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Meeting of February 16, 2011 - EEOC to Examine Treatment of Unemployed Job Seekers

Written Testimony of Helen Norton
Associate Professor
University of Colorado School of Law

Good morning, Chair Berrien and Commissioners Ishimaru, Feldblum, Barker, and Lipnic. Thank you for the opportunity to join you today to discuss the potential legal implications of employers’ exclusion of currently unemployed workers from consideration for job opportunities.

Apparently this is not an isolated practice, as a sampling of recent job announcements reveals that employers have required applicants for a wide range of jobs to be currently employed as a condition of further consideration. These jobs include freight handlers, restaurant managers, sales representatives and other salespersons, litigation associates, mortgage underwriters, electrical engineers, apartment maintenance technicians, and executive assistants.1

Other witnesses today will explore the relevant demographic trends and other data that suggest this practice’s potential to impose a disparate impact on the basis of race, sex, national origin, age, or disability. My testimony today seeks not to draw any definitive conclusions, but instead to identify a number of questions and concerns raised by this practice with respect to federal antidiscrimination law.

Disparate treatment issues:

As you know, federal antidiscrimination law includes prohibitions on intentional discrimination on the basis of race, national origin, sex, color, religion, age, and disability. There are at least two situations where an employer’s current-employment requirement would trigger such concerns. First, an employer who imposed this requirement on some workers and not others based on protected class status would have engaged in impermissible disparate treatment ­ - if, for example, an employer required female but not male applicants to be currently employed as a condition of further consideration. Second, an employer who used current unemployment as a surreptitious means of excluding applicants based on protected class status would also have engaged in illegal disparate treatment – if, for example, an employer intentionally used a current-employment requirement to screen older workers or workers with disabilities.

Disparate impact issues:

Current-employment requirements are perhaps more likely to raise concerns about impermissible disparate impact discrimination. As you know, the Supreme Court and Congress have long made clear that Title VII prohibits both disparate impact and disparate treatment discrimination as complementary components of the Civil Rights Act’s commitment to equal opportunity in the workplace. Employment practices that impose an unlawful disparate impact – i.e., measures that disproportionately exclude protected class members from job opportunities without adequate justification -- frustrate Title VII’s objectives in at least two ways. First, employment practices that disproportionately disadvantage protected class members without any meaningful relationship to successful job performance may sometimes conceal an employer’s intent to discriminate.2 Second, even absent an employer’s discriminatory intent, employment practices that impose a disparate impact often reflect unexamined assumptions and stereotypes about the skills and capabilities that predict successful job performance.3

For these reasons, the Supreme Court has long held that Title VII prohibits both disparate impact and disparate treatment discrimination.4Congress confirmed its intent to prohibit both disparate treatment and disparate impact discrimination as unlawful barriers to equal employment opportunity when it codified Title VII’s disparate impact standard in the Civil Rights Act of 1991.5The ADA6 and ADEA7 also prohibit disparate impact as well as disparate treatment discrimination.

The Plaintiff’s Burden of Establishing Adverse Impact

Plaintiffs seeking to establish illegal disparate impact discrimination must start by demonstrating that the challenged practice causes an adverse impact based on protected class status.8 There are a number of ways in which plaintiffs can make such a showing.

Labor market (or “labor pool”) analysis is especially appropriate when the challenged practice likely skews the actual applicant pool by deterring potential applicants who realize that they cannot satisfy the requirement in question.9 This would be the case, for example, when a job announcement expressly lists “current employment” among the requirements for the job: faced with such an announcement, many prospective applicants who are not currently employed will simply not bother to apply.

Under this analysis, the qualified labor market represents those in the relevant geographical area (i.e., the area from which the employer draws workers for the position in question) who otherwise possess the relevant job qualifications.10 Labor market analysis compares the selection rate for protected class members who comprise the qualified labor market with that of the comparator class in that market. Consider, for example, a school located in a certain metropolitan area that requires applicants for teaching positions to be currently employed. To determine whether this practice has an adverse impact against African-Americans, we might compare the percentage of African-American teachers (i.e., those with the requisite teaching credential) in the metropolitan area who are currently employed with the percentage of currently employed white teachers in the metropolitan area. The plaintiff has established the requisite adverse impact if the difference between those two percentages is statistically significant11 or satisfies the 80% rule.12

If the employment practice in question is instead used as a screen later in the process (e.g., if an employer does not require current employment as a condition of application, but instead screens applicants who are not currently employed later in the decision making process), applicant flow analysis may be more appropriate. Applicant flow analysis compares the selection rate under that requirement for protected class members who apply for the position with that of the comparator group. Again, if the difference between the two percentages is statistically significant or satisfies the 80% rule, then the plaintiff has established the requisite adverse impact.

The demographic data offered by other witnesses today suggests that a current-employment requirement has the potential to impose an adverse impact in a number of contexts. Of course, the outcome of any adverse impact analysis will depend on the job in question, the geographical area from which the employer draws candidates for this job, and the characteristics of the relevant labor market and applicant pool.

The Employer’s Burden of Justifying Practices Shown to Impose Adverse Impact

A plaintiff who proves that a practice imposes an adverse impact as described above has established a Title VII or ADA violation if the employer (or employment agency13)then “fails to demonstrate that the challenged practice is job related for the position in question and consistent with business necessity.”14Even if the employer so demonstrates, the plaintiff will still prevail if he or she can prove the availability of a less discriminatory employment practice that achieves the employer’s interest in selecting individuals who can successfully perform the job in question.15

By requiring careful examination of employment practices that impose a disparate impact on protected class members (along with possible alternatives to such practices), federal antidiscrimination law thus enhances not only equal access to job opportunities, but also a commitment to true merit selection. As the Supreme Court has observed, “Nothing in the Act precludes the use of testing or measuring procedures; obviously they are useful. What Congress has forbidden is giving these devices and mechanisms controlling force unless they are demonstrably a reasonable measure of job performance.”16

In short, at this stage of the Title VII or ADA analysis the employer is required to prove that the challenged requirement reliably assesses an individual’s ability to perform the job in question.17 With this in mind, I will turn to several possible explanations that an employer might offer to justify a current-employment requirement, and some of the questions that arise when considering those justifications.

Some employers may use current employment as a signal of quality job performance, under the theory that those currently employed (especially in a tough economy) must be strong performers.18 But such a correlation is decidedly weak, as there are many reasons why one might be unemployed at any time (and especially during a time of economic downturn) that have nothing to do with job performance. These reasons include (but are not limited to) having been in school or in a training program; having to leave a job because of spousal relocation; having lost a job because lack of seniority during employer downsizing; having lost a job because the employer eliminated an entire division or shut down altogether; and having left employment temporarily due to illness, injury, disability, pregnancy, or family caregiving responsibilities.19A blanket reliance on current employment thus serves as a poor proxy for successful job performance.

As another possibility, some employers may use current employment as a proxy for relevant experience. But this also raises questions and concerns. First, such a justification would not be job related for the position in question and consistent with business necessity with respect to entry-level jobs that require no experience or jobs in which candidates receive relevant training on the job. Second, even for those jobs that require state-of-the-art knowledge of rapidly changing technologies or practices, current employment may still be an impermissibly blunt instrument for evaluating relevant experience and knowledge. More accurate (and less discriminatory) alternatives include more individualized assessments, such as posing problems or questions in interviews or tests that measure relevant contemporary knowledge, as well as asking questions that reveal recent experience or recent education and training (e.g., the candidate may be currently unemployed because he or she has been in school; the candidate may have been employed until very recently; or the candidate may have used a period of unemployment to receive additional education or training).

Offering still another possibility, a recent media report suggested that some employers might use a current-employment requirement simply to reduce the number of applications received.20 Such a justification – i.e., the practice facilitates the employer’s speed and ease in processing applications – has no relationship to candidates’ successful job performance, and thus is not job related for the position in question.21

I do not suggest that this is an exhaustive list of the possible justifications for a current-employment requirement. Employers may have other explanations in mind that I have not anticipated here -- if so, they too require examination. My aim instead is to note that this practice raises questions and concerns under current antidiscrimination law that deserve attention. Indeed, equal employment opportunity law seeks to ensure that access to job opportunities is free from discrimination in tough economic times as well as good.

Again, thank you for the opportunity to join you today, and I look forward to our continued discussion.


Footnotes

1Job announcements on file with the author.For a sampling of media reports of this trend, see “How Employers Weed Out Unemployed Job Applicants, Others, Behind the Scenes,” Huffington Post, January 14, 2011 (http://www.huffingtonpost.com/2011/01/14/unemployed-job-applicants-discrimination_n_809010.html); “Employers Continue to Discriminate Against Jobless,´Huffington Post, October 8, 2010 (http://www.huffingtonpost.com/2010/10/08/employers-continue-to-dis_n_756136.html).

2See Griggs v. Duke Power Co., 401 U.S. 424, 426-30 (1971) (observing that employer’s non-job-related tests disproportionately excluded African-Americans from jobs that “formerly had been filled only by white employees as part of a longstanding practice of giving preference to whites” and thus operated “to ‘freeze’ the status quo of prior discriminatory employment practices”).

3See id. at 431-32 (“What is required by Congress is the removal of artificial, arbitrary, and unnecessary barriers to employment when the barriers operate invidiously to discriminate on the basis of racial or other impermissible classification. . . . [G]ood intent or absence of discriminatory intent does not redeem employment procedures or testing mechanisms that operate as ‘built-in headwinds’ for minority groups and are unrelated to measuring job capability.”).

4See id. (“The Act proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation. . . .Congress directed the thrust of the Act to the consequences of employment practices, not simply the motivation.”) (emphasis in original); see also Franks v. Bowman Transp. Co., 424 U.S. 747, 763 (1976) (emphasizing that Title VII “prohibit[s] all practices in whatever form which create inequality in employment due to discrimination”); Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 987 (1988) (“[T]he necessary premise of the disparate impact approach is that some employment practices, adopted without a deliberately discriminatory motive, may in operation be functionally equivalent to intentional discrimination.”).

5See 42 U.S.C. § 2000e-2(k). Congress there made clear its determination to restore a robust understanding of the disparate impact standard. Finding that “the decision of the Supreme Court in Wards Cove Packing Co. v. Atonio, 490 U.S. 642 (1989) has weakened the scope and effectiveness of Federal civil rights protections,” Congress specifically identified the Act’s purposes to include “codify[ing] the concepts of `business necessity' and `job related' enunciated by the Supreme Court in Griggs v. Duke Power Co., 401 U.S. 424 (1971), and in the other Supreme Court decisions prior to Wards Cove Packing Co. v. Atonio, 490 U.S. 642 (1989).” Civil Rights Act of 1991, Pub. L. No. 102-166, §§ 2(2) and 3(2).

642 U.S.C. § 12112(b)(6) and (7).

7 The Supreme Court has held that the ADEA prohibits practices that impose a disparate impact against those protected from age discrimination unless the employer can prove that its practice is justified by a reasonable factor other than age. See Smith v. City of Jackson, 544 U.S. 228 (2005); Meacham v. Knolls Atomic Power Lab., 554 U.S. 84 (2008); see also 29 C.F.R. § 623.

8See, e.g, 42 U.S.C 2000e-2(k)(1)(A)(i).

9See, e.g.,Dothard v. Rawlinson, 433 U.S. 321, 330 (1977) (“There is no requirement, however, that a statistical showing of disproportionate impact must always be based on analysis of the characteristics of actual applicants. The application process might itself not adequately reflect the actual potential applicant pool, since otherwise qualified people might be discouraged from applying because of a self-recognized inability to meet the very standards challenged as being discriminatory. “); see also International Brotherhood of Teamsters v. United States, 431 U.S. 324, 365 (1977) (“A consistently enforced discriminatory policy can surely deter job applications from those who are aware of it and are unwilling to subject themselves to the humiliation of explicit and certain rejection.”).

10See, e.g., Hazelwood Sch. Dist. v. United States, 433 U.S. 299, 308 (1977).When the job in question is entry-level or does not require specialized skills or training as a condition of employment, the relevant labor market may be the percentage of adult protected class members in the relevant geographical area. Id. at n.13 (“In Teamsters, the comparison between the percentage of Negroes on the employer's work force and the percentage in the general areawide population was highly probative, because the job skill there involved the ability to drive a truck is one that many persons possess or can fairly readily acquire.”). If the employer recruits workers from across the nation – as would likely be the case for certain jobs requiring specialized skills or responsibilities -- the relevant geographical area could be the entire nation.

11Courts consider disparities to be “statistically significant” when the difference between the compared percentages (i.e., the difference between the actual and expected outcomes) is greater than two or three standard deviations, thus greatly reducing the possibility that chance explains the disparity. See id. at 308 n.14 (explaining that the Court has noted that “‘(a)s a general rule for such large samples, if the difference between the expected value and the observed number is greater than two or three standard deviations,’ then the hypothesis that teachers were hired without regard to race would be suspect.”) (quoting Castaneda v. Partida, 430 U.S. 482, 496-97).

12 The 80% rule finds adverse impact upon a showing that the selection rate for protected class members under this requirement is less than 80% of the selection rate for the most successful group. This would be the case, for example, if only 50% of the African-Americans in the applicant pool were currently employed, compared to 75% of the whites in the applicant pool. See, e.g., 29 C.F.R.§ 1607.4(D) (stating that federal enforcement agencies will generally consider as evidence of adverse impact a selection rate for protected class members that is less than 4/5 of the rate for the group with the highest selection rate).

13 Federal antidiscrimination law’s prohibitions on disparate treatment and disparate impact discrimination apply to employment agencies as well as employers. This means that employment agencies who use discriminatory practices requested by their client employers remain liable themselves for such discrimination. See, e.g., 42 U.S.C. § 2000e­2(b) (prohibiting employment agencies from “discriminat[ing] against any individual because of race, color, religion, sex, or national origin, or to classify for employment any individual on the basis of race, color, religion, sex, or national origin”); 29 C.F.R.§ 1607.10 (“The use of an employment agency does not relieve an employer or labor organization of its responsibilities under Federal law to provide equal employment opportunity or its obligations as a user under these guidelines.”).

14 42 U.S.C 2000e-2(k)(1)(A)(i). As discussed above, the ADEA prohibits practices that impose a disparate impact against those protected from age discrimination unless the employer can prove that its practice is justified by a reasonable factor other than age. See supra note 7.

15See 42 U.S.C 2000e-2(k)(1)(A)(ii); Albemarle Paper Co. v. Moody, 422 U.S. 405, 425 (1975) (even if the employer proves that the challenged requirement is sufficiently job related for the position in question, the plaintiff may still prevail by then showing that another practice with a less discriminatory impact would also “serve the employer’s legitimate interest in ‘efficient and trustworthy workmanship’”); 29 C.F.R. § 1607.3(B) (“Where two or more selection procedures are available which serve the user’s legitimate interest in efficient and trustworthy workmanship, and which are substantially equally valid for a given purpose, the user should use the procedure which has been demonstrated to have the lesser adverse impact.”).

16Griggs, 401 U.S. at 437.

17See id. at 432 (requiring the employer to meet “the burden of showing that any given requirement (has) . . . a manifest relationship to the employment in question”); Dothardv. Rawlinson, 433 U.S. 321, 331 n.14 (1977) (requiring the employer to prove that the challenged requirement is “necessary to safe and efficient job performance”); Fitzpatrick v City of Atlanta, 2 F.3d 1112, 1117 (11th Cir. 1992) (“[T]he defendant must show that the challenged action is demonstrably necessary to meeting a goal of a sort that, as a matter of law, qualifies as an important business goal for Title VII purposes.”);Bradley v. Pizzaco of Nebraska, Inc., 7 F.3d 795, 797 (8th Cir. 1993) (“Under the Griggs standard, the burden is on the defendant employer to prove both a ‘compelling need’ for the challenged policy, and the lack of an effective alternative policy that would not produce a similar disparate impact.”); EEOC v. Dial Corp., 469 F.3d 735, 742 (8th Cir. 2006) (stating that “an employer using the business necessity defense must prove that the practice was related to the specific job and the required skills and physical requirements of the position”); El v. SEPTA, 479 F.3d 232, 240 (3rd Cir. 2007) (describing the business necessity defense as requiring “some level of empirical proof that [the] challenged hiring criteria accurately predicts job performance”); EEOC, Employment Tests and Selection Procedures (2008), http://www.eeoc.gov/policy/docs/factemployment_procedures.html (“An employer can meet this standard by showing that it is necessary to the safe and efficient performance of the job. The challenged policy or practice should therefore be associated with the skills needed to perform the job successfully. In contrast to a general measurement of applicants’ or employees’ skills, the challenged policy or practice must evaluate an individual’s skills as related to the particular job in question.”).

18See, e.g., “Employers Continue to Discriminate Against Jobless, Think ‘The Best People are Already Working,’” Huffington Post, October 8, 2010 (http://www.huffingtonpost.com/2010/10/08/employers-continue-to­dis_n_756136.html).

19 Even in the unlikely event that an employer or employment agency could establish the requisite connection between current employment and job performance, less discriminatory alternatives remain available. They include inquiries of the applicant as to whether he or she was ever disciplined or terminated for poor performance, as well as reference checks.

20 See https://recruit.theladders.com/recruiter-resource-center/uninterested-in-unemployed.

21 Of course, employers who seek simply to reduce the number of applications to be processed are free to do so in a way that does not impose an adverse impact on protected class members, and thus does not trigger a requirement that they justify the practice as job related for the position in question and consistent with business necessity.