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New type of hiring discrimination claim in works


WASHINGTON—The Equal Em-ployment Opportunity Commission is expected to take action that could range from a policy statement to test litigation that would challenge employers that hire only people who are employed, say observers.

With some speakers at the EEOC's recent hearing claiming there are employers that hire only the employed, which results in a disparate impact on protected groups, some observers say the EEOC's interest in the issue could also spark litigation by plaintiffs attorneys, who may seek class action status.

But observers say few employers have such policies, and they question the likely success of litigation.

Experts say employers can best protect themselves by eliminating these policies if they have them (see story, page 20).

At the Feb. 15 hearing, the EEOC heard conflicting testimony as to whether employers consider only the employed for job vacancies, with employer representatives asserting that few firms do so.

Many employment attorneys say they have never encountered such a blanket policy among clients, and that they make little business sense because they eliminate potentially attractive candidates.

However, Paul C. Evans, a partner with law firm Morgan Lewis & Bockius L.L.P. in Philadelphia, said while he has never had a client with such a policy, nor has he advised a client to implement one, “I do think the EEOC will look to see whether or not employers are de facto, even without an explicit policy, precluding or eliminating from consideration” those who have been out of work for long periods of time when filling jobs.

The EEOC commissioners are “going to take a very close look at all the information that came out of the meeting, and we'll see if and how the commission proceeds,” an EEOC spokeswoman said. “At this point, there's been no talk of doing anything. There are a number of possibilities, including putting out guidance” on the issue, she said.

Mike Aamodt, principal consultant with Washington-based DCI Consulting Group Inc., said when the EEOC holds open meetings on such a subject, typically “it's kind of a signal they think something is going on, and I would not be surprised if a couple of test cases are filed.”

As an example, observers noted that the EEOC held a hearing in October on using credit checks in vetting job applicants. Two months later, it sued Chicago-based Kaplan Higher Education, alleging it refused to hire a class of black job applicants nationwide because of their credit history.

Laura Sack, a shareholder with law firm Vedder Price P.C. in New York, said because of the EEOC's interest in the hiring issue, it will be “easier to go forward, to get the EEOC's attention with this kind of a claim, than it would have been in the past.” Bringing a class action suit “would certainly make it more worth their while,” she said.

While acknowledging unemployment has a disparate impact on protected groups, many observers say it would be difficult if not impossible to establish the next step—that employer hiring of only the employed disparately impacts protected groups.

“It can be hard to isolate what factor or factors lead to an employer's decision not to hire someone,” said Ms. Sack. “It can be difficult to prove that the person that was hired wasn't more qualified.”

“Many people are looking at it as the EEOC pushing the envelope as far as it could possibly be pushed” in how broad the nation's law is in this area, said Gerald L. Maatman Jr., a partner with Seyfarth Shaw L.L.P. in Chicago. “It's not going to be received very well in a court.” The EEOC's theory that employers are not hiring the unemployed, which is having a disparate impact on protected groups “just doesn't hold water,” he said.

Jerrold F. Goldberg, a shareholder with law firm Greenberg Traurig L.L.P. in New York, said, “I think the problem for the plaintiffs bar is going to be putting together these statistics” to establish their case.

“Demonstrating that there is a statistically significant difference in hiring between a protected group and a nonprotected group, and putting together that kind of data for this kind of discrimination, would be pretty difficult to do,” Mr. Goldberg said.

James S. Urban, a partner with law firm Jones Day in Pittsburgh, who testified at the EEOC hearing on employers' behalf, said plaintiffs “are going to have to show—and it'll be very fact-intensive—that a particular employer had this screening mechanism in place” and it caused a disparate impact on protected classes, whether it was blacks, Hispanics or females. Employers will “be able to come back pretty hard” to defend themselves against statistical evidence, he said.

Experts say the EEOC also could issue a policy statement on the issue, perhaps in addition to filing litigation.

“What will likely come out of it will be some kind of either enforcement guidance or some sort of policy statement from the EEOC that the use of employment statutes in hiring is presumed to have a disparate impact,” said Jonathan T. Hyman, a partner with law firm Kohrman Jackson & Krantz P.L.L. in Cleveland.

Fernan R. Cepero, human resources vp at the YMCA of Greater Rochester in Rochester, N.Y., who spoke at the hearing on behalf of the Alexandria, Va.-based Society for Human Resource Management, said he hopes the EEOC will work with SHRM in developing best practices in this area.