Financial Costs as a Defense to an Employment Discrimination Claim

The article discusses under what circumstances an employer's financial costs are relevant to a claim of employment discrimination. The article discusses both disparate treatment and disparate impact claims, using four hypotheticals to analyze the issues. The article concludes that while potential financial costs should never be recognized as a defense to intentional discrimination motivated by stereotyping or customer preference, courts should take costs into account in other contexts. If an employer attempts to establish a BFOQ and the plaintiff claims that the employer could hire her if it restructured the environment, hired more employees, or made other changes involving some expense, courts should examine whether the proposed expenditures are reasonable in light of all the circumstances. To aid in the analysis, courts could look to the reasonable accommodation and undue hardship concepts under the ADA. In these situations courts may expect employers to undergo significant costs but the employer will not have to demonstrate that it is faced with financial ruin. The article concludes, however, that disparate impact cases are different. When there is no intentional discrimination, the employer should have to show that a challenged practice significantly serves the employer’s legitimate business interest. Such interests could include cost savings and efficiency, so long as these savings are more than de minimis. Similarly, an employer should not have to adopt a suggested alternative employment practice if the employer would have to spend a significant amount of money to adopt the practice. In analyzing these disparate impact problems, courts could look to the reasonable accommodation and undue hardship concepts in the cases and regulations involving religious discrimination.