DEI and Disparate Impact

The next step in restoring meritocracy is to reject the theory that proportionate outcomes equal fairness

By Andrew M. Grossman and Kristin A. Shapiro. Mr. Grossman is a senior legal fellow at the Buckeye Institute. Ms. Shapiro is a senior fellow at the Independent Women’s Forum. Excerpt:

"Disparate-impact theory was first recognized by the Supreme Court in Griggs v. Duke Power Co. (1971). Title VII of the 1964 Civil Rights Act prohibits racial discrimination by employers. The Equal Employment Opportunity Commission applied this prohibition to any policy that had a disparate impact on racial minorities—even absent intentional discrimination. The EEOC argued that the purpose of Title VII was to “accomplish economic results, not merely to influence motives or feelings.” The justices agreed and blocked Duke Power from requiring a passing score on a standardized test and a high-school diploma as conditions of employment, as these requirements disqualified black applicants at a higher rate than whites.

Griggs limited aptitude testing by employers, but not the need for aptitude. Many businesses found a proxy in college-degree requirements, which seemed legally safer given that colleges widely engaged in racial balancing. But applicants with ability but not credentials were blocked from positions.

Griggs was limited to employment law, but disparate-impact theory has since infected many levels of the federal government. It applies to federally funded programs under Title VI of the Civil Rights Act, creditors under the Equal Credit Opportunity Act, landlords under the Fair Housing Act, and broadband providers under the Infrastructure Investment and Jobs Act. It has been used to block criminal-background tests on rent applications, school-discipline policies and underwriting criteria for home insurance. Landlords successfully sued the city of St. Paul, Minn., for “aggressively” enforcing its housing code because it required landlords to respond to rodent infestations, broken smoke detectors and other hazards, which could increase rent and disproportionately affect black tenants.

The Supreme Court has repeatedly emphasized that racial balancing is “patently unconstitutional,” as in Students for Fair Admissions v. Harvard (2023) and Grutter v. Bollinger (2003). Yet as the justices explained in Ricci v. DeStefano (2009), disparate-impact theory dictates that policies with an “undesirable racial effect” are invalid. If a race-neutral policy affects racial outcomes—or appears to do so—the burden falls on the employer to prove that the policy is essential, a daunting standard.

In practice this means that employers, landlords and other businesses must track and plan for racial outcomes to maintain racial balance. Before adopting policies such as drug tests, they must assess the racial impact and consider alternatives that might achieve a more desirable racial balance. Race must be constantly monitored to identify potential liabilities. As Justice Antonin Scalia noted in his concurring opinion in Ricci, disparate-impact theory places a “racial thumb on the scales” and requires employers to make decisions “because of” racial outcomes."