Recruiting on the Right Side of the Law

By Fay Hansen

May. 23, 2006

Abercrombie & Fitch engaged in “creative” recruiting to fill sales jobs with candidates who matched the company’s carefully constructed marketing image. The high-profile clothing retailer staffed its stores with handsome young white men and touched off a lawsuit that ultimately cost the company $50 million and a barrage of bad publicity. More than 10,000 applicants and employees received their checks for damages in December 2005 after Abercrombie settled the suit.

    Although companies generally operate in a heightened state of awareness about the potential for discrimination charges during terminations, the possibility of lawsuits arising from the recruiting process draws less attention. But faulty recruiting and hiring procedures can generate claims from unsuccessful applicants. In addition, employees who initiate lawsuits often reach all the way back to the hiring process to show systemic practices.

    Objective sourcing and selection standards are the key to staying on the right side of the law, but many recruiters are still working with subjective criteria. “Creative” evaluation techniques and the ever-popular “best fit” explanation for selecting candidates can invite discrimination charges.

    Abercrombie recruited for a certain “look.” Some recruiters go on a “gut feeling” about candidates or search for a match with the corporate “culture.” It’s a subtle landscape, but red flags pop up along the way.

    The Equal Employment Opportunity Commission filed the lawsuit against Abercrombie for using image-driven recruiting and hiring practices that led to the exclusion of minorities and women and limited their employment. As part of the settlement, Abercrombie agreed to hire 25 diversity recruiters, set benchmarks for hiring women and minorities, overhaul its recruiting procedures and end recruiting at fraternities, sororities and certain colleges. A court-ordered monitor will evaluate the company’s recruiting practices for at least five years.

    Damage to the company’s reputation exceeded the direct dollar costs of the settlement.

   “When a discrimination charge is filed, applicants are making one of the most serious charges anyone can make short of a criminal accusation,” notes Eric Dreiband, who was general counsel for the EEOC when the agency moved against Abercrombie. “They are charging that their civil rights have been violated. People fight over money all the time, but a discrimination charge goes to the integrity and reputation of the employer.”

    Companies with large, sophisticated staffing functions are more vulnerable than they may think. On March 29, the EEOC filed a lawsuit against UPS on behalf of a Rastafarian who was told he would have to shave his beard to be hired as a driver helper. Two days later, it filed a national class-action sex discrimination lawsuit against Lawry’s Restaurants Inc. on behalf of male applicants who allege they were systematically rejected for jobs as food servers.

    Applicants and employees file more than 75,000 charges with the EEOC each year and the agency pursues more than 400 full-fledged lawsuits annually.

    “Any midsize or large employer will experience some form of discrimination claim through the EEOC or state law,” says Dreiband, who is now a partner at Akin Gump Strauss Hauer & Feld in Washington, D.C.

Setting objective standards
    Abercrombie & Fitch was seeking a particular “look” for its sales force in a retail setting, which is not inherently unlawful. “But if recruiters use a subjective or ‘creative’ component in the hiring process, the employer must carefully review the results for disparate impact,” Dreiband warns. “The company needs to consider whether this ‘creative’ component breeds discrimination. At Abercrombie, it created a group of employees who were young, lily-white males.”

    Employers must use objective standards for selecting candidates. To the extent that these criteria may have an adverse impact on a specific group of applicants, the employer must ensure that the criteria are job-related and be prepared to demonstrate their relevance. Otherwise, the company is open to charges that it uses artificial standards to screen out a particular group.

    “In addition, for any element of subjective decision-making, the employer should involve multiple people in the hiring process, preferably of diverse gender and race,” Dreiband advises. “This provides a more defensible position than using one decision-maker.”

    The nuanced skills and capabilities that a growing number of jobs require make it more difficult to set sharp parameters for selection.

    “But general statements used to explain selection, such as the successful candidate was a ‘better fit,’ are almost becoming code for a potentially discriminatory practice,” warns Margaret Edwards, shareholder at the San Francisco office of Littler Mendelson, the largest employment law firm in the country.

    Subjective screening and selection criteria often rest on speculation about customer preferences or how a candidate will perform on the job.

    “It is not inherently unlawful to not hire someone on the basis of speculation, but speculation is a first cousin to stereotyping, and screening out candidates on the basis of stereotypes is where employers get into deep trouble in the hiring process,” Edwards notes. “Engaging in subtle assumptions about applicants or customer preferences can lead to charges of discrimination.”

Ending speculation
    A common example of stereotyping occurs when applicants are rejected as “overqualified.”

    “This presents a conundrum for employers,” Edwards says. “The employer may look at a highly experienced person with a tremendous résumé, and assume that the person will have no interest in a lower position, or will only keep it until he finds something better.”

    The assumption may be true.

    “However, case law says that a person who is overqualified is, by definition, qualified, so the person cannot be rejected on that basis,” Edwards cautions. “The rejection must therefore be based on other criteria.”

    She advises employers to avoid screening out seemingly overqualified candidates.

    “If a person is truly qualified but not hired, the candidate may assume that age discrimination occurred,” she warns.

    The best solution is to call the candidate in and ask why they are interested in a position for which they seem overqualified.

    “They may honestly be looking for a career change or less responsibility,” Edwards notes. “If there is evidence that the candidate has been job hopping, then you are no longer simply speculating about whether they will stay in the job.”

    One of the earmarks of hiring discrimination is a selection process that is inconsistent or does not match the actual pattern of decision-making when someone reviews the entire pool of candidates. “For example, the employer may state that an applicant was not hired because of insufficient experience, but the successful candidate had less experience,” Edwards says. “The reason given can be interpreted as a pretext for discrimination if it is not true or appears to be contradictory.”

    Kathleen O’Toole, director of employment law and litigation management for Milwaukee-based Manpower Inc., advises companies to drop the use of terms such as “best fit.”

    ” ‘Fit’ is a difficult word that can be a mask for discrimination,” she says.

    Recruiting and hiring on the basis of a “gut feeling” must go as well.

    “It opens the employer to discrimination charges and makes it far more difficult to reconstruct the selection process and explain why the candidate was hired,” O’Toole notes. “The story is harder to tell.”

    The required qualifications must make sense to the EEOC and its equivalents at the state level.

    “They are looking for a simple, fair process that treats all applicants the same,” O’Toole says. “It is HR’s responsibility to make sure that recruiters and hiring managers can articulate objective, neutral reasons for selecting an applicant.”

    Edwards advises companies to issue a policy that prohibits recruiters, hiring managers and HR staff from engaging in conversations with unsuccessful candidates about why they were not hired.

    “Although HR staff may be well versed in the problems generated by these conversations, direct calls to hiring managers are where many mistakes are made,” she says.

Beginning at the beginning
    Although lawsuits typically hit after an applicant has been rejected, the conditions that can lead to a discrimination charge often exist long before the first résumé arrives.

    “Employers need to invest more time before they even begin the hiring process,” says Juliann H. Panagos, member at law firm McGlinchey Stafford in Houston.

    “Specifically, they need to prepare a completely accurate, current job description that lists the essential functions of the job and the required and desired qualifications.”

    The employer must preset these job requirements before posting the position. Panagos reminds employers that there is no potential for a lawsuit from any applicant who does not meet the stated job-related requirements.

    Crafting a job description based on objective standards is a critical preventive step.

    “For example, if the position requires work on one Saturday every month, state that clearly in the job description,” Panagos advises. “If you do, an employee who is fired for not working on those Saturdays cannot charge discrimination based on religious beliefs. If the job requires climbing stairs, state that in the job description. Then you are protected from an employee in a wheelchair who claims discrimination based on a disability.”

    Panagos notes that the courts generally will not second-guess an employer on the requirements for a job.

    “The law gives deference to employers in preparing the job description,” she says. “If the requirement can be linked to a business reason, it will generally hold up.”

    Even if a discrimination claim is without merit, employers must respond, typically by assembling documents, interviewing all the participants in the hiring process, and then presenting all the relevant material to the government.

    “A discrimination charge is very disruptive,” Dreiband says. “It heightens anxiety and emotions and generates morale problems. Even when the actual dollar amounts that may be at stake are relatively small, a discrimination charge raises questions about racism and bigotry.”

    The EEOC is now devoting greater resources to pursuing systemic discrimination cases, which can generate awards that run into hundreds of millions of dollars. The new EEOC initiative is another good reason to ensure that recruiters and hiring managers rely on objective standards instead of a more expedient but potentially more costly subjective approach.

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