Unemployed Applicants in the Hiring Process: Ensuring Proper Treatment and Documentation

Of course your company’s policy is not designed to discriminate against unemployed job applicants or exclude them from the hiring process, but with a soft job market and today’s regulatory environment, a blanket nondiscrimination policy may not be enough.

The combination of high unemployment rates and increased governmental scrutiny of hiring practices, particularly with regard to unemployed job applicants, means that employers should review their hiring processes with a specific eye on the outcomes for unemployed applicants.

The regulatory environment is trending toward higher levels of scrutiny around hiring practices as they relate to the currently unemployed. In 2011 alone, there have been several legal developments that are indicative of this larger trend.

In February, the Equal Employment Opportunity Commission held a hearing “to examine the practice by employers of excluding currently unemployed persons from applicant pools.” The news release stated, “Today’s meeting gave the commission an important opportunity to learn about the emerging practice of excluding unemployed persons from applicant pools.”

Testimony from several experts indicated that the use of current employment status to distinguish candidates in the hiring process was on the rise and was likely to have a disparate, adverse impact on minority and disabled job applicants.

Then in March, Rep. Hank Johnson (D-Georgia) introduced the Fair Employment Act of 2011 that would amend the Civil Rights Act of 1964 to protect against discrimination on the basis of employment status.

In May, the U.S. Office of Federal Contract Compliance Programs requested revisions to the data it collects for compliance evaluations of federal contractors that include a listing of all applicants and hires during the year for each job title and each job group. This revision is part of a broader increase in OFCCP review of employment practices.

In June, a New Jersey law took effect that outlaws job advertisements requiring applicants to be currently employed.

Even if company policy does not prohibit or restrict hiring unemployed candidates and provides for an individualized assessment of each applicant’s employment history, hiring rates of unemployed applicants may nevertheless be lower for legitimate reasons. Further, this might impact hiring rates for minorities or the disabled because these groups have higher unemployment rates.

Suppose unemployed, unsuccessful applicants come forward and charge they were not hired because of their unemployment status. They will likely allege that, despite the absence of any written policy, hiring managers abide by an “unwritten policy” to exclude unemployed applicants. In essence, the “proof” is in the data.

To prepare for this type of claim, a company must first capture the information necessary to respond to such a claim and then assess the data patterns that already exist between applicants’ employment status, hiring outcomes and protected characteristics. Below are four questions, and corresponding actions, that can help your company:

1. How well are noninterview/nonhire reasons documented to establish that unemployment was not a factor?

• Accurate disposition codes are always important, but even more so given the large number of applications received in a soft job market.

Action: Review documentation of hiring process outcomes to ensure that all nonhires are properly identified with an accurate, valid reason.

2. What feedback is provided to unsuccessful applicants?

• The conveyance of accurate, timely and appropriate feedback to unsuccessful applicants can avoid erroneous conclusions and inaccurate allegations.

Action: Provide prompt, valid reasons for nonselection that are consistent with the disposition codes/documentation, especially for unsuccessful applicants who progress through the initial stages of the hiring process.

3. How well are job offers vs. hires (i.e., accepted offers) documented?

• Because the cost of applying over the Internet is low, as the economy improves many job applicants selected by your company will have interviewed for positions or received job offers from other companies. Consequently declined job offers and interview requests are likely to be more prevalent.

Action: Review employment offers and decisions to ensure that all offers and decisions are documented and that declined offers are correctly recorded.

4. Is unemployment status correlated with being hired?

• Although not collected explicitly, this information is likely available from the current/previous employment listing(s) on your company’s employment application.

Action: Given the availability of this information to the EEOC—and others who can review your employment applications—it is prudent to examine, under the direction of legal counsel, the relationship between unemployment status, hiring and protected status in advance of litigation or an EEOC inquiry.

In a time when unemployment and frustration with the job search are high and regulatory agencies are tightening their grip, it is important for companies to fully comprehend the implications of their hiring and record-keeping practices for protected groups. The evidence, both for the plaintiff and for the defense, will lie in the data.

Workforce Management Online, July 2011 — Register Now!