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A Focus on Unemployment Status Could Create Liability

On September 12, 2011, President Obama delivered the American Jobs Act to the United States Congress with the hope that its passage would stimulate economic growth and alleviate unemployment.  The American Jobs Act includes the Fair Employment Opportunity Act of 2011 (the “Act”), which would provide expansive rights and broad protections to the unemployed.  The Act states, “Congress finds that denial of employment opportunities to individuals because of their status as unemployed is discriminatory and burdens commerce by . . . reducing personal consumption and undermining economic growth . . . .”   The proposed Act contains provisions that are very similar to proposed legislation that was previously introduced in Congress. (S. 1471 and H.R. 2501).

Under the Act, covered employers would be prohibited from publishing any advertisements for jobs that purport to disqualify unemployed individuals.  The Act would also make it unlawful for an employer not to consider or hire an individual because of that person’s status as unemployed.  It would also be illegal for an employer to direct an employment agency to take an individual’s unemployment into account when considering that individual or making referrals for employment.  Employers would, however, still be able to consider an individual’s employment history and examine the reasons for his or her unemployment.  Fines for violating the Act would include liquidated damages of up to $1,000.00 for each day’s violation plus attorneys’ fees and costs.

State governments have also shown a willingness to protect the unemployed.  New Jersey recently enacted a law that attempts to limit discrimination based on unemployment status, outlawing job advertisements that bar unemployed workers from applying.  Similar proposals are reportedly being considered in other states such as New York, Michigan and Illinois.

The Equal Employment Opportunity Commission conducted a hearing in February 2011 that addressed whether discriminating against the jobless might be illegal because it disproportionately hurts older people and African Americans.

Suffice it to say, these issues are on the radars of those who are attempting to protect the unemployed.  Employers should pay careful attention to these developments.  If the Act passes as written, private employers should review their hiring procedures and any instructions given to employment agencies used for referrals or temporary workers.  As a part of the hiring process review, employers should implement procedures to document the reasons a particular candidate was/was not hired and should avoid using unemployed status as a factor.  Even if the proposed Act does not pass, there could still be a claim for disparate impact if unemployed status is a screening criteria used by an employer.  It is possible that the pool of unemployed applicants for the position could include a disproportionately high number of minorities, older workers or women, thus giving rise to a disparate impact claim.