Hiring Bias Claims Up as HR Practices Get Tougher Scrutiny

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By Patrick Dorrian

The recent rush of legislation to track down and punish hiring bias should have employers carefully reviewing their policies and practices, employment lawyers told Bloomberg BNA.

Many prominent companies in a range of industries have been sued for various types of hiring bias. R.J. Reynolds, PricewaterhouseCoopers, Bass Pro Outdoor World LLC, Ford Motor Co., Oracle America Inc., Kaplan Higher Education Inc., Cisco Systems Inc., and Grisham Farm Products Inc. have been sued by workers or the federal government in the past several years for some form of hiring discrimination.

And substantial payouts to rejected job applicants have occurred in some cases. For example, Silicon Valley’s Palantir Technologies Inc. in April paid $1.7 million to end a hiring bias case, while Bank of America paid $1 million, BMW Manufacturing Co. $1.6 million, and the Census Bureau $15 million in recent settlements.

Inquiring about salary history, recruiting only college students, or placing jobs ads where they’re likely to be seen by some job seekers but not others are just some of the things that could result in hiring bias or at least spur allegations.

To avoid hiring bias and related claims and potential liability, “employers need hiring practices that are defensible for business reasons and fair overall,” management-side attorney Peter J. Gillespie said.

Things are getting more complicated for human resources departments at every step of the process, Gillespie said. Companies need to see that the information they’re requesting and collecting about job seekers at the recruiting, application, interview, and other stages complies with all relevant laws, he said.

Hiring Bias Claims Increased in 2016

Every state has its own employment and hiring discrimination laws, which mimic federal laws in some ways and supplement them in others, Claudia D. Orr, who also represents employers, said. It’s crucial that HR know the laws in each state and locality where the company does business, she said.

Legislation also is under consideration at the federal level targeting hiring bias by government agencies and contractors. And eliminating barriers in recruitment and hiring remains an enforcement priority of the Equal Employment Opportunity Commission, which enforces federal job bias laws against private-sector employers.

Last year the number of hiring bias charges filed with the agency rose to 7,359, breaking a three-year run of declines.

Discrimination in hiring can occur against any protected class and things are too unpredictable to say that problems are more likely for one set of workers than others, Gillespie said. Bias also doesn’t discriminate based on industry, he said, and thus isn’t a sector-specific problem.

Salary History: Are Disparate Impact Claims Coming?

There is “a movement right now” seeking to curb or eliminate employer inquiries into and use of the salary history of an applicant or new hire, plaintiffs-side attorney Donna M. Ballman told Bloomberg BNA.

The underlying principle of the salary issue is that asking about and using a person’s pay history as a means of setting starting wages locks in pre-existing pay discrimination, especially based on sex, she said.

Legislation has been passed in several places, including Massachusetts and New York City, Ballman said. Employers in locations where the law has changed need to adjust their hiring practices accordingly, she told Bloomberg BNA.

Even employers that aren’t subject to any of the new salary history laws need to think about the issue, because asking about a worker’s pay history might be shown to have a disparate impact on women, blacks, or some other protected class, Ballman said.

“We haven’t really seen those cases yet, but I think we will,” she predicted. Ballman is a solo practitioner in Ft. Lauderdale, Fla., and the author of Screw You Guys, I’m Going Home, a blog on employee-side employment law issues. She also wrote the book Stand Up For Yourself Without Getting Fired.

Regardless of any laws banning the practice, asking applicants who may have faced historical pay discrimination about their salary history could be a bad move, she added. “It pisses people off and a lot of people don’t want to answer those sorts of questions anymore,” Ballman said.

Employers need to revisit their policies from both a legal and a practical standpoint. Otherwise they risk losing out on good candidates, she said.

That’s so even though the U.S. Court of Appeals for the Ninth Circuit on April 27 rejected the argument that any inquiry or use of salary history by an employer violates federal law, she said.

Instead of blunting the pay history movement, the Ninth Circuit’s decision in Rizo v. Yovino will be used “as a rallying cry,” Ballman predicted.

The plaintiff in the case on May 10 asked the court to take another look at the issue.

The EEOC May 22 filed an amicus brief with the Ninth Circuit supporting rehearing by the full court.

Criminal-History and Other Background Screening

Other problems can arise in how employers do background checks on job applicants, Ballman said.

Under the Fair Credit Reporting Act, “an employer can get in trouble if it doesn’t jump through all of the hoops,” Ballman said. For example, an employer who uses a third-party vendor for its pre-hire credit screening must provide an applicant whose background check raises a concern with advance notice and a chance to explain or cure the alleged problem before it may legally decide not to hire the person, she said.

In addition, ban-the-box and similar criminal-history-screening laws have cropped up all across the country in the past few years. Generally these laws delay when an employer can ask an applicant to disclose a criminal record, Gillespie said. He’s of-counsel with Laner Munchin Ltd. in Chicago.

The reason for laws on criminal-history bias is that rejecting applicants out of hand based on past offenses typically has a disparate impact on racial minorities, Orr said. She’s a senior attorney with Plunkett Cooney P.C. in Detroit.

Orr cited criminal-history bans as an example of an area where the law can vary from place to place.

As with federal law, there’s no statute in Michigan—where Orr practices—that expressly prohibits employers from making inquiries about convictions, she said. But Michigan law does prohibit basing hiring decisions on a misdemeanor arrest record that didn’t result in a conviction. Michigan employers, however, may lawfully reject an applicant based on a misdemeanor conviction or based on a pending felony charge or a felony conviction, she said.

It’s easy for employers to get tripped up on ban-the-box restrictions and their nuances, Gillespie said. That’s especially true for a company with a presence throughout the country that recruits nationally.

Recruiting Risks, Especially Age Bias

The other “big, hot hiring issue” right now is whether older job seekers can sue for hiring bias without showing intentional discrimination, Ballman said.

Some see disparate impact age discrimination claims as a possible threat to the traditional practice of college recruitment. Whether such recruitment is permitted turns on how the federal Age Discrimination in Employment Act is interpreted.

A federal appeals court in Atlanta ruled in October that a 49-year-old worker who applied online for a job with R.J. Reynolds Tobacco Co., but was repeatedly rejected, couldn’t pursue his proposed class claims. The would-be employee alleged that the company was using “resume review guidelines” that screened out older applicants. The company directed a recruiter to favor recent college graduates and to avoid applicants with more than a certain amount of experience, he charged.

Employers don’t want to tell recruiters to engage in that sort of behavior, Ballman said.

The court rejected the claim, finding that the ADEA permits employees, but not job seekers, to sue for disparate impact bias.

The plaintiff in that case has asked the U.S. Supreme Court to take a look at the viability of disparate impact hiring claims under the ADEA.

PriceWaterhouseCoopers LLP was similarly sued for disparate impact hiring bias by a class of 40-and-over job seekers based, in part, on its use of a campus-track recruitment tool that can only be accessed by applicants with a current college affiliation.

College recruitment, by definition, will have a disparate impact on older workers, Ballman said.

Using Staffing Agencies, Joint Employers

Employers shouldn’t give certain directions to recruiters. Orr said she’s seen cases where a staffing agency was told by an employer not to send certain types of job candidates—no applicants from Detroit, for example, or no female applicants (allegedly to avoid potential sexual harassment scenarios). The first restriction could have a disparate impact on minority job seekers while the second would be discriminatory based on sex.

Companies hiring through staffing agencies also have to be careful not to create additional liabilities for themselves under the “joint employer” rule, Orr added. This might happen where the company and staffing agency are both deemed to be the employer of a worker and the separate employees of the two entities are aggregated for purposes of determining whether the hiring company had enough employees to be covered by an employee-rights law, she said.

The Family and Medical Leave Act, which covers employers with 50 or more employees within a 75-mile radius, is one example. A small employer using a staffing agency could suddenly find itself subject to leave-related bias claims when it didn’t think it was big enough to be, she said

Technology No ‘Panacea’

Gillespie noted that some employers are using or looking into using artificial intelligence to replace humans in aspects of the hiring process.

Relying on computer applications or programs at the outset rather than humans is seen by some as a way of keeping the implicit biases of humans out of the criteria setting and screening processes, he said. But a question about the benefit of using artificial intelligence is whether the implicit biases “may already be baked in,” he said.

An application or program may be assumed to be a better selector at the beginning of the process than a person would be, but the computer coder or developer “still is a human,” Gillespie said. Down the road, any inadvertently introduced biases might have an adverse impact on a protected class of applicants, he said.

That’s a problem because it’s hard for an employer to know at the point of purchase and implementation whether a digital selection tool is flawed in this way, Gillespie said. An employer could find itself “on the cusp of liability” before learning of an issue with its AI-driven screening tool, he said.

“So just turning hiring over to a computer isn’t a panacea,” he said.

To contact the reporter on this story: Patrick Dorrian in Washington at pdorrian@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

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