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Dangers of Excluding Unemployed When Searching for Workers

By Reggie Gay

Employers that need workers often find themselves inundated with applicants — especially in today’s down economy. Some employers have even resorted to limiting the applicant pool to currently employed individuals as a way of dealing with a deluge of resumes. But that can be a legally shaky strategy.

Mastering HR Special Reports: Hiring

While no federal law directly prohibits discrimination against unemployed individuals, the practice might be considered illegal if it can be shown to have a “disparate impact” on protected groups. Federal law prohibits an employer from using a job advertisement that limits or expresses preference for applicants based on race, color, religion, sex, national origin, or age.

Employers also should consider the short-sightedness of excluding unemployed applicants. In today’s economy, many well-qualified and hard-working individuals are unemployed through no fault of their own. It’s probably safe to say that the current unemployed applicant pool is the best-qualified unemployed applicant pool in recent history.

Public image is another factor to consider. An advertisement excluding the unemployed looks bad in the current economic climate. It wouldn’t be difficult to imagine a local newspaper or TV station picking up such a story.
Employers also need to know that a number of states, as well as the federal government, are proposing laws that would prohibit such practices. One such law was recently passed in New Jersey. In addition, the Equal Employment Opportunity Commissions (EEOC) recently held a hearing on the practice and will clearly be closely scrutinizing such ads and policies. So while no federal law directly prohibits employers from considering only currently employed applicants for open positions, having such a policy may not be the best decision for an organization. An advertisement or policy excluding unemployed applicants may be found to have a disparate impact on certain protected classes, thereby creating potential exposure for discrimination.

Mastering HR Special Report: Discrimination

In addition, a no-unemployed-applicant policy may preclude an employer from hiring the best candidate for the job, expose the organization to bad publicity, and create a poor public perception of the company. So the final word is, be careful before implementing such a policy, and think through all of the potential ramifications.

Reggie Gay, an employment law attorney with McNair Law Firm, P.A., in Columbia, SC, writes a regular monthly column called “Ask Reg” for South Carolina Employment Law Letter. He and fellow McNair attorney Rita McKinney, who also writes for the publication, will present a 90-minute webinar for HR pros and employers on “Long-Termed Unemployment: New Hiring Discrimination Threats,” on November 29, 2011, at 1:30 p.m. Eastern, 12:30 Central.