The Seventh Circuit Court of Appeals recently dealt a set-back for set-aside programs implemented by Cook County, Illinois. Builders' Assn. of Greater Chicago v. County of Cook, F. Supp. 2d 1087 (N.D. Ill. 2000), aff'd, 256 F.3d 642 (7th Cir. 2001), involved a Cook County ordinance that required a minimum of 30 percent of the dollar value of public works contracts awarded by the county to go to minority-owned business enterprises (MBE) and at least 10 percent of the value of such contracts to be awarded to women-owned business enterprises (WBE.) Commonly known as M/WBEs, these favored groups are defined as enterprises at least 51 percent owned by minority or female members.

Earlier federal court rulings have held that a race, ethnicity or gender-preferred policy does not infringe upon the equal protection of the laws if it is a remedy for intentional discrimination committed by the public entity that is according the preferential treatment and discriminates no more than is necessary to accomplish the remedial purpose. City of Richmond v. J.A. Croson Co., 488 U.S. 469, 491-92 (1989); Builders' Assn., 256 F.3d 642, at 643-44. Public entities justify remedial provisions on the theory that they themselves are vicariously responsible for the prior discriminatory practices of the private contractors. See Croson, 488 U.S. at 492.

Minority-favored programs

In order to promulgate and enforce rules that favor women and minorities, the public entity must present evidence that reveals a systematic exclusion of qualified M/WBEs. Croson, 488 U.S. at 509. To justify a race-based preference program, Croson demands that a public entity show:

* that qualified members of a M/WBEs are being denied the opportunity to participate in contractual opportunities offered by the public entity because of their race;

* that the situation presents the "extreme case" of discrimination so systematic that redress of particular discriminatory acts would be insufficient to prevent harm to other members of the harmed class;

* that a pattern of racial discrimination exists and that there is "strong evidence" to support the pattern; and

* that the set-aside program is narrowly tailored to remedy the specific discriminatory practice.

Builders' Assn., 123 F. Supp. at 1092. Additionally, a race-favored remedy is acceptable only if the public entity itself intentionally discriminated against the favored group(s) or the public entity is charged with eliminating private discrimination, Builders' Assn., 256 F.3d at 644, or was a "passive participant" in the discrimination, Croson, 488 U.S. at 492. It is essential that the public entity identify the alleged discriminatory practice(s) with specificity. Id. at 504. Race discrimination, even if it is discrimination against white, male business owners, triggers a strict scrutiny review of the remedial program. Id. at 505. Strict scrutiny requires that the public entity provide a compelling public interest for the program and a narrowly tailored means of achieving the objective. Id.

Gender-favored programs

Programs that favor WBEs (i.e., gender-favored programs) trigger a less strict standard known as "intermediate scrutiny." U.S. v. Virginia, 518 U.S. 515, 533 (1996.) Under "intermediate scrutiny," a public entity must present an important government interest coupled with a substantially related means of achieving the objective. Id. To state it differently, the public entity must find and show an "exceedingly persuasive justification for the action." Id. Although the differences between the two levels of scrutiny may seem great, the chasm has been characterized by the court as "vanishingly small." See Builders' Assn., 256 F.3d 642, at 644.

The law within the Seventh Circuit

In the Builders' Association case, the county presented statistical evidence that highlighted the disparity between M/WBE subcontracting jobs in county construction projects (governed by M/WBE requirements) and M/WBE subcontracting jobs in the private sector. Although the numbers alone may have exhibited prima facie evidence of discriminatory practices implemented by private contractors, both the district court and the Seventh Circuit Court of Appeals found the county's reliance on the statistical effects of the ordinance to be flawed. Seventh Circuit Judge Richard Posner rejected the county's theory by pointing out that an increase in M/WBE involvement in public jobs through the set-asides pushes non-M/WBEs to move to the private sector; thus, the numbers will be forever distorted. Builders' Assn., 256 F.3d 642, at 647. Furthermore, the court noted that the remedy for correcting past discrimination against blacks sweeps too broadly when it favors Asian-Americans and women over non-minorities.

The M/WBEs argued that the contractors did not invite them to bid on private jobs and numerous witnesses recounted tales of rejection by contractors throughout the area. Builders' Assn., 123 F. Supp. at 1113. The non-M/WBEs countered with evidence and testimony indicating that all bids, even unsolicited bids, were considered for subcontracting opportunities. Id. Finding in favor of the non-M/WBEs, the district court said, "[n]ot receiving an invitation to bid is not the same thing as being denied the opportunity to bid." Id.

Do not call it a set-aside

Under a State of Illinois competitive bidding statute, counties are required to select the "lowest responsible bidder." See Court Street Steak House, Inc. v. County of Tazewell, 163 Ill. 2d 159, 162, (1994) (citing 55 Ill. Comp. Stat. 5/5-1022). Similar statutes govern other types of public entities such as municipalities, park districts and school districts. Competitive bidding statutes are intended to prevent favoritism, fraud, and extravagance in securing a contract. Id. at 165. These statutes do not require a public entity to award the contract to the lowest bidder, but rather, permit a public entity, in the exercise of discretion, to award a contract in the public's best interest. S.N. Nielsen Co. v. Public Bldg. Comm'n, 81 Ill. 2d 290, 299 (1980).

The Illinois Supreme Court has held that a public body may consider the financial and social responsibility of the bidder, as well as the bidder's ability to perform the work. Id. More specifically, a public entity could consider the affirmative action efforts of the bidders. Id. In a similar vein, it is reasonable for a public entity to base a decision to award a contract on a bidder's practice of providing a valuable service to the community. In Court Street Steak House, the Illinois Supreme Court concluded that the contractor's training of mentally handicapped people validated the county's decision to award the county jail food service contract to that contractor rather than to the plaintiff, who was the lowest responsible bidder. 163 Ill. 2d at 167.

It bears mentioning that the public entity in S.N. Nielsen implemented a canvassing formula that deducted dollars from a bid for credits earned in the employment of minorities. 81 Ill. 2d at 292. In upholding the formula, the Supreme Court of Illinois concluded that "the capacity to assure a performance which complies with anti-discrimination laws is reasonably a part of the standard of a best or responsible bidder on a contract involving the expenditure of public funds. Accordingly, a bidder for a construction contract to be awarded by a public body of this state may be required to assure, by appropriate promises contained in contract provisions or related instruments, nondiscrimination in employment in the entire performance of the contract." Id. at 301. This approach, however, does not rely on specific percentages. Moreover, this standard would not require the hiring of any MBEs. It would also be difficult to monitor and evaluate.

Advice for the future

Government entities desiring to promote a more balanced participation by women and minorities in public contracting might be well advised to observe the following guidelines:

* Avoid establishing precise percentages as a condition to the award.

* Avoid naming specific minority groups

* Characterize the program or policy as a "goal" or require a "promise of attempted compliance" rather than imposing quotas.

* Request and maintain statistics of contractors where possible so that the goal does not continue to be pursued to the point of imbalance to the clear detriment of non-minorities.

* Be able to identify a "proper concern for the welfare of the community" if, in the contract award, the lowest responsible bidder is not selected.

While these measures may seem insufficient to qualify as a meaningful remedy for correcting prior injustices, there is a real risk of a successful challenge if a public body takes the aggressive route adopted by Cook County in Builders' Association. In the event the public body desires to pursue such a route, however, homework is necessary. The employer must gather relevant statistics to document the prior decision, hold public hearings, be prepared to acknowledge its own participation in the discriminatory practices, and articulate further findings that will survive the test of logic.

Seventh Circuit rejects gender discrimination claim in Indiana worker's reassignment to the night shift

A woman who was reassigned to supervisory duties on the night shift failed to prove that the reassignment constituted gender discrimination under Title VII, the Seventh Circuit Court of Appeals recently held. Grube v. Lau Industries, 257 F.3d 723 (7th Cir. 2001.)

Diann Grube brought suit against Lau Industries for transferring her to the second shift in 1997 after she returned to work from a medical leave. Although Grube resigned from the company rather than accept the transfer, she alleged that the reassignment amounted to a constructive discharge.

In a decision written by Judge John L. Coffey, the Seventh Circuit indicated that a mere change in working hours does not "rise to the level of creating a condition so unbearable as to allow an employee to quit and then bring a claim of constructive discharge ..." Id. at 728.

Grube asserted that the company "'preyed upon [her] wifely instincts' knowing that she would choose to quit so that she could take care of her husband rather than accept a transfer to the second shift." Id. at 728-29. Her counsel further suggested at oral argument that Grube's transfer to the second shift "was deliberately designed to make her working conditions intolerable because she could no longer be a dedicated wife and caregiver for her husband and because a female's income tends to supplement a family income, rather than provide the principal source of funds (and a male's income tends to be the primary family income.)" Id. at 729.

The court said that if it accepted this analysis, "any transfer of a married female employee to a less desirable work assignment could serve as the basis for a Title VII claim." Id. Moreover, the court said, the arguments were antithetical to Title VII's goal of preventing gender discrimination.

Grube urges this court to take a position that, rather than eradicating gender stereotypes that pervade the workplace, instead reinforces them. That is because Grube's theory is itself based upon a gender-specific stereotype--that women should be the family caregivers and should remain at home during the evening hours ... Title VII simply was never intended to be used as a vehicle for an employee to complain about the hours she is scheduled to work or the effect those hours have upon the time an employee spends with family members.

Id. As a factual matter, the court also noted that although Grube's husband had been ill, he had returned to work and did not require medical care at the time of Grube's reassignment.

Even if Grube had been able to establish that she was constructively discharged, the court said that Lau Industries had offered a legitimate, nondiscriminatory reason for the transfer. The company's evidence showed that Grube had been selected for reassignment because she was "not one of [Lau's] strongest supervisors" and that it was critical to keep their best supervisors on the first shift.

Grube contended that her supervisor "developed an animosity towards her" because "he had been shown up by a subordinate female employee" as a result of her boldness. The court, however, found Grube's comments to be pure speculation and insufficient to demonstrate pretext.