Is “Being Unemployed” the Next Protected Class? (4/11)

You probably are aware that your employees are protected by numerous civil rights laws prohibiting discrimination based on such characteristics as race, sex, ethnic origin, religion, color, age, disability, military status, and most recently, genetic information.  Now, the Equal Employment Opportunity Commission (EEOC) is examining another trait – a person’s unemployed status.  On February 16, 2011, the EEOC held hearings to examine, according to a press release announcing the hearings, “the practice by employers of excluding currently unemployed persons from applicant pools, including in job announcements.”  Apparently, the EEOC was reacting to recent news stories providing anecdotal reports of employers that required job applicants to be currently employed to be considered for a position.  In the hearings, the EEOC Chair, Jacqueline A. Berrien stated “Today’s meeting gave the Commission an important opportunity to learn about the emerging practice of excluding unemployed persons from applicant pools.”  However, the EEOC did not provide any statistical evidence showing whether this issue is a wide-spread practice or is used by just a few employers.      The experts testifying generally fell into two categories.  On one side were several employee rights advocates who uniformly expressed their concern that the practice was becoming “fairly common” (though, again, no one had any statistics on this issue) and would adversely affect the disabled, minorities, older workers, and women in particular.  On the other side were two employer representatives who both indicated that were unaware of any widespread practices where employers excluded applicants simply because they were unemployed and emphasized the employers typically consider many factors in their hiring process, including current employment status.        So what do these hearings mean for employers?  Although the EEOC did not specifically indicate what it would be doing with the information from the hearings, clearly, the agency is watching the issue and may take action to address it in the future, for example by issuing a policy guidance for employers.  As a practical matter, though, since federal employment discrimination laws do not specifically protect the rights of the unemployed, the agency has limited power to prohibit employers from excluding the unemployed from jobs.  However, the laws do protect against “disparate impact” discrimination.  Under the theory of disparate impact discrimination, an employee alleges that an otherwise neutral employment practice affects a protected group disproportionately and cannot be justified by business necessity.  So, for example, it is possible that a policy requiring job applicants to be currently employed could be discriminatory if it excluded members of protected classes in greater numbers, such as people who are over 40, female, or disabled.  The EEOC can take action against an employer with a policy against hiring the unemployed if it can show that the policy has a disparate impact on a protected group.  In addition, a bill has been proposed in the House of Representatives, H.R. 1113, which would amend Title VII of the Civil Rights Act to prohibit employers from discriminating against individuals based on their unemployment status.      Accordingly, your most prudent policy is to not exclude applicants unilaterally who are not currently employed or who have not been employed for a certain period of time to prevent the possibility of having a disparate impact on a particular protected group.  That said, though, it still is a legitimate hiring practice to consider past employment, periods of unemployment, and reasons for unemployment (i.e., a reduction in force versus a termination for poor performance), just as you do other job-related hiring criteria such as skill sets and experience.