Job Bias — Costly Compromise?

By Michael Fumento

Investor’s Business Daily, October 28, 1991
Copyright 1991 Investor’s Business Daily

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The historic, two-year-long political battle between President Bush and proponents of the civil rights bill has finally ended.

"It’s not a quota bill. Read my lips . . . "

After a day of intense negotiations on Thursday, the two sides worked out a compromise version of the bill that both Republicans and Democrats support.

"It is not a quota bill. It is a fair bill. I couldn’t be more happy," Bush told reporters in a press conference on Friday. He said that the compromise legislation will set "a new standard against discrimination."

The bill is expected to pass overwhelmingly when the Senate votes on it Monday night.

The proposed bill may be a watershed for the Democrats — and a disappointment to business.

For the first time in his term, Bush appears to be on the defensive. Recent polls show his popularity waning as the U.S. economic slump continues, and the Democrats last week began pressing for popular middle-class tax cuts.

Democratic Senate Majority Leader George Mitchell accused the president of a sudden reversal on the quota issue, long a sticking point with the Bush administration in approving the new civil rights bill. He said that administration’s claim of compromise was a "Fig leaf to cover his retreat."

The administration had objected to the bill’s original standard of business necessity in employment discrimination cases. Officials argued it would be so difficult for employers to prove that they would end up resorting to hiring by quotas to simply avoid having such cases brought against them.

The compromise language does away with the quota issue from the White House’s viewpoint. It essentially leaves it up to the courts to define the meaning of business necessity. And the business community is by and large pleased with that outcome.

Civil rights activists are pleased with it as well because the bill directs the courts to use the definition they had been using prior to the 1989 Wards Cove Supreme Court decision.

Since the two interest groups disagree on what the prior law was, each believing that it favored their own side, business and civil rights activists both seem to feel that they won on the business necessity issue.

At least someone is a winner with the Civil Rights bill.

Less satisfactory to business, however, is the fact that the new version would still permit jury trials and award punitive and compensatory damages in Title 7 discrimination cases. The award could go as high as $300,000 for big employers, in addition to unlimited past monetary damages.

"It is not a quota bill. But it is certainly a lawyers’ bonanza." said business lobbyist Jeff McGuiness. "Three hundred thousand dollars — that’s a lot of incentive to sue."

"It was never a quota bill," said Tony Califa, a staff attorney with the American Civil Liberties Union, which strongly supported the Democratic proposal.

"All of that was pure raw political rhetoric. The president knew it wasn’t a quota bill, and the proof of the pudding is that now he says it’s not and little has changed" from the Democratic version, Califa said. There is nothing in the legislation calling for quotas, but Janet Fulco, a spokeswoman for the U.S. Chamber of Commerce, said, "In order to prevent a lawsuit from ever arising in the first place, businesses are going to do things, and that’s to make their numbers look correct."

Although she believes the final bill has language more favorable to businesses than the Democratic proposal, she added, "I think that possibility still exists."

Pointing out that litigation can be long and costly, Barbara Berish Brown, an employment law attorney with the Washington firm Paul, Hastings, Janofsky & Walker, said employers might say, "If I don’t want to get to stage one, the only way is to hire enough minorities."

Anti-discrimination laws already on the books have something of the same effect, she said, "but I think when the business community sees that going on already, they’ll ask, ’What will this will do to us now?’"

Initial reaction to the compromise from business groups was negative. The National Federation of Independent Business remains opposed to the bill, and the U.S. Chamber of Commerce issued a statement saying, "We are gravely disappointed."

When David Duke insists on being in your party, it’s advisable to take some pro-civil rights stands.

"The feeling with all the business community people I’ve talked to is that the cost of employment law litigation has just gone up substantially, and that’s disappointing," McGuiness said.

Still, even business lobbyists conceded that the legislation is a major improvement on last year’s civil rights proposal.

Bush vetoed last year’s civil rights bill, sponsored by Sen. Edward Kennedy, D-Mass., calling it a quota bill, and he had threatened to do the same thing again this year.

The Senate sustained Bush’s veto last time, and up until a few days ago it looked as if he still had enough votes to keep his opponents from being able to override another veto of a civil rights bill.

The administration’s successful characterization of the proposal as a quota bill and the public’s overwhelming opposition to such a bill had the civil rights bill’s supporters on the defensive for most of this past year.

But the political tide on the issue shifted with the Senate hearings into charges of sexual harassment against Bush’s Supreme Court nominee, Clarence Thomas.

The heightened public attention that was suddenly being given to women’s issues made it seem more politically risky for lawmakers to vote against the civil rights bill, which would permit women to win monetary damages for sexual discrimination cases for the very first time.

Bush was also concerned with his party’s image on race after former Ku Klux Klan member David Duke won a run-off spot on the Republican gubernatorial ticket in Louisiana.

It was enough to make Republican support for Bush’s position in the Senate falter. "We didn’t want to vote against what could be perceived as a women’s issue," said an aide to one Republican senator.

A group of five GOP senators went to the White House on Wednesday to tell the president that he couldn’t take their votes on the issue for granted.

Not only were they concerned about the issue of sexual discrimination, but they didn’t want to be put in the position of having to oppose fellow Republican Sen. John Danforth, R-Mo., who has taken over this year as the lead senator pushing for a civil rights bill.

Seeing that it might not be able to hold onto the number of votes it would need to sustain a veto, the White House began negotiating with Danforth and other Senate Republicans and Democrats the next day. They finally reached agreement around 11 p.m. Thursday.

Danforth, who sponsored Thomas’ Supreme Court nomination in the Senate, didn’t let the ugly battle he’d just had with civil rights groups opposing Thomas stop him from aligning with them on the civil rights bill just two weeks later, as many observers speculated it might.

Adding to both sides’ willingness to compromise was the feeling that after having wallowed in sleaze during the Senate hearings into the sexual harassment charges against Thomas, the Senate needed to take the high road to restore its public image. Thus there was more than the usual eagerness to rise above partisan politics.

"Congress itself decided it was time to cut a deal and to hell with what the civil rights groups thought and to hell with what the business community thought," said McGuiness.

As for winners and losers, the compromise appears to be a draw. "I don’t know who won or lost. There’s still too much blood on the floor," said one GOP Hill staffer.

Anita Hill: A secret weapon for backers of the job bias bill?

The one clear winner is Danforth, who in the past two weeks has gotten a Supreme Court nominee on the bench and a civil rights bill.

There appears to be no consensus as to what the effect of the new act will be on hiring.

The new law will "absolutely" encourage a large amount of new litigation, Brown asserted. "I consider myself a reasonable person, but I think a lot of the provisions, including those not debated a lot, will make it far easier for suits to be filed and pursued," she said.

Also, "I think punitive damages will make it harder to settle cases," she said.

Fulco agreed, noting, "There’s no question" there will be considerably more litigation. But the ACLU’s Califa said, "I would doubt this would amount to much litigation increase at all.

"What we’ve found in our research is that it’s very hard to get a lawyer to take a case, and (the new act) doesn’t change that," said Califa.

Califa agreed, however, that the provision granting money awards for sexual harassment "may bring a small number of suits. Sexual harassment is a very important and widespread problem in this society, and the last thing a lot of (harassed women) want is to get their job back."

One limit on litigation is that the legislation allows for dollar limits on awards for sexual harassment and sexual discrimination. This could limit incentives for both potential plaintiffs and lawyers.

But Kennedy has vowed to overturn this restriction with later legislation, and constitutional scholar Bruce Fein of Bruce Fein & Associates in Great Falls, Va., observes that the Supreme Court may declare unconstitutional a provision allowing a cap for sexual discrimination but not for racial discrimination.

The upshot could be that one of the few litigation dampeners in the act would be removed.

Another potential source of litigation, said Brown, is that expert witnesses were formerly paid at the same rate as ordinary witnesses. Now they will be paid much more.

Much of the controversy concerns the "business necessity" defense which allows a hiring standard that results in a disparate impact if the employer can show that it was related to the position in question and consistent with business necessity.

Fulco said that regardless of whether the definition of business necessity is "more favorable to business" than it could have been, "It’s still going to take court interpretation, and that will prompt litigation."

Perhaps the only thing that is certain is that there will be a great deal of uncertainty.

Said Fein, "if employers knew with any sureness what kind of earmarks were necessary (to constitute business necessity) they would probably hire themselves out as an employer services company advising other people."

Senate Bill at a Glance

  • Partially offsets rulings that made it harder for victims of job discrimination to sue and collect damages.
  • Reverses decisions that made it harder for employees to sue employers for practices that seem fair but have the effect of screening out certain groups.
  • Reinstates a decision that lets plaintiffs bring such "disparate impact" cases. Sets standards for employers to meet in defending those practices, and places the burden of proof on them.
  • Bars "race norming," or the adjustment of job-related tests to boost scores for certain groups.
  • Permits victims of intentional sexual discrimination, including sex harassment, to seek compensatory and punitive damages, up to fixed limts. Victims of racial bias would still be eligible for unlimited damages.

Read Michael Fumento’s additional work on the law and on politics.