What is disparate impact discrimination?

Do anti-discrimination laws protect employees from employment practices that are not directly discriminatory, but still have a discriminatory effect? In Texas, the default rule is that an employer can fire an employee at any time for any reason. This is called employment-at-will. However, certain federal and state statutes place limitations on the employment-at-will doctrine by prohibiting employment discrimination, preventing employers from basing their employment decisions—hiring, firing, promoting, and paying—on an employee belonging to a protected class.

Protected classes are listed in various statutes. For example, Title VII of the Civil Rights Act of 1964 prohibits discrimination based on race, sex, religion, or national origin. The American with Disabilities Act prohibits discrimination based on an employee’s disability. Similarly, the Age Discrimination in Employment Act protects employees over the age of 40 from discrimination.

Before these federal statutes, the federal prohibition on employment discrimination began with an Executive Order from President Franklin D. Roosevelt that prohibited discrimination in federal government contractors. However, until President Lyndon B. Johnson signed the Civil Rights Act into law in 1964, private employees had no legal recourse if they were adversely affected by discrimination in the workplace.

While these statutes protect against intentional or overt discrimination, they also protect against employment practices that have a discriminatory effect without any intention to discriminate. This is called disparate impact.

In cases of disparate impact, the employment practice is not overtly discriminatory. For example, it does not explicitly state a preference for male employees. However, if an employment practice affects one group more severely than another it can be said to have a disparate impact.

Take, for example, the employment practice of requiring employees to have no arrests on their record. On its face, there is no discriminatory intent. However, because minorities tend to be arrested at higher rates, this practice will more adversely affect minorities than non-minorities—that is, it will have a disparate impact.

However, there are some cases where an employer can implement an employment practice that has a disparate impact. The employer must show that the practice is job-related and motivated by business necessity. However, this business necessity defense can also be defeated. An employee can overcome it by demonstrating that an alternative business practice existed that would have furthered the business need and would not have had a disparate impact.