For federal contractors, the linchpin to fending off failure-to-hire claims alleged by the Labor Department is to document clearly and precisely every step and outcome in the hiring process for each job seeker, according to a labor economist and an employment law attorney.
It’s not unusual for a large government contractor to receive more than a hundred applications for an entry-level position within a week of announcing the opening. However, sloppy record-keeping on job applicants can expose the company to hiring discrimination claims.
And when the DOL’s Office of Federal Contract Compliance Programs targets a company with failure-to-hire claims, it can get costly. A recent Bloomberg Law analysis found that the OFCCP reached a record $23 million in settlements with contractors over the past fiscal year, with cases alleging hiring discrimination accounting for the bulk of that total.
“Document everything when it comes to your hiring and application process,” said Robert Speakman, a senior vice president at Economists Incorporated, a Washington-based consulting firm. “If you don’t document, then you don’t have a defense,” he said.
Speakman and John Fox, a management-side attorney at Fox, Wang & Morgan in San Jose, Calif., addressed the topic of hiring analyses in October at the National Employment Law Institute's Affirmative Action Update conference in Washington.
Under OFCCP regulations, federal contractors must collect and maintain records of their hiring selection process and applicant flow data. Contractors can also analyze each individual component of their selection processes for statistical indicators of potential discrimination.
Defending failure-to-hire claims may require the contractor to gather, organize, and review data on job applicants so that it can analyze the data and its hiring process. The contractor has to produce evidence that the non-selection of a job seeker was based on legitimate, non-discriminatory reasons.
However, some contractors fail to maintain and digitize sufficient data, such as prior-related work experience, that would support and explain their nondiscriminatory hiring decisions. “Many failure-to-hire cases investigated by the OFCCP settle because the cost of handling the job-applicant data is expensive for the contractor,” said Fox, who was an OFCCP official during the Reagan administration.
“If you are not digitized, for example, and you have 10,000 applications, you are going to spend thousands of dollars hiring clerks to digitize the applications. The contractor may have great applicant data to defend the hiring discrimination claim, but the data is not accessible as a practical matter,” he said. That’s when the high cost involved in mounting a defense can make a settlement look appealing.
Another factor that can tilt the balance toward settling failure-to-hire claims is insufficient or unclear information on reasons for rejecting job applicants.
Many applicant tracking and human resources information systems (HRIS) allow contractors to create one or more data fields where recruiters and HR representatives can fill in disposition codes and descriptions on job applicants. Disposition codes describe the stages in the hiring process an applicant has reached and the reason a candidate didn't proceed further.
According to Speakman, “more and better data always works to the benefit” of the contractor in failure-to-hire cases, because the company will be asked to explain why certain hiring decisions were made. Every step in the application and hiring process should have a disposition code and description, from the time of application submission until the applicant is either hired or is no longer considered, he said. “Each application also should have a final disposition code, and in some cases, maybe more than one,” he added.
“The disposition descriptions should be clear and precise,” Speakman said. For example, contractors should avoid the term “not selected” and opt instead for something more descriptive, such as “not-best qualified.” Not selected “just means the applicant wasn’t picked, but it could have been for many reasons,” he said. “Not-best qualified tells more about why the person wasn’t selected.”
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