Griggs v. Duke Power Co.: Disparate Impact and Business Necessity

Griggs v. Duke Power Co. is the 1971 Supreme Court decision that established the disparate impact doctrine under Title VII of the Civil Rights Act of 1964. A unanimous Court, in an opinion by Chief Justice Warren Burger, held that employment practices neutral on their face still violate Title VII if they disproportionately exclude a protected group and the employer cannot show the practice is related to job performance. Justice Brennan did not take part. The ruling shifted employment discrimination law away from asking only whether an employer meant to discriminate and toward asking whether its policies actually shut people out based on race, sex, or other protected characteristics.

The Requirements at Dan River Station

The case came out of Duke Power Company’s Dan River Station in Draper, North Carolina, a 95-worker plant organized into five departments: Labor, Coal Handling, Operations, Maintenance, and Laboratory and Test. Before the Civil Rights Act, Black employees could work only in Labor, where the highest-paying job paid less than the lowest-paying job in any other department. Thirteen of the plant’s fourteen Black workers brought the lawsuit.

Duke Power set its challenged requirements in two waves. In 1955, it began requiring a high school diploma for initial placement in any department except Labor and for transfers from Coal Handling into the higher-paying “inside” departments. Then on July 2, 1965, the day Title VII took effect, the company added satisfactory scores on two standardized tests: the Wonderlic Personnel Test and the Bennett Mechanical Comprehension Test.

The rules applied to everyone, but they hit Black applicants far harder. They were less likely to hold a diploma or score well on standardized tests after attending segregated and underfunded North Carolina schools. White employees already working in the better-paying departments were performing those same jobs successfully without ever having met either standard. Duke Power never studied whether the diploma or the test scores actually predicted job performance.

What the Court Held

The Supreme Court held that Title VII “proscribes not only overt discrimination, but also practices that are fair in form, but discriminatory in operation.” The touchstone, the Court said, is business necessity. If a practice screens out a protected group and cannot be shown to relate to job performance, it is illegal, regardless of whether the employer intended any harm.

That was a fundamental shift. Before Griggs, an employment discrimination case generally required proof of a discriminatory motive, a theory now called disparate treatment. Griggs opened a second path. Under disparate impact, the question is not what the employer meant to do but what the policy actually does. A worker who shows that a facially neutral criterion screens out a disproportionate share of a protected group forces the employer either to justify the criterion or drop it.

The Court described how neutral requirements can perpetuate inequality: they operate as “built-in headwinds” for minority groups. Good intentions do not redeem a practice that functions as a barrier to otherwise qualified people. Decades of segregated education and employment meant that standardized tests and diploma requirements could lock in the effects of past discrimination even after explicit racial barriers came down.

Job-Relatedness and Business Necessity

Once a worker shows disparate impact, the burden shifts to the employer to prove the requirement is job-related and consistent with business necessity. Duke Power failed that test completely. The company produced no evidence that a high school diploma or either aptitude test predicted successful performance in coal handling, maintenance, or any other department. Employees hired before the new rules were doing the same jobs without diplomas or test scores, which made the company’s position harder to defend.

The Court drew a sharp line: employers may use tests, but “any tests used must measure the person for the job and not the person in the abstract.” A preference for a better-educated workforce is not enough. The requirement has to connect to the actual tasks the worker performs.

Even if the employer proves business necessity, the worker has one more argument. If a less discriminatory alternative would serve the employer’s legitimate needs just as well, the employer is expected to use it.

The Ability-Test Defense Under Section 703(h)

Duke Power argued that Section 703(h) of the Civil Rights Act shielded its testing program because the statute permits employers to “give and to act upon the results of any professionally developed ability test” so long as the test is not “designed, intended or used to discriminate.”¹ Because the Wonderlic and Bennett tests were professionally developed, the company said, they were automatically lawful.

The Court rejected that reading. A test does not get a pass just because a testing company built it. The statute’s protection applies only when the test is not used to discriminate, and a test that disproportionately excludes a protected group without measuring actual job skills is being “used to discriminate” within the meaning of the law. The employer still has to show the test is a reasonable measure of job performance.

How Disparate Impact Is Measured

Griggs said the real-world effect of a policy matters, but the opinion did not set a numeric threshold. Federal agencies filled that gap with the Uniform Guidelines on Employee Selection Procedures, codified at 29 CFR Part 1607, which introduced the four-fifths rule as a practical benchmark.

Compare the selection rate of the group with the highest pass rate to the selection rate of each other group. If any group’s rate is less than 80 percent (four-fifths) of the highest group’s rate, that gap is generally treated as evidence of adverse impact.² If 60 percent of white applicants pass a test and 30 percent of Black applicants pass, the Black pass rate is 50 percent of the white rate, well below the threshold.

The four-fifths rule is a starting point, not a hard cutoff. Smaller gaps can still count if they are statistically significant or if the employer’s recruiting discouraged minority applicants from applying in the first place. Larger gaps may not count if sample sizes are too small to be reliable.² Courts also apply standard-deviation analysis and other statistical methods when the numbers warrant it.

Wards Cove and the Civil Rights Act of 1991

The Griggs framework stood for nearly two decades before the Supreme Court weakened it in Wards Cove Packing Co. v. Atonio (1989). That case involved salmon canneries in Alaska where nonwhite workers were concentrated in lower-paying jobs. The Court made two changes. First, workers had to identify the specific employment practice causing the disparity rather than pointing to overall workforce statistics. Second, and more consequentially, once a worker showed disparate impact, the employer had to produce only evidence of a business justification, not prove business necessity. The ultimate burden of persuasion stayed with the worker throughout.³

Congress responded with the Civil Rights Act of 1991, which stated that one of its purposes was “to codify the concepts of ‘business necessity’ and ‘job related’ enunciated by the Supreme Court in Griggs v. Duke Power Co.” and to overrule the Wards Cove standard.⁴ The 1991 Act added subsection (k) to 42 U.S.C. § 2000e-2, restoring the burden-shifting framework: the worker demonstrates disparate impact, and the employer must then demonstrate that the practice is “job related for the position in question and consistent with business necessity.”¹ The statute also preserved the worker’s right to propose a less discriminatory alternative.

Where the Doctrine Applies Today

Griggs involved standardized tests and diplomas, but the framework reaches any employment practice that screens people in or out. Hiring criteria, promotion standards, physical fitness tests, interview scoring rubrics, and automated resume-screening tools can all trigger a disparate impact claim if they disproportionately exclude a protected group without a business necessity justification.

Criminal Background and Credit Checks

One of the most active areas of modern litigation involves policies that automatically disqualify applicants with criminal records. Because arrest and conviction rates differ significantly across racial groups, blanket exclusions based on criminal history can create the same kind of built-in headwind Griggs identified. The EEOC’s enforcement guidance states that a neutral policy excluding applicants based on criminal conduct can violate Title VII if it has a disparate impact and is not job-related and consistent with business necessity.⁵

The EEOC distinguishes arrests from convictions. An arrest alone does not establish that a person did anything wrong, so an exclusion based only on an arrest record is hard to justify as job-related. A conviction is stronger evidence, but even conviction-based exclusions need context. The guidance identifies three factors: the nature and seriousness of the offense, the time that has passed since the offense or completion of the sentence, and the nature of the job held or sought.⁵ An employer conducting an individualized assessment on these factors is on much stronger ground than one applying a blanket “no felonies” rule.

Validation and Job Analysis

For any selection tool that produces disparate impact, the employer needs documentation that the tool actually predicts job performance. That usually means a validation study comparing scores against objective measures like productivity, error rates, or supervisor evaluations. The Uniform Guidelines describe several accepted methods: criterion-related studies that correlate test scores with job outcomes, content validation showing the test samples actual job tasks, and construct validation demonstrating the test measures a psychological trait necessary for the work.²

Employers who skip this step are gambling. The lesson of Griggs is that a requirement which sounds reasonable in the abstract can be illegal if it filters out protected groups and nobody checked whether it matters for the job. That applies just as much to a coding test for a software job or a credit check for a warehouse position as it did to the Wonderlic in 1971. Congress wrote the principle into the statute itself in 1991, so it is not going anywhere.⁴

Remedies for a Successful Claim

A winning disparate impact claim under Title VII can produce several kinds of relief. Courts can order injunctive relief, typically requiring the employer to stop using the offending practice. They can also order reinstatement or hiring of excluded workers, along with back pay covering the wages and benefits the worker would have earned absent the discrimination.⁶

Back pay can reach up to two years before the worker filed a charge with the EEOC and continues accruing until judgment. Workers have a duty to look for comparable work during that period, and any earnings from substitute employment reduce the award.⁶ One important limit: compensatory and punitive damages are available only in intentional discrimination cases, not in disparate impact cases. Disparate impact remedies are equitable, aimed at making workers whole and changing the employer’s practices going forward.

1
Office of the Law Revision Counsel. 42 U.S. Code 2000e-2 – Unlawful Employment Practices
2
eCFR. 29 CFR Part 1607 – Uniform Guidelines on Employee Selection Procedures
3
Justia U.S. Supreme Court Center. Wards Cove Packing Co. v. Atonio
4
U.S. Equal Employment Opportunity Commission. Civil Rights Act of 1991 (Original Text)
5
U.S. Equal Employment Opportunity Commission. Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act
6
Office of the Law Revision Counsel. 42 USC 2000e-5 – Enforcement Provisions