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Wrongful Termination

California Law About Wrongful Termination of Employment

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Disparate Impact

Disparate Impact

Disparate impact in the context of wrongful termination and employment law in California refers to practices in employment, hiring, or termination that are not intentionally discriminatory but result in a disproportionate impact on a protected class of employees. This concept is crucial in understanding and navigating employment law in California, as it can lead to legal consequences for employers who inadvertently engage in such practices.

Legal Framework

  1. Federal Laws: The primary federal law governing disparate impact is Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination based on race, color, religion, sex, or national origin.
  2. California State Laws: The California Fair Employment and Housing Act (FEHA) extends these protections to include marital status, sexual orientation, gender identity, and medical conditions, among others.
  3. Disparate Impact Theory: This legal theory focuses on the effects of employment practices rather than the employer’s intent. A policy that appears neutral but disproportionately affects a protected class may be considered unlawfully discriminatory unless the employer can demonstrate that the practice is job-related and necessary for the operation of the business.

Legal Consequences

  • Lawsuits and Litigation: Employers may face lawsuits alleging disparate impact discrimination. These can lead to significant financial liabilities, including compensatory and punitive damages, especially in cases of wrongful termination.
  • Reputational Damage: Legal battles or public allegations of discrimination can harm an organization’s reputation, affecting its ability to attract talent and retain clients.
  • Regulatory Scrutiny: Frequent or high-profile cases of disparate impact can lead to increased scrutiny from regulatory bodies.

Potential Problems and Examples

  1. Hiring Practices: A company requiring a specific degree that is less commonly held by certain ethnic groups could inadvertently create a disparate impact, even if the degree is not essential for job performance.
  2. Performance Evaluations: If a company’s performance evaluation criteria unintentionally disadvantage a particular gender or ethnic group, this could lead to a disparate impact.
  3. Redundancy Decisions: Choosing employees for redundancy based on seniority can disproportionately affect younger workers or those who have taken maternity leave, resulting in potential disparate impact claims.
  4. Language Requirements: Requiring employees to speak a specific language (unless it is essential for the job) can create a disparate impact based on national origin.

Reasoning and Logic

  • Objective Criteria: Employers should ensure that employment practices are based on objective, job-related criteria to minimize the risk of disparate impact.
  • Regular Reviews: Regularly reviewing and updating employment practices can help identify potential areas of disparate impact.
  • Diversity and Inclusion Training: Training programs can help managers and HR professionals understand and avoid practices that may lead to disparate impact.
  • Legal Compliance: Staying informed about legal developments in employment law is crucial for employers to adapt and comply with evolving standards.

Conclusion

In summary, disparate impact in California’s employment law represents a significant legal concern for employers. While not based on intentional discrimination, practices leading to a disproportionate impact on protected classes can result in legal challenges and financial liabilities. Employers must be vigilant in reviewing their employment practices and policies to ensure compliance and fairness in the workplace.

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Additional Information

Disparate Impact is a crucial concept in employment law that deals with unintentional discrimination. It occurs when an employer’s seemingly neutral policies or practices disproportionately impact a protected group, such as a racial or gender minority, resulting in adverse employment outcomes. In the context of wrongful termination and employment law in the state of California, understanding disparate impact is essential.

1. Legal Basis for Disparate Impact:

  • Disparate impact claims are primarily governed by federal law under Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act (ADEA), as well as by the California Fair Employment and Housing Act (FEHA) for state-level cases.

2. Key Elements of Disparate Impact Claims:

  • The plaintiff must demonstrate that an employer’s seemingly neutral policy or practice has a disproportionate adverse impact on a protected group.
  • The employer may defend against such claims by showing that the policy or practice is job-related and consistent with business necessity.

3. Application of Disparate Impact:

  • Disparate impact can apply to various employment practices, including hiring, promotion, compensation, and termination.
  • It focuses on the impact of a policy rather than intent, making it possible for employees to challenge practices that have a discriminatory effect, even if the employer did not intend to discriminate.

4. Problems and Challenges:

  • Proving Disproportionate Impact: One challenge for plaintiffs is proving that the policy or practice had a disproportionate impact on a protected group. This often requires statistical analysis.
  • Business Necessity Defense: Employers can argue that the policy or practice is job-related and consistent with business necessity. However, they must provide strong evidence to support this claim.
  • Balancing Business Interests: Balancing the legitimate business interests of employers with the rights of employees is an ongoing challenge in disparate impact cases.

5. Case Example:

  • Imagine a large technology company in California that has a policy of conducting annual layoffs based on performance reviews. Unintentionally, this policy results in a higher percentage of employees over the age of 50 being terminated compared to younger employees.
  • Several older employees who were terminated file a disparate impact lawsuit under the ADEA, alleging that the performance review process had a disproportionately negative impact on older workers.
  • The company may argue that the performance review process is job-related and consistent with business necessity, providing data to support this claim.
  • The court would then evaluate whether the company’s policy meets the legal criteria for a disparate impact defense, considering the evidence presented by both parties.

Conclusion

In conclusion, disparate impact is a critical concept in wrongful termination and employment law in California. It allows employees to challenge seemingly neutral employment policies or practices that disproportionately affect protected groups. While proving a disparate impact case can be challenging, it plays a vital role in promoting equal employment opportunities and preventing unintentional discrimination in the workplace. Employers must carefully assess their policies and practices to ensure they comply with the law and do not have an unjustified adverse impact on any protected group.

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2502. Disparate Impact—Essential Factual Elements (Gov. Code, § 12940(a))

[Name of plaintiff] claims that [name of defendant] had [an employment practice/a selection policy] that wrongfully discriminated against [him/ her/nonbinary pronoun]. To establish this claim, [name of plaintiff] must prove all of the following:

  1. That [name of defendant] was [an employer/[other covered entity]];
  2. That [name of plaintiff] [was an employee of [name of defendant]/ applied to [name of defendant] for a job/[other covered relationship to defendant]];
  3. That [name of defendant] had [an employment practice of [describe practice]/a selection policy of [describe policy]] that had a disproportionate adverse effect on [describe protected group—for example, persons over the age of 40];
  4. That [name of plaintiff] is [protected status];
  5. That [name of plaintiff] was harmed; and
  6. That [name of defendant]’s [employment practice/selection policy] was a substantial factor in causing [name of plaintiff]’s harm.

New September 2003; Revised June 2011

Directions for Use

This instruction is intended for disparate impact employment discrimination claims. Disparate impact occurs when an employer has an employment practice that appears neutral but has an adverse impact on members of a protected group and cannot be justified by business necessity. (Jumaane v. City of Los Angeles (2015) 241 Cal.App.4th 1390, 1405 [194 Cal.Rptr.3d 689].)

If element 1 is given, the court may need to instruct the jury on the statutory definition of “employer” under the FEHA. Other covered entities under the FEHA include labor organizations, employment agencies, and apprenticeship training programs. (See Gov. Code, § 12940(a)–(d).)

The court should consider instructing the jury on the meaning of “adverse impact,” tailored to the facts of the case and the applicable law.

Sources and Authority

  • Discrimination Prohibited Under Fair Employment and Housing Act. Government Code section 12940(a).
  • Disparate Impact May Prove Age Discrimination. Government Code section 12941.1.

  • Justification for Disparate Impact. Cal. Code Regs., tit. 2, §§ 11010(b), 11017(a), (e).
    • “Prohibited discrimination may . . . be found on a theory of disparate impact, i.e., that regardless of motive, a facially neutral employer practice or policy, bearing no manifest relationship to job requirements, in fact had a disproportionate adverse effect on members of the protected class.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 354, fn. 20 [100 Cal.Rptr.2d 352, 8 P.3d 1089], internal citations omitted.)
    • “A ‘disparate impact’ plaintiff . . . may prevail without proving intentional discrimination . . . [However,] a disparate impact plaintiff ‘must not merely prove circumstances raising an inference of discriminatory impact; he must prove the discriminatory impact at issue.’ ” (Ibarbia v. Regents of the University of California (1987) 191 Cal.App.3d 1318, 1329–1330 [237 Cal.Rptr. 92],

quoting Lowe v. City of Monrovia (9th Cir. 1985) 775 F.2d 998, 1004.)

  • “ ‘To establish a prima facie case of discrimination, a plaintiff must show that the facially neutral employment practice had a significantly discriminatory impact. If that showing is made, the employer must then demonstrate that “any given requirement [has] a manifest relationship to the employment in question,” in order to avoid a finding of discrimination . . . Even in such a case, however, the plaintiff may prevail, if he shows that the employer was using the practice as a mere pretext for discrimination.’ ” (City and County of San Francisco v. Fair Employment and Housing Com. (1987) 191 Cal.App.3d 976, 985 [236 Cal.Rptr.

716], quoting Connecticut v. Teal (1982) 457 U.S. 440, 446–447 [102 S.Ct.

2525, 73 L.Ed.2d 130], internal citation omitted.)

  • “It is well settled that valid statistical evidence is required to prove disparate impact discrimination, that is, that a facially neutral policy has caused a protected group to suffer adverse effects. ‘ “Once the employment practice at issue has been identified, causation must be proved; that is, the plaintiff must offer statistical evidence of a kind and degree sufficient to show that the practice in question has caused the exclusion of applicants for jobs or promotions because of their membership in a protected group.       [S]tatistical disparities

must be sufficiently substantial that they raise such an inference of causation.” ’ ” (Jumaane, supra, 241 Cal.App.4th at p. 1405.)

  • Under federal title VII, a plaintiff may establish an unlawful employment practice based on disparate impact in one of two ways: (1) the plaintiff demonstrates that a defendant uses a particular employment practice that causes a disparate impact on the basis of a protected status, and the defendant “fails to demonstrate that the challenged practice is job related for the position in question and consistent with business necessity”; or (2) the plaintiff demonstrates

that there is an alternative employment practice with less adverse impact, and the defendant “refuses to adopt such alternative employment practice.” (42 U.S.C.

§ 2000e-2(k)(1)(A).)

Secondary Sources

Chin et al., California Practice Guide: Employment Litigation, Ch. 4-A, Employment Presumed At Will, ¶ 4:25 (The Rutter Group)

Chin et al., California Practice Guide: Employment Litigation, Ch. 7-A, Title VII And The California Fair Employment And Housing Act, ¶¶ 7:530, 7:531, 7:535 (The Rutter Group)

1 Wrongful Employment Termination Practice (Cont.Ed.Bar 2d ed.) Discrimination Claims, § 2.65

2 Wilcox, California Employment Law, Ch. 41, Substantive Requirements Under Equal Employment Opportunity Laws, § 41.21 (Matthew Bender)

3 Wilcox, California Employment Law, Ch. 43, Civil Actions Under Equal Employment Opportunity Laws, § 43.01[2][c] (Matthew Bender)

11 California Forms of Pleading and Practice, Ch. 115, Civil Rights: Employment Discrimination, § 115.23[4] (Matthew Bender)

California Civil Practice: Employment Litigation, § 2:23 (Thomson Reuters)

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