President Obama recently announced a jobs bill he believes will help get the ball rolling to counter rampant unemployment. Employers should know, however, that they face the potential for new lawsuits if the bill is passed. The new jobs bill would allow the 14 million unemployed workers in this country – six million of whom are classified as long-term unemployed, having been without work for 27 weeks – to sue employers who do not hire them because they are unemployed.
Currently, employers with 15 or more employees cannot screen applicants on the basis of race, color, religion, sex or national origin (unless the employer can show that the discriminatory hiring practice is due to the nature of the job and is consistent with business necessity). However, the new bill would make unemployed workers a protected class that could not be discriminated against.
The proposition is simple: employers would not be able to use an applicant’s current employment status as a reason not to hire them, nor could they post job openings that require applicants to be currently employed. If employers limited job openings to currently employed, or if an applicant believed they were not hired because of their unemployment status, the unemployed worker could sue the employer for discrimination.
This designation could be detrimental to employers for two reasons. First there is very little, if any, evidence suggesting that companies regularly discriminate against the unemployed or altogether refuse to hire them. The new jobs bill, however, would permit anyone who applied for a job but was not hired to sue the employer for discrimination. Even if the suit is ultimately baseless, employers may find themselves having to defend such actions. Second, unlike the other protected categories list above, there may be legitimate purposes for screening applicants who are unemployed. If, for example, an employer has two applicants, Applicant A who works at Company X, and Applicant B who was fired from Company X, the employer may wish to hire Applicant A believing he will be the better employee, and basing that reasoning on the evaluation of Company X, who had a much better chance to evaluate both candidates than the employer. Even if this is a legitimate reason, an employer would be subject to a discrimination suit for making such a decision.
The new jobs bill has not yet passed, but the contents of the proposal carry heavy potential implications for employers. Employers should be aware of this bill and keep an eye on it going forward.