The U.S. Supreme Court recognized that Title VII included disparate impact claims in its decision in Griggs v. Duke Power (1971; see LegalSpeak, p. 228). The case involved a claim by 13 African-American employees at Duke Power Co. who claimed that two requirements for transfer to a better division within in the company discriminated against them and others (they filed a class action suit on behalf of all African-American employees) on the basis of race. The employer—who years before had refused to hire African-Americans except for manual labor jobs—instituted two policies for transfer to the better divisions after the passage of Title VII. Any employee seeking transfer had to either have a high school education or have passed a general intelligence test.

Evidence in the case showed that neither requirement was imposed on white employees already within certain divisions. Evidence also established that neither requirement was substantially related to good job performance. For example, there were white employees who had no high school education or passed such an intelligence test who performed very well in these departments.

In oft-cited language, Chief Justice Warren Burger wrote: “The Act proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation. The touchstone is business necessity. If an employment practice which operates to exclude Negroes cannot be shown to be related to job performance, the practice is prohibited.”