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Supreme Court Cases customer discrimination by smx43008

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									 Supreme Court Cases: customer discrimination

• Dias vs Pan Am (1971)
• Celio Diaz applied for a job as flight cabin attendant
  with Pan American Airlines in 1967. He was rejected
  because Pan Am had a policy of restricting its hiring
  for that position to females. Pan Am argued that
  customers preferred female flight attendants.
• Court ruled customer preference was not a bona fide
        Supreme Court Cases: Marriage, fertility
• UAW v. Johnson Controls (1991)
   – Court rules illegal a company policy barring all women of
     childbearing age from jobs involving actual or potential exposure
     to lead in amounts exceeding OSHA recommended levels. Women
     who wanted to work in these positions were required to submit
     medical documentation of inability to bear children.
   – More generally, marital status must be shown to be a BFOQ and
     must apply equally to men and women
• G.E. vs Gilbert (1976)
   – Pregnancy was excluded from company disability plan. Ruling
     stipulates that pregnancy must be treated the same as any other
     medical condition.
   – 1978 Pregnancy Discrimination Act
         Supreme Court Cases: Seniority

• Franks vs Bowman Transportation (1976)
  – If discrimination led protected groups to lose
    seniority, Court can give retroactive seniority

• Teamsters vs U.S. (1977)
  – Retiractive seniority can only a[ply to
    discrimnatory behavior that occurred after the
    1964 passage of Title VII
     Supreme Court Cases: Physical Stuture

• Dothard vs Rawlinson (1977)
  – After being denied employment as a correctional
    counselor because of inadequate weight, Dianne
    Rawlinson brought a class action against appellant
    corrections officials challenging the statutory height and
    weight requirements (5’-2” to 6’-10”; 120-300 lbs.). The
    standards excluded 41% of the female population but less
    than 1% of the male population.
  – The prison failed to show that workers outside the stature
    requirements could not meet the requisite strength
    requirements, and so they did not meet the standards of a
    legitimate BFOQ. However….
     Supreme Court Cases: Physical Stuture

• Dothard vs Rawlinson (1977)
  – … Alabama’s four maximum-security male penitentiaries
    did not classify or segregate inmates according to their
    offense or level of dangerousness. The estimated 20% of
    the male prisoners who are sex offenders are scattered
    throughout the system, and the facilities were essentially
    dormitories. The use of women as guards in "contact"
    positions under the existing conditions in Alabama
    maximum-security male penitentiaries would pose a
    substantial security problem, directly linked to the sex of
    the prison
           Supreme Court Cases: Layoffs

• Firefighters v. Stotts (1984)
   – Layoffs based on seniority are ok, even if they lay
     off protected groups disproportionately
   – Exception if low seniority was due to past
  Supreme Court Cases: Pensions and Benefits

• City of Los Angeles v. Manhart (1978)
   – Court ruled illegal the Department's pension plan was
     based on mortality tables and its own experience showing
     that female employees had greater longevity than male
     employees. The cost of a pension for the average female
     retiree was greater than for the average male retiree
     because more monthly payments had to be made to the
     female, and so women were charged 15% more for the
   – Department had to reimburse the past extra payment
  Supreme Court Cases: Pensions and Benefits

• Arizona Governing Committee vs. Norris (1983)
   – Under the State’s retirement plan, employees had the
     option of receiving retirement benefits from one of several
     companies selected by the State, all of which pay lower
     monthly retirement benefits to a woman than to a man
     who has made the same contributions.
   – Court ruled that payments had to be equal.
   – OK for firm to pay out dollar value at retirement
   – OK for firm to pay into retirement plan that worker
     controls (401K).
    Supreme Court Cases: Sexual Harassment

• Meritor Savings Bank vs Vincent (1986)
   – After being fired by Meritor Savings Bank, Mechelle Vinson
     sued for damages saying that she had been subjected to
     sexual harassment that constituted a hostile working
     environment. Sidney Taylor, VP, had coerced her to have
     sexual relations, had touched her in public, exposed
     himself, …
   – Court ruled that sexual harassment is a violaton of Title VII
     if it is unwelcome and sufficiently severe or pervasive to
     alter the conditions or privileges of employment.
    Supreme Court Cases: Sexual Harassment

• Harris vs Forklift Systems Inc (1993)
   – Teresa Harris had worked for two years as rental manager. She filed a
     complaint alleging that the company's president, Charles Hardy, had
     created a hostile work environment by, among other things, calling her
     names and asking her to retrieve coins from his front pants pocket. A
     federal district court in Tennessee had found that Harris was not
     protected by Title VII since she had not suffered any psychological
     injury on the job.
   – Court ruled that it was not necessary to show psychological damage or
     that job performance had suffered. Furthermore,
   – The measure to be used in such cases was whether the harassment
     had the effect of altering the conditions of the working place, a
     condition or privilege of employment.
     Supreme Court Cases: Sexual Harassment
• Burlington Industries, Inc. v. Ellerth (1998)
   – From March 1993 until May 1994, Kimberly Ellerth was a salesperson
     in one of Burlington’s divisions in Chicago. She alleges, she was
     subjected to constant sexual harassment by her supervisor, one Ted
   – According to Slowik’s supervisor, his position was “not considered an
     upper-level management position,” and he was “not amongst the
     decision-making or policy-making hierarchy.” Ellerth did not argue that
     the supervisor or other higher managers were aware of Slowik’s
   – an employee who refuses the unwelcome and threatening sexual
     advances of a supervisor, yet suffers no adverse, tangible job
     consequences, can recover against the employer without showing the
     employer is negligent or otherwise at fault for the supervisor’s actions.
                  Other Stipulations

• Advertising jobs
• Education
• Arrest and conviction records
• Credit rating
• Age: comes under the Age Discrimination in
  Employment Act. People over 40 covered.
• State protective laws covering hours, lifting weights,
  occupations, …superseded by Title VII
   Title VII as a response to discrimination in
              internal labor markets
The Act and subsequent court cases have
  created a manual on what firms can and
  cannot do in hiring, compensation,
  promotion, and other conditions and
  privileges of employment.

Example: Handout from SHRM on legal
  questions in interviews
   Anti Discrimination Legislation
Affirmative Action: Executive Order (1965, 1968,
Requires that contractors take
• "affirmative action to ensure that applicants are
  employed, and that employees are treated during
  employment without regard to their race, color,
  religion, sex, or national origin."
• 1971: "set numerical goals and timetables … to
  correct deficiencies."
 Affirmative Action coverage and requirements
• Federal contractors, subcontractors and
  educational institutions
• 50+ workers and/or $50,000+ in contracts
  – Firms must compare their own mix of workers by
    occupation against the mix in the labor market
    (local for less skilled, national for more skilled)
  – Identify underrepresentation
  – Set goals and timetables
  – Good Faith Effort
         Affirmative Action Enforcement
• Office of Federal Contract Compliance (OFCC)
  – Reviews plans vs. statistical data on relevant
  – Checks for Good Faith Effort to make progress on
  – Penalties
     •   Back pay and mandated corrections
     •   Delayed contracts
     •   Debarments
     •   Federal court ordered plans with contempt of court
         possible for noncompliance
     Supreme Court Cases: Voluntary quotas

• Bakke vs University of California at Davis (1978)
   – UC Davis reserved 16 of 100 slots in the medical school for
   – Bakke had higher GPA and MCAT scores than some
     admitted minorities

   – Supreme Court ruled that absent evidence of past
     discrimination, ongoing quotas violate Title VII.
   – Note: quotas may be mandated as a corrective action in
     cases where discrimination is found.
   – Minority status can be used as a factor in admission
      Supreme Court Cases: Voluntary quotas

• Steelworkers vs Weber (1979)
  – Only 2% of Kaiser Aluminum’s skilled craft workers were Black,
    even though the population around Kaiser’s plants were 39%
  – Kaiser entered into a master collective bargaining agreement
    including an affirmative action plan, reserving for black
    employees 50% of the openings in in-plant craft training
    programs until the percentage of black craft workers matched
    that in the local workforce.
  – Several more junior Black workers received training ahead of
    more senior White workers.
       Supreme Court Cases: Voluntary quotas
• Steelworkers vs Weber (1979)
  – Brian Weber, one of those white production workers, instituted a
    class action suit alleging discrimination against Whites.
  – Supreme Court overturned lower court rulings favoring Weber
     • Title VII does not prohibit voluntary race‐conscious affirmative action
       where it is necessary “to eliminate conspicuous racial imbalance in
       traditionally segregated job categories”
     • the affirmative action plan was voluntarily adopted by private parties to
       eliminate traditional patterns of racial segregation, and Weber was
       represented in the negotiation by his union.
     • Plan was temporary to correct imbalances
     • Plan did not displace incumbents
     • Plan did not unduly impede majority
      Supreme Court Cases: Voluntary promotion
• Johnson vs Santa Clara County Transportation Agency
   – Transportation Agency created an affirmative action plan to
     bring about representation equal to the labor force proportions
     of women, minorities, and disabled. While program was justified
     as redressing past harm to groups facing discrimination, the
     Agency had not been accused of discriminatory practice.
   – Paul Johnson applied for a promotion to a skilled craft worker
     category. Although he scored highest on the evaluation process,
     the promotion went to Diana Joyce.
   – Johnson sues alleging violation of Title VII.
     Supreme Court Cases: Voluntary promotion
• Johnson vs Santa Clara County Transportation Agency
• Supreme Court rules against Johnson
   – voluntary sex‐conscious affirmative action does not violate Title VII where
     it is necessary to eliminate a “manifest imbalance that reflects
     underrepresentation of women in ‘traditionally segregated job categories’
   – Plan recognized gender as only one of several factors in decisions about
     hiring and promotion.
   – temporary means to overcome past discrimination against workers based
     on sex.
   – The Agency Plan did not unnecessarily trammel male employees' rights or
     create an absolute bar to their advancement.
 Texas 5th District on Admissions Preferences
• Hopwood vs. Texas (1996)
  – Cheryl Hopwood, a white female, alleged that she was
    denied admission to the University of Texas Law School
    despite being better qualified than many admitted
    minority candidates.
  – 5th Circuit ruled that race cannot be used explicitly as a
    factor in admissions.
  – U.of Texas changed admissions policies. Fdor
    undergraduates, they admit the top 10% of each high
    school class. For Law, preference for lower income
  – Because U.of Texas no longer maintained the policy,
    Supreme Court refused to rule on the case.
              Impact of Hopwood

       U of Texas freshman Admissions
               Black     Hispanic Asian     White
Pre-Hopwood 4%      14%         15%     65%
Post-Hopwood3%       14%        20%     61%
               Supreme Court: University Admissions

• Grutter v. Bollinger (2003)
   – Barbara Grutter, a white Michigan resident with a 3.8 GPA and 161 Law School
     Admissions Test (LSAT) score, was rejected by the University of Michigan Law
     School. She alleged that the university had discriminated against her on the
     basis of race in violation of the equal protection clause of the Fourteenth
     Amendment to the United States Constitution and Title VII of the Civil Rights
     Act of 1964.
   – Court rule that Title VII "does not prohibit the law school's narrowly tailored
     use of race in admissions decisions to further a compelling interest in obtaining
     the educational benefits that flow from a diverse student body."
                Supreme Court: University Admissions

• Gratz v. Bollinger (2003)
   – The University of Michigan used a 150-point scale to rank applicants, with 100
     points needed to guarantee admission. The University gave
     "underrepresented" ethnic groups, including African-Americans, Hispanics, and
     Native Americans, an automatic 20-point bonus on this scale, while a perfect
     SAT score was worth only 12 points.
   – Jennifer Gratz and Patrick Hamacher, both white residents of Michigan, applied
     for and were denied admission to the University of Michigan’s undergraduate
     program in liberal arts.
   – Court ruled that, because the University's use of race in its current freshman
     admissions policy is not narrowly tailored to achieve respondents' asserted
     compelling interest in diversity, the admissions policy violates the Equal
     Protection Clause of the Fourteenth Amendment.
EEOC enforcement
                                                                             In 1973, sex-
                                                                             rose to 32% for
                                                                             the first time

Claudia Goldin, Understanding the Gender Gap: An Economic History of American Women, 1990
Title VII of the Civil Rights Act of 1964 (Title VII)
The Americans with Disabilities Act of 1990 (ADA)
The Age Discrimination in Employment Act of 1967 (ADEA)
The Equal Pay Act of 1963 (EPA)
               Types of EEOC case resolutions
• Administrative Closure Charge closed for failure to locate charging
  party, charging party failed to respond to EEOC communications,
  charging party refused to accept full relief, closed due to the outcome
  of related litigation, charging party requests withdrawal of a charge
  without receiving benefits or having resolved the issue, no statutory
• Merit Resolutions Charges with outcomes favorable to charging
  parties that include negotiated settlements, withdrawals with
  benefits, successful conciliations, and unsuccessful conciliations.
• No Reasonable Cause EEOC determines no reasonable cause to
  believe that discrimination occurred based upon evidence obtained
  in investigation. The charging party may exercise the right to bring
  private court action.
The "rapid charge processing" program introduced by
EEOC Commissioner Eleanor Holmes Norton in 1977
sought quick settlement of cases prior to full investigation.
This program relied on no-fault settlement agreements
with the agency in return for payment of some money or
other benefit to the charging party. Allowed EEOC to focus
on large class action suits
       Large external impact as lesson to ther firms

Her successor Clarence Thomas implemented a full
investigation policy. All charges were to be fully
investigated to a determination of "reasonable cause" to
believe that there had been a violation of the law or a "no
reasonable cause" determination. Emphasis shifts to
individual cases with identifiable victims.
             Small external impact
Mediation: has been widely praised by both charging
parties (i.e., employees) and respondents (i.e., employers)
as an effective and efficient way to resolve their
employment discrimination disputes and increasing the
likelihood that the parties can continue an employment
EEOC Budget and FTEs: Constraints on enforcement

 Fiscal Year                     Budget, millions                  Full-time workers
 2001                            $317                              2,899
 2002                            311                               2,766
 2003                            322                               2,578
 2004                            325                               2,455
 2005                            327                               2,353
 2006                            327                               **2,343
 2007                            *323                              NA
  *Proposed **As of Dec. 2005
  SOURCES: Office of Management and Budget, Office of Personnel Management
  Washington Post, June 14, 2006
    Enforcement of Affirmative Action

•Debarments rarely used: 27 in first 20
years of Affirmative Action
   – Most reinstated within one year

•Staffing is too small to investigate all
firms, although most checks are electronic
Impact on Hiring and Qualifications
Average skill in the absence of hiring preferences would be μ in each sector. Suppose
instead that Federal Contractors have a preference for hiring protected classes (P). They
lower hiring standards qP for P and only hire white males (WM) if they are atypically
strong, (qWM or higher). NonFederal sector hires everyone who does not get a job in the
Federal Contractor Sector, and so average white male skills there are also higher

         Federal Contractors                      NonFederal Contractors

                qP        qWM                      μP μWM
                                    Skill                                    Skill
Should have average qualifications of white males
  exceeding that of other groups in the Federal
  Contractor sector.

Same will be true in the noncontractor sector as
  Federal Contractors will bid away the best protected
  class workers away from noncontractors.

Does this happen? Evidence is mixed

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