Diversity Insight

Unemployed Need Not Apply

Last month we covered the emerging issue of discrimination against the unemployed. This month, we follow that up with employment law attorney John T. Neighbors giving his insight on the legal and practical considerations of having a policy that the unemployed need not apply for vacant positions with your company.

Legal Implications

On the surface, an “unemployed need not apply” policy seems insensitive, if not cruel, given the high rate of unemployment throughout our nation. However, there is no federal  law currently extending protection to individuals based solely on their employment status . Furthermore, there are obvious business reasons for hiring an employed worker away from another employer rather than hiring someone who’s unemployed.

Yet since the passage of Title VII of the Civil Rights Act of 1964, you must ensure your policies and procedures don’t have an unintended “disparate impact” on a particular workplace group. In lay terms, “disparate impact” is unintended discrimination resulting from a policy or decision that disproportionately and negatively affects a protected group.

To understand disparate impact, think about an employer that hires only college graduates, even though a college degree isn’t necessary for an employee to successfully perform the job. In that circumstance, the “college degree” requirement may have a disparate impact on a protected category of applicants (e.g., based on race, sex, religion, national origin, or age). When that happens, the Equal Employment Opportunity Commission, the National Organization of Women, or the National Association for the Advancement of Colored People may choose to fund a test case challenging your hiring practices.

Legally speaking, if you don’t want to hire a lawyer to defend a test case (which could find its way to the U.S. Supreme Court), you may wish to think hard about announcing a policy that states you have joined the growing ranks of employers that judge applicants based on their employment status. It’s important to note that federal legislation has been introduced to protect the unemployed. While it isn’t likely to go anywhere, the fact that it was introduced shows the concern many have about the issue.

Want to learn more about the EEOC’s move to make being unemployed a protected class and what that can mean to an employer making a hiring decision? The HR Hero webinar Long-Term Unemployed: The New Hiring Discrimination Risk, and How to Protect Your Organization” will walk you through developing a policy, avoiding discrimination claims, and more. For more information, call (800) 274-6774 or click here.

Practical Considerations

Let’s consider the practical aspects of an “unemployed need not apply” approach. Starting in 2008, our national employment ranks were ravaged by reductions in force. Yet for the most part, those who ended up unemployed were less skilled, less experienced, or in some cases, poor attendees or poor performers. In short, they were employees who had repeated safety problems or were often caught not doing what the employer had a right to expect of them. Regardless of the reason, it’s undeniable that more often than not, individuals who were laid off in 2008 and 2009 were less desirable workers.

Accordingly, why would an employer with a good job opportunity not choose a more experienced, more skilled, and more productive applicant over a less experienced, less skilled, and less productive one? It wouldn’t, and it shouldn’t have to. It makes sense that you would want to hire an employed applicant over an unemployed one.

Furthermore, although an “unemployed need not apply” approach seems cruel at first, in a period of tragically high unemployment, it isn’t. Having such a policy encourages a motivated worker to seek a better job. Assuming the vacancy you have is enough to attract an employed worker, he’ll probably expect better wages and benefits, allowing him to move up the economic ladder. Of course, if the position’s not attractive enough, then the employed worker won’t apply, and you’ll be forced to consider hiring the best of the unemployed.

If an employed worker fills a vacancy for which an unemployed applicant wasn’t welcome, then the movement by the employed worker creates a vacancy for an unemployed worker. Eventually, employers will seek out the unemployed to fill positions vacated by the employed. That will allow unemployed workers to get back to work and sharpen their work skills and habits that were dulled by an extended period of unemployment.

Once the economy recovers and unemployment returns to “normal” levels, all workers will again be judged on their skills, qualifications, and work habits. In 2008, it was a worker’s market. Total compensation packages rose, and everyone profited from a more robust economy. Yet with the economic crash of 2008 and the unfortunate sustained period of unemployment, it has become an employer’s market for labor. The pendulum clearly moved. We should hope ― and expect ― it to later move back in the other direction. As it does, it will affect both the employed and the unemployed positively and create more, not less, opportunity.

Bottom Line

Accordingly, an “unemployed need not apply” policy isn’t nearly as cruel as it’s made out to be. Even so, you should be careful when considering whether you want to announce you are subscribing to a policy that the unemployed are not welcome applicants. Rather, you may simply want to judge applicants based on their present skills, abilities, and work habits, which may include some judgment about whether they have greater skills and abilities because they are currently employed. Doing so may be less risky than going forward with a bold blanket policy.


John T. Neighbours is a partner with Baker & Daniels in the firm’s Indianapolis, Indiana, office and is the editor of Indiana Employment Law Letter. He may be contacted at john.neighbours@bakerd.com.