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Can an Employer Refuse to Hire the Unemployed?

I recently had a consultation with an executive recruiter who stated that he recommended a specific worker to one of his corporate clients. However, after numerous interviews, the company decided not to hire this particular worker, simply because she was unemployed. Discrimination against the unemployed is rampant. Certain employers will not consider applicants who have been unemployed for more than six (6) months; while other jobs ads explicitly require applicants to be "currently employed," at the time of application. As of today, only Washington D.C. has a law making it illegal to discriminate against the unemployed. Oregon and New Jersey currently ban discriminatory language in job listings but not the practice of excluding unemployed applicants. Several other states are considering legislation on similar measures; including allowing unsuccessful applicants to sue under the same discrimination laws that apply to race or gender bias. However, it is unclear whether state laws would have much impact. New Jersey's law has been in place since 2011, and to date only one company has been cited for violations. As part of the ill-fated American Jobs Act in 2011, President Obama proposed banning job ads that discourage the unemployed and giving spurned job-seekers a way to file claims with the Equal Employment Opportunity Commission ("EEOC"). The Bill, however, did not make it through Congress. In Colorado, a House Bill forbidding employers from stating in job postings that unemployed candidates would not be considered was struck down in 2012.

In February 2011, the EEOC held hearings on the legality of excluding the unemployed from consideration for jobs, recognizing that unemployment has an elevated impact on certain groups such as older workers, workers of color, women, or other protected groups. The review attempted to determine whether or not the impact on those workers reaches the statistical standard of significance to be considered a "disparate impact." Disparate impact occurs when the employer applies a uniform requirement, such that all employees hired for a certain position must pass a test or possess a certain qualification, which disproportionately excludes people having certain protected characteristics. If the test excludes the workers to a significant degree, and there is no adequate business reason for using the test, or an alternative would have a less severe impact, then its use is unlawful.

Among other things, the EEOC considers the eighty percent (80%) test to determine if a company's selection system has a significant adverse impact on a minority group. For example, if XYZ Company hired fifty percent (50%) of the men who applied and only twenty percent (20%) of the female applicants, the rate of hiring female applicants would be only forty percent (40%) (20 divided by 50) of the rate of hiring male applicants which would be below eighty percent (80%) and may be discriminatory. In regards to unemployment, according to statistics reviewed by the EEOC, the unemployment rate for Hispanics was eleven point nine percent (11.9%) and Caucasians was eight percent (8%). Stated another way, 88.1% of Hispanics are employed and 92% of Caucasians are employed. Using the eighty percent (80%) test, the employment rate for Hispanics is ninety five percent (95%) (88.1 divided by 92) of the rate for Caucasians and would not meet the standard of significance for disparate impact.

While the EEOC found that the correlation between current employment as a sign of quality performance is decidedly weak and that blanket reliance on current employment serves as a poor proxy for successful job performance, it declined to consider the unemployed as a protected class or to recognize a disparate impact caused by the failure to hire the unemployed. If you have a question about best hiring practices or were not hired due to being unemployed, contact us at www.BryanKuhnLaw.com/ to discuss your legal rights.

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