HR Hero Line

Job numbers good news for HR reps

by Connor Beatty

Each month, economists eagerly await the U.S. Department of Labor’s (DOL) jobs report. The report provides analysts a snapshot of the nation’s economic health by measuring the number of jobs the economy added or lost in the previous month. Based on a recent study, perhaps HR managers should review the monthly jobs report, too. The study found a remarkably strong correlation between the national unemployment rate and the number of charges filed with the Equal Employment Opportunity Commission (EEOC)

The data
According to The Wall Street Journal, unemployment rates dropped in all 50 states in 2014. The last time the economy achieved that feat, Ronald Reagan occupied the White House, and Mark Zuckerberg occupied a crib. So far, the job growth trend has continued into 2015.  Total nonfarm payroll employment increased by 173,000 in August, dropping the nationwide unemployment rate to 5.1%.

Meanwhile, 2014 also saw a decrease in the number of employment discrimination charges filed with the EEOC. According to an annual report from the EEOC, the number of claims based on race, sex, national origin, religion, age, and disability decreased last year.

Noticing the trends, a noted employment law blogger compared the national unemployment rate on January 1 of the past several years to the number of charges filed with the EEOC in the preceding year and found a striking correlation. The post can be found at www.lawfficespace.com/2015/02/new-chart-eeoc-charges-vs-unemployment.html. The correlation is clear: Over the past decade, the lower the unemployment rate, the fewer discrimination charges are filed with the EEOC.

What to make of the numbers
I should preface this section with the motto of every high-school statistics teacher: Correlation does not equal causation. In other words, we cannot necessarily conclude that a weak economy causes employees to file charges with the EEOC. That said, the job market could influence the likelihood that your company will face a discrimination charge for several reasons.

First, if the unemployment rate is low, employers will generally terminate fewer employees. When the job market is highly competitive, employers may decide to hold on to marginal performers rather than risk being unable to find suitable replacements. If fewer employees are being fired, it stands to reason that fewer employees will believe they have been wrongfully terminated. The state of the economy is unlikely to influence how many managers at your company are biased, but it may affect how frequently they manifest that bias.

Not only are fewer employees fired in a strong labor market, but employees who are terminated also have an easier time finding a new job. That will not necessarily dissuade a would-be claimant from filing suit. However, when a former employee is weighing the costs and risks of filing a claim, her overall economic situation will likely influence her decision. In a poor economy, a former employee with a weak claim may feel like she has no choice but to file a lawsuit in an attempt to get her job back.

Takeaway
There are a number of reasons to hope that economic conditions will continue to improve across the country. Although a strong job market may affect the likelihood that your company will face a discrimination lawsuit, that does not mean you can put your guard down.

A common mistake employers make is to give generic, rubber-stamp performance reviews to marginal performers when business is booming, only to crack down when times are tough. If an employee can make a credible attempt to tie a change in evaluation results to an incident exhibiting supervisor bias, he will have the makings of a discrimination claim. You cannot control global economic forces, but you can control whether your company follows sound employment practices in good times and bad.

Connor Beatty is an attorney with Brann & Isaacson in Lewistonn, Maine. He may be contacted at cbeatty@brannlaw.com.

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