July 24, 2006

Eighth Circuit Criticizes “Half Person” Rule in Determining Underutilization

On May 1, 2006, the U.S. Court of Appeals for the Eighth Circuit reinstated the claims of two white firefighters who were passed over for promotion under the City of Omaha, Nebraska’s 2002 Affirmative Action Plan (Kohlbek v. City of Omaha, No. 04-2060, May 1, 2006). The Eighth Circuit reinstated the white firefighters’ claims, finding the City’s affirmative action plan was not “narrowly tailored” to remedy specific instances of past discrimination.

 

Background: The City of Omaha instituted its first affirmative action plan in 1971 to racially integrate its fire department. The plan at issue in this case was the city’s 2002 Affirmative Action Plan (“AAP”), which was a remedial plan designed to remedy past discrimination within the fire department. Although the City was exempt as a municipality from complying with OFCCP’s affirmative action regulations, it used them as a guide to develop their 2002 AAP.

 

The plan defined underutilization based on the “half person” rule, which Omaha’s expert referred to as a hybrid of the “any difference” and “whole person” rules. This rule determined that any time the actual number of minorities in a particular position is not within one half of a person of the placement goal, an underutilization exists. Omaha used racial classifications in its promotion decisions if an underutilization was found. Applying the half person rule, the City determined the battalion chief and department captain job categories were underutilized for blacks. The City then promoted two lower-ranked African-American firefighters into these positions over higher-ranked white employees. The bypassed firefighters filed reverse discrimination claims against the City.

 

Decision: In rejecting the half person rule to determine underutilization, the court said, “Numbers must be statistically significant before one can properly conclude that any apparent racial disparity results from some factor other than random chance.” Omaha’s own statistical expert agreed that “a measure of statistical significance is necessary when comparing actual numbers to expected numbers in an attempt to infer the existence of discrimination.” The court found that the half person rule did not require a statistically significant showing of discrimination before racial classifications are triggered. Thus, “by using the half person rule, Omaha, under the auspices of the 2002 Plan, made racial classifications in its promotional decisions that went beyond its interest in remedying identifiable racial discrimination.”

 

Implications for Federal Contractors: This decision sheds light on the different standards that apply to various types of affirmative action plans.

The Eighth Circuit applied a “strict scrutiny” test in this case to determine whether a racial classification used in a public employer’s voluntary remedial affirmative action plan was constitutional under the Equal Protection Clause of the Fourteenth Amendment. As discussed above, the court ruled that a racial classification could not be used unless there is a statistically significant difference between actual employment and availability estimates.

 

In contrast, federal contractors under Executive Order 11246 and its implementing regulations are subject to different standards. Contractors may select from several tests to determine underutilization, such as the “any difference” rule, 80% rule, and a test of statistical significance. These methodologies produce different results that can significantly impact the number of job groups in which the contractor must set placement goals. The contractor’s selection of a particular methodology depends upon its approach to affirmative action. Corporate practitioners should involve other management personnel, including legal counsel and outside statistical experts, in making this important decision.

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DCI Consulting is a risk management human resources consulting firm strategically located in Washington, D.C.

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