T. Elliot Gaiser is the assistant attorney general for the Office of Legal Counsel at the Justice Department. Josh Craddock is a deputy assistant attorney general in the office.
For years if a business adopted an objective, merit-based policy — say, automatic promotions for the top 10 percent of the sales team — every employer knew what HR would ask next: What is the skin color of those promoted? If the answer was too monochrome, the company’s policy could draw legal liability and even an investigation from the federal government.
Until now. In an opinion last month, the Justice Department’s Office of Legal Counsel concluded that this sordid practice is no longer good law. Andrea Lucas, chair of the Equal Employment Opportunity Commission, had asked us whether punishing such policies for their effects alone was constitutional. The primary enforcer of employment law was concerned that “disparate impact” liability had expanded beyond an evidentiary tool intended to smoke out intentional discrimination into a hidden racial balancing mandate anathema to the Constitution.
We agreed. The 14th Amendment, enacted after the Civil War, guarantees the “equal protection of the laws” to all. A century later, Congress enacted Title VII of the Civil Rights Act of 1964 to codify that principle of color blindness in the workplace. The text forbids employers from discriminating against individuals “because of” race, color, religion, sex or national origin.
But applying that principle in practice proved more complicated. In Griggs v. Duke Power Co. (1971), the Supreme Court confronted ostensibly neutral business practices that produced unequal racial outcomes — requiring a high school diploma and aptitude-test scores for certain promotions, adopted on the same day the Civil Rights Act took effect. Those requirements in effect preserved the company’s pre-Civil Rights Act segregation policy, and the court refused to bury its head in the sand. Disparate effects could be evidence of “artificial, arbitrary, and unnecessary barriers to employment” that “discriminate on the basis of racial or other impermissible classification.”
The problem arose when courts used disparate-impact liability to punish not only concealed intentional discrimination — which would always produce discriminatory results — but also innocent employment practices that just happened to produce different results. Never mind that not every difference is the product of discrimination, and nearly every meaningful measure of competence — from aptitude tests to diploma requirements to background checks — affects groups differently.
If a neutral standard is presumptively unlawful whenever it yields uneven racial outcomes, then a law designed to prohibit discrimination begins to incent or even coerce it. Merit-based decisions thus became legal risks; race-conscious decisions became safe harbors. Employment lawyers examining a company’s reduction in force affecting the bottom-performing 10 percent would begin by considering the demographics of those affected. If they weren’t diverse enough, employers would abandon pure merit and change their criteria to ensure those laid off looked like a rainbow coalition.
It is hard enough to run a business without thinking about race at every turn. But federal regulators compounded the problem, driving employers toward race-conscious decision-making while burying them in paperwork. Employers defending race-neutral practices had to commission “validation studies” demonstrating that their criteria predicted job performance well enough to justify the resulting disparities. EEOC guidelines imposed dozens of “essential” requirements on that process, spawning a cottage industry of secondary sources and compliance consultants. Beneath that baroque web was the assumption that merit and equal treatment are at odds.
The Justice Department rejects that assumption, and we aren’t alone. In Texas Department of Housing v. Inclusive Communities (2015), Justice Anthony M. Kennedy explained that the Fair Housing Act of 1968 could only be read to impose disparate-impact liability with essential safeguards to protect race-neutral, merit-based policies. This April, in Louisiana v. Callais, Justice Samuel A. Alito Jr. corrected judicial precedent that twisted the Voting Rights Act of 1965 to focus myopically on racial outcomes. Now, any disparate effects flowing from states’ redistricting matter only insofar as they prove intentional racial discrimination.
We applied that logic to Title VII. To avoid serious constitutional concerns, disparate impact must function as an evidentiary tool for detecting intentional discrimination disguised as neutrality, not as a quasi-quota system. Properly understood, neutral policies are presumptively lawful. Employers need only show that a challenged employment practice rationally serves a valid business purpose to avoid liability. No longer must employers toil under unlawful regulatory requirements that penalized merit-based decisions and rewarded race-based ones.
At the same time, disparate racial effects may sometimes provide evidence of intentional discrimination. Drawing on Inclusive Communities and Justice Antonin Scalia’s concurrence in Ricci v. DeStefano (2009), our opinion establishes guardrails to ensure that disparate impact serves Title VII as Congress wrote it. Before an employer can be held liable for a policy that produces a disparate effect, for example, those challenging the policy must show what Title VII calls an “alternative employment practice” — one that meets the business’s merit-based goals just as well and has a less disparate effect.
Our opinion is part of an administration-wide effort to eliminate race discrimination and restore the original promise of the Civil Rights Act. Last year, President Donald Trump issued an executive order to eliminate unconstitutional disparate-impact liability. On July 4, consistent with that directive and our opinion, agencies jointly announced amendments to remove it from their Title VI regulations. Like Title VII, Title VI prohibits race discrimination but in programs and activities receiving federal financial assistance. It too has long been misinterpreted to encourage the very behavior it forbids.
As we celebrate 250 years of American independence, there is no better time to reject the pernicious claim that we must sacrifice merit on the altar of equality. An employer who selects the best candidate on neutral terms honors the color-blind Constitution and laws like the Civil Rights Act. That’s good for workers, good for business and good for the soul of our nation.
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