The underlying legal risk has not changed.
Over the past year, federal agencies have moved away from pursuing disparate impact claims, and the U.S. Department of Justice has issued an opinion that challenges the existing framework, which was developed by the U.S. Equal Employment Opportunity Commission in 1978.
We discussed this shift in our recent webinar, Disparate Impact Theory: Dead, Dying, or More Important Than Ever?
Despite the latest at the federal level, Title VII still prohibits disparate impact discrimination, courts are still applying the longstanding EEOC standard, private plaintiffs are still bringing claims, and a growing number of states are addressing the issue directly, particularly when it comes to the use of employment tools that are based on artificial intelligence.
Courts are still applying the traditional standard in disparate impact cases
Despite the shift in federal policy, courts continue to analyze disparate impact claims under existing law. For example, in Bomar v. Board of Education, the U.S. Court of Appeals for the Fourth Circuit affirmed summary judgment for the employer in part because the plaintiffs did not identify an alternative practice that would have had less of a discriminatory effect while still serving the employer's legitimate business purposes. In Mobley v. Workday, a case involving an algorithmic applicant-screening tool, a court denied a motion to dismiss disparate impact claims brought under Title VII, the Age Discrimination in Employment Act, and the Americans with Disabilities Act.
Preventing and defending disparate impact claims: Five steps employers should take now
No. 1: Don’t relax. Be aware of the continuing threat of disparate impact liability, as well as the need to prevent it and to address it when you find it. This is especially true if you are in a state that has legislation that expressly prohibits disparate impact discrimination, or a state that regulates automated employment decision-making tools.
No. 2: Continue evaluating your selection procedures, especially any that involve the use of AI. AI tools are now used in nearly every stage of the employment life cycle. This includes screening of applicants, ranking candidates, preparing performance evaluations, and making decisions about layoffs and reductions in force. If you find a disparity, investigate what is causing it and whether an alternative practice is available that would have a less discriminatory effect while serving the same business purpose.
No. 3: Know your rights under your contracts with AI vendors. Confirm that your vendor’s contract gives you the right to audit the underlying data and how the tool has been validated. The contract should also give you the right to receive notice of any changes to the model. Finally, it should address the manner in which data is stored and retained, and require the vendor's cooperation if a charge or lawsuit arises.
No. 4: Monitor state and local AI-related legal developments. Determine whether your jurisdiction requires you to conduct a bias audit or provide notice of AI use to applicants or employees, or imposes other substantive obligations. This area is expanding quickly and will vary from one jurisdiction to another.
No. 5: Consult employment counsel early, ideally before putting a new employment decision-making tool into place. If there are any issues, it is best to discover them early, before they affect significant numbers of applicants or employees.
Conclusion
Where disparate impact liability is concerned, the safest assumptions right now are (1) continued uncertainty at the federal level, and (2) continued expansion at the state level.
By using job-related selection criteria, monitoring the data for disparities, and documenting the reasoning behind your practices, you will be in the strongest possible position, no matter what the future holds.
For a fuller legal analysis of this shift, including the DOJ's opinion and what it does and doesn't change, see our article, Beyond the Uniform Guidelines: Why employers should continue monitoring employment decisions for disparate impact.
PartnerCara co-chairs Constangy’s practice groups relating to EEO/Contractor Compliance, Reporting & Analytics, and DEI Compliance. She advises employers on proactive strategies to help avoid litigation and has defended employers ...
From developments in pay equity and changing requirements in data reporting, to DEI risk mitigation, Title VII compliance, and shifts in enforcement of Section 503 & VEVRAA, the EEO Compliance Dispatch blog is designed to keep employers informed and ahead of the curve.
Whether you’re a federal contractor navigating audits, an HR professional tackling pay transparency, or in-house counsel tracking state and local reporting requirements, our updates, legal analysis, and compliance strategies are tailored to help you manage risk and support a more inclusive workplace.
