From Disparate Impact to Intentional Discrimination and Back Again

When Elaine Shoben, Judge Jack and Lulu Lehman Professor of Law, began teaching at the University of Illinois College of Law in 1975, the Supreme Court had decided only four years earlier its landmark Title VII decision permitting disparate impact evidence of discrimination in Griggs v. Duke Power Co., 401 U.S. 424.

Professor Shoben consequently focused her early scholarship on exploring the scope and nature of proof in disparate impact cases in particular with two law review articles: Probing the Discriminatory Effects of Employee Selection Procedures with Disparate Impact Analysis Under Title VII, 56 Tex. L. Rev. 1 (1977) and Differential Pass/Fail Rates in Employment Testing: Statistical Proof Under Title VII, 91 Harv. L. Rev. 793 (1978)), which was cited favorably by the Supreme Court in Watson v. Fort Worth Bank & Trust, 487 U.S. 977 (1988).

In Watson, the Court considered under Title VII the evaluation of statistical evidence concerning the disparate impact of subjective ratings on applicants for promotion. It took notice of a Federal Executive Agency Guidelines on Employee Selection Procedures standard known as the four-fifths rule of thumb. At bottom, the rule asserts that a difference is not substantial if the acceptance rate for a plaintiff group is at least four-fifths of the rate for the higher group. To support its misgivings about this rule, the Supreme Court referenced Shoben's Harvard Law Review article, where, using sophisticated statistical analysis, she pointed out that the four-fifths rule produces anomalous results because it does not account for differences in sample size and does not consider the magnitude of differences in rates.

After a series of Supreme Court opinions in the 1980’s that disfavored employment discrimination plaintiffs, Congress passed the Civil Rights Act of 1991. One of its purposes was to codify standards for the adjudication of disparate impact suits under Title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e et seq.). This purpose notwithstanding, the primary impact of the statute for Shoben's work was to turn the focus of her scholarship from analyzing disparate impact to exploring the effects of intentional discrimination because the new Act permitted compensatory and punitive damages for intentional discrimination, but not for disparate impact.

In a recent work, however, Shoben returns to her roots and attempts to revive interest in disparate impact analysis and to increase appreciation of its potential for eradicating discriminatory practices in her article Disparate Impact Theory in Employment Discrimination: What’s Griggs Still Good For? What Not?, 42 Brandeis L. J. 597 (2004). Although she announces at the outset that "Griggs and the disparate impact theory of litigation remain largely untapped resources of enormous potential for plaintiffs" (p. 597), she concludes, "Ironically, while scholars have spent considerable energy on the topic, it has not been the subject of much reported litigation" (p. 622).

At present, Shoben is exploring her interest in noncompetition agreements. Her latest published thoughts on NCAs can be found in the fourth edition of a widely used and highly regarded treatise titled Employment Law, a two volume work authored with Mark Rothstein, Charles Craver, and Elinor Schroeder, and published by Thomson West Group (2009). In Chapter Eight, she devotes her attention to "Covenants not to compete, also known as noncompetition agreements, [which] are contractual provisions where the parties agree not to compete with each other for a certain time period in a particular geographic location."

After an remarkably exhaustive look at the major cases related to the interplay between contract law and public policy in enforcing post-employment covenants, Shoben writes in recapitulation, "Considerations of public policy are always featured in cases considering the enforcement of noncompetition agreements. All such agreements are fundamentally a form of restraint on trade, so public policy dictates their curtailment. They are permissible only to protect narrowly defined legitimate employer interests such as an investment in special training or the preservation of trade secrets, confidential business information, customer lists, goodwill or reputation. . . . The interest of the public at large--or even a few innocent individuals--may predominate over a legitimate private interest."

Another topic taken up by Shoben in Chapter Eight is an agreement not to hire, a relatively new contractual concept in which employers agree not to hire each other’s employees. Since only a few cases have addressed this concept, its enforceability, she says, remains unsettled. The Wisconsin Supreme Court, e.g., in Heyde Co. v. Dove Healthcare, 258 Wis.2d 28, 654 N.W.2d 830 (2002) ruled one such contract contrary to public policy because it infringed on the employee's freedom of contract and so cannot be enforced unless the employee consents to the restriction. In contrast, the Virginia Supreme Court in Therapy Serv., Inc. v. Crystal City Nursing Ctr., Inc., 239 Va. 385, 389 S.E.2d 710 (1990) enforced a similar contract, explicitly rejected the claim that such a contract is essentially a noncompetition agreement because it was not between an employer and employee, and asserted that, although the affected employees were restricted from working for the employer subject to the no-hire agreement, they still were free to work for anyone else.

She currently is working on an article based on a talk at the Remedies Forum at the Faculty of Law, Aix-Marseille University, in Aix-en-Provence, France. It is titled "Noncompetition Agreements and Agreements Not to Hire: Issues in Interstate and International Enforcement." In this article, to be published in both French and English, she examines enforcement issues of NCAs given the conflicting legal attitudes towards them. Some states view NCAs with disfavor because they economically coerce employees into remaining with an employer when they could advance their careers more efficaciously with a competitor. Other jurisdictions, she notes, take a more pro-business stance and honor such agreements more routinely as long as they are reasonable. Given these divergent approaches, the fundamental question she addresses is whether NCAs will be enforceable in jurisdictions other than where they are made.