Unemployed applicant + no job offer = discrimination?!?

In a public meeting last week, the U.S. Equal Employment Opportunity Commission (EEOC) examined the impact of employers considering only those currently employed for job vacancies.

Do those employers who won’t consider unemployed individuals for vacant positions engage in unlawful discrimination?

Find out, after the jump (or just watch my baby son dunk like Blake Griffin — slow to load, but worth the wait)…

Excluding unemployed individuals may be discriminatory.

Among those who testified at the public meeting was Helen Norton, Associate Professor at the University of Colorado School of Law. Professor Norton opined that the relationship between employment status and job performance is “decidedly weak.” Accordingly, “blanket reliance on current employment serves as a poor proxy for successful job performance.”

Fatima Goss Graves, Vice President for Education and Employment of the National Women’s Law Center, noted that employers who exclude unemployed individuals from the applicant pool make it harder for those individuals to find work. ***Thank you, Captain Obvious***

Two others testified that an employer’s unwillingness to hire unemployed individuals could have a disparate impact not only on minorities who represent a higher percentage of the jobless market; namely Blacks, Hispanics, and Native Americans, but also on both disabled and older individuals. Others buttressed this conclusion with statistics showing that certain minorities do, in fact, represent a higher percentage of the jobless market.

But are employers really screening out unemployed job candidates?

James Urban, a partner at the Jones Day law firm, who practices labor and employment law and represents employers, testified that he has not encountered a business that automatically excludes unemployed individuals from the applicant pool. This is because employers “want to capture all qualified candidates” — unemployed or not. He added that, “The reason the employer may decline to hire the applicant will be the underlying reason the applicant became unemployed, and typically it is job-related.”

Mr. Urban added that even if employers were excluding unemployed individuals for job openings, to establish that the practice had an unlawful disparate impact on a particular protected class, the national Bureau of Labor Statistics unemployment averages do not meet the EEOC’s threshold for disparate impact.

Fernan Cepero, representing the Society of Human Resource Professionals (SHRM), testified that, “in SHRM’s experience, screening out the unemployed is not an effective practice. Given the high cost of hiring new employees, HR is always focused on keeping turn-over low and retaining those employees in whom you’ve invested.”

Mr. Cepero added, “SHRM is unaware of a widespread practice or trend to exclude unemployed individuals from consideration for available jobs. Employers, in SHRM’s experience, whether operating in the currently challenging economy or in more robust times, are focused on finding the right people for the job, regardless of whether or not they are currently employed.”

Takeways for employers

Like Messrs. Urban and Cepero, I haven’t encountered an employer who has intentionally excluded unemployment candidates from job searches. Employer invest a lot of money into job searches and excluding what could be the best candidate for the job, e.g., someone who was recently laid off or re-entering the job market, sounds like bad business to me. That said, this issue is obviously on the EEOC’s radar and employers who do intentionally exclude unemployed individuals from a job search may be rolling the dice with having to defend a potential disparate impact claim. Win or lose, the cost of defense may dwarf the benefit, if any, to narrowing job searches to exclude unemployed individuals.