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UNITED STATES EEOC v. WARSHAWSKY & CO.

July 11, 1991

UNITED STATES EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff,
v.
WARSHAWSKY AND COMPANY and TEAMSTERS UNION LOCAL 781, Defendants



The opinion of the court was delivered by: HART

 WILLIAM T. HART, UNITED STATES DISTRICT JUDGE

 I. FACTS

 Defendant Warshawsky & Company ("Warshawsky") had a written paid sick leave policy that required all employees to work at least one year before they were eligible for sick leave. Warshawsky discharged those first-year employees who required long-term sick leave. In January of 1986, a discharged Warshawsky employee filed a discrimination charge with plaintiff United States Equal Employment Opportunity Commission ("EEOC") claiming that she had been denied sick leave and discharged because of a disability due to pregnancy. At the time of discharge, the employee had not yet completed one year of employment. On March 8, 1990, after an administrative investigation, EEOC brought the present suit claiming that Warshawsky's sick-leave policy discriminated against pregnant first-year employees in violation of Title VII of the Civil Rights Act of 1964, as amended by the Pregnancy Discrimination Act of 1978 (the "PDA").

 Employment figures relating to the first-year sick-leave policy show that from January, 1985 to March, 1989 Warshawsky discharged 53 first-year employees pursuant to the sick-leave policy. A breakdown by sex reveals that 50 of the discharged employees were female and only 3 male. Of the 50 female employees discharged, 20 were pregnant. During the same time period, Warshawsky employed 1,105 female first-year employees and 773 male first-year employees.

 Both parties are now before the court on cross-motions for partial summary judgment. *fn1"

 II. TITLE VII -- EMPLOYMENT DISCRIMINATION

 Title VII of the Civil Rights Act of 1964, as amended, forbids employment discrimination because of race, color, religion, sex or national origin. 42 U.S.C. §§ 2000e to 2000e-17 (Supp. 1991). Section 2000e(k), added in 1978, defines "because of sex" to include pregnancy, childbirth or related medical conditions. *fn2" Pregnancy Discrimination Act, § 701(k), 42 U.S.C. § 2000e(k) (Supp. 1991). Under the statutory scheme, the EEOC may bring a Title VII suit against an employer "engaged in an industry affecting commerce who has 15 or more employees." See 42 U.S.C. §§ 2000e(b); 2000e-5(f)(1). EEOC can bring a Title VII action on behalf of a class of employees without certification of a class action under Federal Rule of Civil Procedure 23. General Tel. v. EEOC, 446 U.S. 318, 64 L. Ed. 2d 319, 100 S. Ct. 1698 (1980). There are several forms of Title VII cases including: disparate impact; disparate treatment; retaliatory discharge; and constructive discharge. In the present case, EEOC alleges both "disparate impact" and "disparate treatment."

 A disparate impact suit is one in which an employee alleges that a facially neutral employment practice "in fact falls more harshly on one group than another and cannot be justified by business necessity." International Bd. of Teamsters v. United States, 431 U.S. 324, 335 n. 15, 52 L. Ed. 2d 396, 97 S. Ct. 1843 (1977). In a disparate impact suit, proof of discriminatory intent is not required. The focus is on the consequences of the employment practice, not the motivation. Griggs v. Duke Power Co., 401 U.S. 424, 432, 28 L. Ed. 2d 158, 91 S. Ct. 849 (1971). Plaintiff must present "enough evidence to warrant a finding that, more likely than not, the challenged test, criterion, or practice had a disparate impact." Allen v. Seidman, 881 F.2d 375, 380 (7th Cir. 1989). In addition to showing statistical disparities, to establish a prima facie case plaintiff must identify "the specific employment practices that are allegedly responsible for any observed statistical disparities." Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 994, 101 L. Ed. 2d 827, 108 S. Ct. 2777 (1988). If plaintiff establishes a prima facie case of disparate impact, then defendant must show that the challenged practice "serves, in a significant way, the legitimate employment goals of the employer." Wards Cove Packing Co., Inc. v. Atonio, 490 U.S. 642, 658-59, 104 L. Ed. 2d 733, 109 S. Ct. 2115 (1989).

 1. Statistical Analysis

 The Supreme Court set forth the standard for analyzing statistical evidence in Hazelwood School Dist. v. United States, 433 U.S. 299, 53 L. Ed. 2d 768, 97 S. Ct. 2736 (1977), a race discrimination case. The Court held that the appropriate statistics compared the racial composition of the relevant labor market with the racial composition of those effected by the facially neutral policy. The two proportions must then be compared by statistical means to determine whether there is any statistically significant difference. If a statistically significant difference is found, an inference of discrimination may be drawn. See also Dothard v. Rawlinson, 433 U.S. 321, 53 L. Ed. 2d 786, 97 S. Ct. 2720 (1977) (statutory height and weight requirements had a disparate impact on women). The Seventh Circuit has stated that standard deviations over three are significant and standard deviations between two and three should be looked at with caution. See Coates v. Johnson & Johnson, 756 F.2d 524, 536-48 (7th Cir. 1985). EEOC challenges Warshawsky's one-year sick-leave policy claiming that the policy has a disparate impact on pregnant first-year employees. There is no material dispute between the parties as to the relevant facts concerning the number of first-year employees who were fired because of the sick-leave policy. The dispute between the parties focuses on the proper statistical model to be used to determine disparate impact in a "pregnancy discrimination" case. EEOC defines the "protected group" as all pregnant first-year employees and bases its claim upon a statistical comparison between the percent of pregnant first-year employees who were discharged because of the policy (95.2% -- all except one) and the percent of all non-pregnant first-year employees who were discharged because of the policy (1.8%) (See table below). GROUP TOTAL # FIRED % FIRED Pregnant Employees 21 20 95.2% Non-Pregnant Employees 1,858 33 1.8% Standard Deviation = 25.3 Warshawsky disputes this computation and argues that the protected group is all pregnant first-year employees who required sick leave and the non-protected group as all non-pregnant first-year employees who required sick leave. (See table below). GROUP TOTAL # FIRED % FIRED Pregnant Employees who required leave 21 20 95.2% Non-Pregnant Employees who required leave 33 33 100.0% Standard Deviation = 1.27

 Warshawsky's model is inappropriate to determine whether a disparate impact in fact exists concerning pregnant employees because it does not take into account the different impact of the leave policy on all pregnant and non-pregnant employees. Disparate impact analysis recognizes that not all employees are similarly situated and, thus, a facially neutral employment policy may effect one group more than another because of the differences in the group. For example, in Griggs v. Duke Power, 401 U.S. 424, 28 L. Ed. 2d 158, 91 S. Ct. 849 (1971), the United States Supreme Court held that an employer's high school diploma requirement, which did not have an adequate business justification, had a disparate impact on the hiring of black applicants because fewer black applicants had high school diplomas. In that case, the disparity focus was between all black applicants and all white applicants -- not between all black applicants who did not have a high school diploma and all white applicants who did not have a high school diploma. Had the analysis been of the latter, as Warshawsky argues it should have been in this case with respect to pregnant and non-pregnant employees requiring leave, there would have been no disparate impact. *fn3" The EEOC's model, however, is also incorrect. By comparing "pregnant" and "non-pregnant" employees, disparate impact may be shown when none exists. To illustrate the problem, if Warshawsky had fired only four of the first-year pregnant women, but had allowed sick leave for the other seventeen, the analysis would be as follows: GROUP TOTAL # FIRED % FIRED Pregnant Employees 21 4 19.0% Non-Pregnant Employees 1,858 33 1.8% Standard Deviation = 5.66 n4

  Had 17 of the 21 pregnant employees received sick leave, the facially neutral policy would not have a disparate impact on pregnant women. Yet, applying EEOC's statistical analysis would result in a finding of disparate impact. *fn5" EEOC does not cite any case, and this court has not found any, in which a statistical model has been used to show disparate impact in a "pregnancy discrimination" case. ...


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