Retiree Benefit System that Disproportionately Benefits Men is Not Necessarily a Violation of Title VII

by Hinshaw & Culbertson LLP
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In Wood v. City of San Diego, Janet Wood brought suit under Title VII of the Civil Rights Act of 1964, alleging the surviving spouse benefit provided by the City of San Diego to retired employees discriminated on the basis of sex.  Her theory of liability was that because, in the aggregate, the City pays a larger amount of money to the married retirees than to those who are unmarried, and male retirees are more likely to be married, the benefit system had an unlawful disparate impact on female retirees.  Wood asserted both disparate treatment and disparate impact claims.  The trial court granted the City’s motion to dismiss.

The Ninth Circuit Court of Appeal affirmed, rejecting the disparate treatment claim because such a claim requires that the employer treat a particular person less favorably than others because of a protected trait.  In other words, a disparate-treatment plaintiff must establish that the defendant had a discriminatory intent or motive for taking a job-related action.  The complaint, which asserted merely that the City had knowledge of the discriminatory effect of its actions did not allege enough.  To survive a motion to dismiss, she would need to have alleged that “the City adopted the surviving spouse benefit because it would benefit men more than women.”

The Ninth Circuit also rejected the disparate impact claim based on the ruling in Los Angeles, Department of Water & Power v. Manhart, 435 U.S. 702 (1978).  In that case, as the Ninth Circuit explained, the Supreme Court:

expressly recognized that facially neutral pension plans will inevitably have a disparate impact on some protected groups and concluded that such claims are not actionable under Title VII.”

Furthermore, the Ninth Circuit explained, Title VII and Equal Pay Act together provide that a compensation differential based on sex is not unlawful if it is based on factors other than sex.

Comment:
This case recognizes, without discussing, the distinction between “disparate treatment” and “disparate impact” claims.  The distinction was explained by the United Supreme Court in Raytheon Co. v. Hernandez, 540 U.S. 44, 52 (2003) as follows:

This Court has consistently recognized a distinction between claims of discrimination based on disparate treatment and claims of discrimination based on disparate impact. The Court has said that ‘[d]isparate treatment’ . . . is the most easily understood type of discrimination. The employer simply treats some people less favorably than others because of their race, color, religion, sex, or [other protected characteristic].” [citation omitted]. Liability in a disparate-treatment case “depends on whether the protected trait . . . actually motivated the employer’s decision.” [citation omitted]. By contrast, disparate-impact claims “involve employment practices that are facially neutral in their treatment of different groups but that in fact fall more harshly on one group than another and cannot be justified by business necessity.” [citation omitted.]  Under a disparate-impact theory of discrimination, “a facially neutral employment practice may be deemed [illegally discriminatory] without evidence of the employer’s subjective intent to discriminate that is required in a ‘disparate-treatment’ case.”

As discussed recently on this blog, the EEOC has recently enacted a Guidance that discusses this second category (i.e., disparate impact), stating that facially neutral use of criminal records in hiring and retention decisions violates the Civil Rights Act if it disproportionately impacts those protected under the Act, unless a business justification for such use could be provided.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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