Hospitals, as employers, should be aware of the changes that the Civil Rights Act of 1991 will bring to employment discrimination law.  The bill recently passed both the Senate and the House of Representatives.  President Bush has indicated that he would sign the bill.  Once signed, the new law would take effect immediately.

            The new civil rights law will make it easier for workers to sue their employers for employment discrimination.  The law is seen as an attempt by Congress to counter a series of 1989 Supreme Court decisions that restricted the ability of workers to bring and prevail in employment discrimination suits. 

            The new law will expand the number of groups who could receive compensatory and punitive damages in an employment discrimination suit.  Previously, only workers claiming racial discrimination could collect compensatory or punitive compensation.  The new civil rights law will allow employment discrimination suits based on the worker's gender, religion, national origin or disability to award punitive and compensatory damages to the plaintiff.  Up to now, if a women or disabled person sued his or her employer for discrimination, the only remedies available were reinstatement and back pay.  Now these groups of employees will be able to receive compensation for "pain and suffering",  medical costs incurred due the discrimination and the like.

            However, unlike racial employment discrimination suits, the new punitive and compensatory damages allowed in gender, disability, religion and national origin cases will be capped.  Employers with less than 15 workers will be exempted from the law.  For employers with 15 to 100 workers the cap will be $50,000; between 101 and 200 workers, $100,000; between 201 and 500 workers, $200,000; and over 500 workers, $300,000.

            The new law will also shift the burden of proof in cases involving "unintentional" discrimination from the employee to the employer.  Unintended discrimination addresses those seemingly neutral practices of an employer which have a "disparate impact" on the employee.  A company seniority system or mandatory job test are examples of employment practices that have been subject to lawsuits as "unintentional" discrimination because of their negative impact on minorities or women.  What constitutes "disparate impact" is not specified in the bill and will be left to the courts to determine on a case-by-case basis.

            In 1989, the Supreme Court held that in order to prevail on a claim of "unintentional" bias the employee had to prove that the practices in question were not a "business necessity".  This case overruled a 1971 Supreme Court decision which held that the employer had the burden of proof in demonstrating that its practices which unintentionally worked to the disadvantage of minorities or women were justified by business necessity.  The new law will shift the burden of proof back to the employer, who must prove that the practices at issue are necessary.

            The bill describes a necessary business practice as one that "must bear a significant relationship to the successful performance of the job".  Thus, under the new civil rights law, if an employer is sued on the basis of "unintentional discrimination", that employer would have to prove that the business practice leading to the unintended discrimination  bore a significant relationship to the employee's successful performance of the job.

            The new civil rights law does not restrict its scope to hiring, but extends its coverage to promotion and dismissal.  Also, in the wake of the Judge Thomas/Anita Hill hearings, an amendment has been added that includes sexual harassment into the types of activities for which compensatory and punitive damages are allowed.

            "What impact will this new civil rights law have on hospitals"?  "Should hospitals as employers change their employment practices because of this new law"?  While the new civil rights law does not embrace sweeping changes in employment practices, its impact will be felt by many employers.  The additional groups eligible for punitive and compensatory damages will no doubt increase the amount of employment litigation that currently exists.  Further, the additional costs that could be incurred by employers in a lawsuit may encourage certain hospitals, especially small to middle size facilities, to settle cases rather than risks large jury awards.  Thus, hospitals should be increasingly aware of the potential liability of employment discrimination and educate their management as to the law's parameters.

            The shifting of the burden of proof in "unintentional" discrimination cases should cause hospitals to carefully review their job practices to ensure that such a lawsuit is unlikely.  Hospitals should be aware that common employment practices such as seniority systems and job tests which are facially neutral may be subject to litigation as "unintended" discrimination.  Hospital management needs to anticipate such problems and create and maintain comprehensive records regarding their employment practices.  The absence of such documentation is very damaging to the employer in a discrimination case.  Furthermore, for any employment practice which could inadvertently work to disadvantage minorities, women or the disabled, hospital management needs to be prepared to prove that such practice is a "business necessity".  The time to make this type of preparation is the present, not after you are subjected to an employment discrimination lawsuit.


Healthcare Law, Litigation & Public Policy   Medical Licensure & Discipline ♦ Employment Board of Registration

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The new Civil Rights Act's Impact on Hospitals

by Attorney Frank E. Reardon

November 1991