The Employment Law Impact of Texas Dep't of Housing v. Inclusive Comm.: A Double-Edged Sword?

Earlier this week, in a 5-4 decision, the Supreme Court surprised many and saved disparate impact discrimination claims under the Federal Housing Act (“FHA”). See Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. Generally, the disparate impact analysis allows individuals to prove discrimination based upon the disparate impact of an employer’s otherwise neutral policy. For example, a purportedly neutral test that is not related to the job but has the effect of weeding out members of racial minorities. This is welcome news, many plaintiffs’ employment lawyers (such as me) feared that this conservative Supreme Court would take this opportunity to do away with disparate impact cases altogether.

But this decision may have come at a price. Though purportedly saving the disparate impact theory, the Court narrowed it and gave conservative trial judges the tools they need to dismiss future disparate impact cases. Specifically, the court emphasized that the “job related and consistent with business necessity” defense should not be an impossible hurdle for employers, and that trial judges should perform a more thorough analysis at the pleading stage, before plaintiffs’ lawyers have had the opportunity to seek the information they need in discovery. The Court specifically said that “a plaintiff who fails to allege facts at the pleading stage or produce statistical evidence demonstrating a causal connection cannot make out a prima facie case of disparate impact.”

It may take years for employment lawyers to see the full impact of this decision, but one thing for sure is that plaintiffs’ lawyers must continue to be on guard for further attempts to water down the discrimination laws — whether by being selective in the cases they choose to appeal and working with colleagues to make sure that they are advancing the strongest possible arguments.

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