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RIFs are subject to disparate-impact review; class action race bias claims revived

By Brandi O. Brown, J.D.

The employees, who were laid off in a RIF, can pursue their disparate impact claims against the District of Columbia; the appeals court saw no basis in to exempt RIFs from a disparate impact review.

Addressing for the first time “whether a RIF or, more precisely, the practices through which an employer implements a RIF are subject to disparate-impact review under Title VII,” a D.C. Circuit panel majority saw “no basis to exempt such practices from otherwise-applicable law,” and reversed a grant of summary judgment in an employer’s favor on a class action race discrimination suit alleging both disparate treatment and disparate impact discrimination. The plaintiffs alleged that their employer, the District of Columbia Child and Family Services Agency, eliminated those job categories in which African-American employees were most concentrated. Although the district court, as well as the dissenting justice, contended that a RIF is not a “particular employment practice” for purposes of analyzing disparate impact, the appeals court explained that nothing in the federal law suggested that the practices an employer used to effectuate a layoff, whether or not they are called a “RIF,” are exempt from disparate-impact scrutiny. The court reversed the lower court on its “particular practice” finding as well as its denial of class certification. Judge Katsas dissented in part (Davis v. District of Columbia, January 7, 2019, Pillard, C.).

Budget shortfall leads to RIF. Faced with budget shortfalls after 2009, the D.C. city council decreased the agency’s operating budget for fiscal years 2010 and 2011. The agency, in turn, reduced its full-time staff. In all, the agency let go of 115 employees. Although the agency was 73.4 percent African American, 93 percent of the terminated workers were African American.

Forty-seven of the employees who lost jobs filed a class action against the employer, alleging race (and age) discrimination. According to their complaint, the racial disparity in the RIF was because the agency, rather than laying off employees based on salary or making proportional cuts by department, instead focused on three offices. In one of those offices, the Agency Programs Office, the department completely cut two job categories that were “most densely occupied by African American employees.” Those category eliminations resulted in the termination of 70 employees, of whom 67 were African American. Elsewhere in the agency, the layoffs resulted in the termination of 45 employees, of which 40 were African American.

Summary judgment to employer. The plaintiffs brought both disparate treatment and disparate impact claims. The district court bifurcated discovery and pretrial motions, limiting the first stage to the disparities caused by the practices challenged by the disparate impact claim. Both sides retained experts who reached opposing views with regard to the impact of the layoffs. Following the close of the first phase of discovery, the employees moved for class certification and the employer moved for summary judgment. The district court granted the employer’s motion.

Of greatest importance to the appeal, the employer argued, and the district court agreed, was that the termination decisions were not subject to scrutiny under Title VII for disparate racial impact because the employees failed to identify a specific employment practice that was actionable under the disparate impact theory. The employer contended that its decisions were not actionable because they did not involve an objective “test or requirement,” but rather a series of subjective, contextual judgments made individually by leadership. The district court held that the employees failed to make out a prima facie case of disparate impact.

RIFs not excluded. Considering for the first time whether the practices through which an employer implements a RIF are subject to a disparate-impact analysis, the appeals court saw no reason that such practices should be exempt from Title VII review. Thus, the appeals court concluded that the district court erred in finding that the agency’s actions could not be reviewed for adverse racial impact. There was “no mystery” with regard to the layoff practices challenged by the employees, the appeals court observed: they challenged the decision to target two job categories for elimination and to “allow managers to make putatively individualized, discretionary and subjective choices of which positions to winnow from other units.”

Possible to analyze impact of RIF. Indeed, courts applying the federal law in the context of RIFs have shown how to analyze those layoffs as a “particular employment practice,” the appeals court explained, including in cases where the targeted departments were those where the employees were predominantly of one race or one gender.

“When an employer cuts back on its workforce by ‘targeting’ demographically disproportionate departments for layoffs,” the court explained, “that practice means that ‘the likelihood of selecting a[n individual in a protected class] increase[s].’” That was the type of practice highlighted by the employees in this case.

The appeals court was “mindful” that plaintiffs who identify a particular practice with a disparate impact have more to do—they also have the burden of showing causation—and the “touchstone” for liability is the lack of “business necessity” supporting the practice in question.

Calling it a “RIF” does not immunize it. The racial impact of the employer’s method of selecting employees for layoff was not lost on the district court, the appeals court noted, but the district court chose not to address the statistics, relying on the erroneous notion that the employees failed to identify a “specific” employment practice. However, “[t]erminating a large group of employees in a compressed timeframe is clearly an adverse employment action within the meaning of Title VII,” the appeals court explained, “and an employer’s assertion that the firings were a ‘RIF’ required by budget cuts does not somehow immunize them from Title VII scrutiny.”

In this case, the appeals court explained, scrutiny should fall upon “not the Agency’s decision to reduce its workforce, but the process the Agency used to select positions for the chopping block.”

Dissent. Judge Katsas, however, faulted the majority for recasting and repackaging the employees’ arguments and how they framed the lawsuit—as a challenge to the RIF writ large—by claiming to focus on the agency’s processes, which they claimed were “properly before the court.” Katsas, however, contended that the employees expressly “disavowed” the claims challenging the employer’s specific processes and, thus, they were not properly before the court.