A B-school professor proposes an “antidiscrimination bond,” a tool that would screen out persons likely to sue you for discrimination before they’re ever hired. Would you use it?
Since the passage of the landmark Civil Rights Act of 1964, governmental power has been directed at ending discrimination in the workplace. In a possible ironic twist, have these efforts actually caused discrimination?
The answer is Yes, says Dr. Anne Marie Knott, an associate professor of strategy at the Olin School of Business at Washington University in St. Louis. She claims that because of the fear of being sued for discrimination, and the expense required defending even a meritless suit, employers go out of their way not to hire persons from protected groups.
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“One way to get around the problem,” says Knott, “is to create a process that would enable employers to get a sense of whether a prospective employee is likely to sue for discrimination.”
That process, or more accurately put, that invention, is what she calls the “Antidiscrimination Bond.” The Bond (for which Knott has applied for a patent) is a means by which employees stand to lose financially if they sue for discrimination.
This is accomplished by requiring all new employees to purchase a bond from the employer, in a standard 401(k)-type arrangement. Employees make contributions through deductions from their pay, the bond pays interest, and their money is held in a safely invested individual account.
There’s really only one way to lose it.
“The bond has a provision,” explains Knott, “that the contributions are forfeited in the event that the employee brings suit.”
To Knott, this requirement for employment is simply another screening tool to weed out potentially “litigious” employees. A person buying the bond would, presumably, not be inclined to sue, and thus would be more “cost-effective” than those who refuse to sign, who may represent an economic risk. The reasoning is that there is usually no problem in not hiring someone who might cost more money to employ, as long as all candidates are treated equally.
Knott’s research points toward the plan being effective. “Economic experiments indicate that the bond may reduce employment litigation by 96 percent,” she says.
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The questions raised by Knott’s invention are both legal and ethical. The bond’s defenders say it may actually reduce discrimination by allowing employers greater comfort in hiring members of protected groups. Those opposed point to the fact that it poses an obstacle toward suing to obtain the protections the law provides.
The key to its possible legality (at this writing, neither the EEOC nor any court has yet ruled on it) is that it does not ask employees to sign away their right to sue, which would be illegal. Employees still can bring suit, if they are willing to bear the financial loss of doing so. But the legal and other costs a plaintiff might incur in a suit are a financial loss, as well, and these have never been ruled as an obstacle.
The idea is so new that reaction to it has been limited. One blogger, calling himself “bryanb,” responded to it this way on the website, hrtests.blogspot.com:
”I have to admit this is pretty creative … tying [a guarantee for employers against suit] to a benefit. But I wonder what message this sends to applicants? I know if I was asked to sign something like this I might wonder … do they assume I’m a litigious kind of person? [Or] are they planning to discriminate against me?”
What’s your opinion of the Antidiscrimination Bond? Would you use it? Click the Share Your Comments button below and let us know.
I agree with “bryanb”. I would not apply to a company if I was asked to sign this bond. I would feel this may give the company the right to discriminate against me and knowing that finacially I would have to burden the cost if I wanted to sue the company. In today’s world with the cost of gas, daycare, etc. I would not want to work for a company with this bond. Too risky.
I would question the ethics of an oranization that asked employees to appear to waive their rights. In asking employees to purchase insurance for their jobs, does the company guarantee life time employment? Doubtful. Upon termination, can the employee cash in the bond, then sue if he/she believes the termination was wrongful? The bond appears to provide protection to employers who want to make gut feeling decisions in employment practices versus decisions based on facts.
This concept is appealing for the employer. I agree that an candidate might have reservations. One option for alleviating the possible negative connotation would be that the employer contribute equally to the bond. This creates a form of understanding that both parites will work to avoid litigation and discrimination.
As a prospective employee, I would turn on my heel and run away as fast as I could. The first question that would come to my mind is, “Does this organization get sued so frequently that they must have employees take out bonds to avoid litigation?” If a company is getting sued that frequently, the company is doing something wrong, not the employee. Secondly, as Brenda Scott stated, the ethics are highly questionable when an organization places such a burden on the employees and essentially tries to bribe them to not sue. I believe this to be a poor concept.
I think that whole idea is outrageous not to mention unethical. Any company that would make such a request must be planning on treating their employee in a discriminator way. If a company has policies and procedures in place that train supervisors and managers on how to document problems they can handle problems before they get to the lawsuit stage. I believe this type of policy would be dicriminator in it self. What are the odds someone would be hired if they didn’t agree to pay into this fund. It scares me that someone would even come up with such an idea.
From my teaching of employment law, I feel this bond would be considered retaliation under Title VII and would ultimately lead to more lawsuits and bad publicity for any company that attempts it. I feel it is a terrible idea and I think the EEOC would agree too.
There are many best practices in human resources that do prevent and reduce the chances of lawsuits. This is where I would recommend organizations spend there time.
A financial item to note here is that most lawsuits brought by employees are not brought by employees with deep pockets. Ultimately the employees actually go into business with a contingency fee attorney who’s sole goal is to settle. With this in mind- How much money would be available as a regular contribution by the employee from a practical stand point and thus give the bond the deterrent status is seeks? Most people can’t afford to pay for health insurance as a $300 a month contribution. The inventor assumes that the masses could even afford to participate. If I am working for $20 an hour with a family- any additional deductions are out of the question. What might be acceptable- would be that the prevailing party in a lawsuit, “would get,” the bond amount as compensation for legal fees if any are incurred. Last I bring up public policy- even in cases where great Arbitration policy is in place- which this “bond” seems to attempt to mimic in a bastardized way- the courts seem to be saying that employee/employer agreements can not preclude or affect the punitive nature of a public policy investigation. Does the bond say that an employee can not file an EEOC complaint and if they do, they lose their bond contribution? The 9th circuit is drooling…hahaha
This approach seems to serve as a license to discriminate. Instead of using gadgets to avoid liabiity, employers would be better served by prudent HR management and regular use of preventative employment law advice. Such an approach would also be highly likely to invite statutory restrictions. Many state legislatures are already restricting arbitration agreements with employees and covenants not to compete. Employers should also consider the costs of such an approach for staff time, recordkeeping and other costs.
A creative, but misguided and poorly thought out solution. Why would any reasonable court of law uphold such a provision of employment where the financial burden is shifted to the employee for an employer’s unethical and illegal behavior. Why would any reasonable employee sign such an agreement? 94% of Americans can’t save for their future. Why would they put money into a losing proposition such as this?
Having been an employee for a total of thirteen years with my previous company, and now the principal shareholder of my own company, I have been blessed to witness and experience employment issues from both sides of the fence. However, the thing I am most struck with is the steadily declining sense of fairness and shared responsibilities in the workforce. The overriding and ever growing attitude in this country toward employers is that if they are successful it was done on the backs of their employees, and if they failed, it was because management failed. It seems as though our attitude is that Employees are never wrong. Not only does that fly in the face of logic, it is also sets a spirit that Companies are now a target for being sued for anything at any time and with no risk to the employee, their attorney or the labor unions. The only group that ever risks anything is the company and that risk is not even brought on my them, but rather the employee (their attorney or union, et al). This “invention” looks to bring all the players in the game by tying the risk of loss to each side. The result will be more soul searching and less gold digging. That’s good for business and for those employee that have truely have been discriminated against by eliminating the money grabbing, entitlement oriented plaintiffs.
I have never sued or thought about doing that. However I would never work in a place requiring that as it surely sends the wrong message to me. I have to pay work there and if I’m good, I’ll get my money back – WOW. However should I every feel discriminiated against, then I get to not only lose what I’ve paid in, but I get to pay to hire a lawyer etc..
Maybe we can sell worker’s comp bonds too, or mistake bonds or better yet, absent/tardy bonds – now that might make a difference for some.