Washington D.C. Employment Law Update : Washington D.C. Employment Lawyer & Attorney : Littler Mendelson Law Firm : Virginia, Tyson's Corner

This hearing is the latest effort to address unemployment discrimination. In February, the EEOC held a public meeting to address what it considers an “emerging practice” of excluding currently unemployed job-seekers from applicant pools. On month later on March 16, Rep. Henry Johnson (D-GA) introduced a bill that would make unemployment discrimination unlawful. His bill, the Fair Employment Act of 2011 (H.R. 1113), would amend Title VII of the Civil Right Act to add “unemployment status” to the list of protected classes. Rep. Johnson, along with Rep. Rosa DeLauro (D-CT), introduced yet another unemployment-related bill on July 12. The Fair Employment Opportunity Act of 2011 (H.R. 2501) would prevent employers and employment agencies from refusing to consider or offer a job to an unemployed individual; prohibit the publication in any medium of an advertisement or announcement for a job that includes language indicating the unemployed need not apply; and entitle those discriminated against to bring a civil action against the employer or employment agency for actual, compensatory and punitive damages. Sen. Richard Blumenthal (D-CT) introduced a companion bill (S. 1471) in the Senate on August 2, 2011.

The provisions of the Fair Employment Opportunity Act were ultimately incorporated into President Obama’s jobs bill, the American Jobs Act (S. 1660). Although this comprehensive bill failed to advance in the Senate, provisions have been voted on in standalone form. On November 21, for example, the President signed into law a measure that provides employer tax incentives for hiring unemployed veterans. These benefits were initially included in the American Jobs Act.

During the hearing, several panelists and lawmakers voiced support for these legislative efforts. Ranking member Enzi, however, questioned whether bills making employers potentially liable for unemployment discrimination would be counterproductive. Enzi argued that it would be difficult for employers to prove that their hiring decisions were not based on an applicant’s unemployment status, and that the fear of lawsuits could curtail their hiring efforts. He added that such legislation would result in a “profitable new field” for class action attorneys.

During questioning, Christine Owens, Executive Director of National Employment Law Project, admitted that inquiries about an applicant’s resume gaps could “open a door” to an unemployment discrimination lawsuit, but emphasized that under the terms of the proposed legislation, the burden is on the individual to make a showing that his or her unemployment status was a factor in the employer’s adverse decision.

Toward the end of the hearing, Sen. Harkin stated that, as one of the first orders of business, he is willing to bring a bill up for a Committee vote in January that would reauthorize the Workforce Investment Act. This bill provides for a wide range of workforce development and training programs through state and local organizations.

A list of hearing witnesses, links to their testimony, and an archived webcast of the hearing itself can be found here.

While is it unlikely that this provision will be enacted as part of the President’s jobs plan, alleged discrimination against the unemployed has received a great deal of attention from the Equal Employment Opportunity Commission (EEOC) and lawmakers in recent months. In February, the EEOC held a public meeting to address what it considers an “emerging practice” of excluding currently unemployed job-seekers from applicant pools. Several panelists at that hearing endorsed legislation such as the Fair Employment Opportunity Act. Another bill by the same name was introduced earlier this year that would include “unemployment status” as a protected category under Title VII of the Civil Rights Act. This development will be closely followed.

Work Share Program

Part III of the legislation would encourage employers to develop temporary work sharing positions in lieu of layoffs, and entitle those employees working reduced hours to receive proportionate unemployment benefits.

Under the terms of this bill, employer participation in short-time compensation programs would be voluntary. Those participating would need to certify that reducing employees’ hours was a measure taken in lieu of implementing temporary layoffs, and submit written work share plans for state agency approval. If unionized, the employer would also need to provide a written plan describing the short-time compensation program for union approval. Employees whose workweeks are reduced by at least 10 percent (but no more than 60 percent) would be eligible for the pro rata portion of unemployment compensation they would have received if totally unemployed.

Employers that hire workers on a seasonal, temporary, or intermittent basis, or those currently engaged in labor disputes would be ineligible to participate.

If an employer provides health and retirement benefits under a defined benefit plan, or contributes to such plans, it must certify that such benefits will continue to be provided to employees participating in the short-time compensation program under the same terms and conditions as though the workweek of such employee had not been reduced or to the same extent as other employees not participating in the program.

Payroll Tax Cuts

During his address, the President touted temporary payroll tax relief provisions contained in the bill that he claimed would promote hiring. Such measures include a temporary 50 percent payroll tax cut for employers on their first $5 million in payroll. Specifically, the bill would cut the current rate of 6.2 percent on payroll expenses to 3.1 percent. In addition, the bill sets forth a temporary employer tax credit for increased payroll. Under the terms of the bill, employers would receive a 100% refund on payroll taxes paid on added workers or wage increases for current workers above the level of last year’s payroll. This benefit would be capped at $50 million in new wages.

The measure provides more specific tax credits for hiring veterans and the long-term unemployed. Namely, Section 201 of the Act would provide a tax credit of up to $5,600 for veterans who have been unemployed for at least six months. The bill provides for a second tax credit of up to $9,600 that would increase the existing credit for employers that hire veterans with service-connected disabilities who have been unemployed six months or longer.

As for the long-term unemployed, the bill would provide employers with a tax credit of up to $4,000 for each individual who was without work for at least 6 months during the 1-year period ending on date of hire.

Other notable sections of this bill would do the following:

• Extend Emergency Unemployment Compensation. Among other provisions aimed to help the unemployed, Title III of the measure would extend emergency unemployment benefits an additional year.
• Prevailing Wages. Section 5 of the Act stipulates that all laborers and mechanics employed by contractors and subcontractors on projects funded directly by the bill must be paid the prevailing wage rate.
• Extension of 100% Expensing. This bill would extend 100 percent business expensing of investments in certain business assets through 2012.

At this point it is unclear which, if any, of these provisions will advance. 

Photo credit: amphotora

Assistant Secretary of Labor for Policy William Spriggs presented national employment statistics indicating that minorities, particularly African Americans and Hispanics, are overrepresented in the unemployed population. Following his testimony, several panelists claimed that using current employment as a selection criteria adversely impacts women, minorities, and individuals with disabilities, and called for EEOC guidance and enforcement to address this issue. According to law professor Helen Norton:

this is not an isolated practice, as a sampling of recent job announcements reveals that employers have required applicants for a wide range of jobs to be currently employed as a condition of further consideration. These jobs include freight handlers, restaurant managers, sales representatives and other salespersons, litigation associates, mortgage underwriters, electrical engineers, apartment maintenance technicians, and executive assistants.

Similarly, Christine L. Owens, Executive Director of the National Employment Law Project, claimed:

there is a disturbing and growing trend among employers—honored by staffing firms—to refuse to consider the unemployed for available job openings, regardless of their qualifications. This refusal is often explicitly manifested in job ads that include restrictive language specifying that only currently employed candidates will be considered; or that no unemployed candidates will be considered, regardless of the reason for unemployment; or no candidate unemployed for more than a certain period (e.g., six months) will be considered. Employers or staffing firms questioned about such ads typically pull the ads or delete the exclusionary language, but that does not signal that they will not apply the exclusion in the selection process.

Others, however, testified that the practice of discriminating against the unemployed is uncommon. Speaking on behalf of the Society for Human Resource Management (SHRM), Fernan R. Cepero claimed that the organization “is unaware of a widespread practice or trend to exclude unemployed individuals from consideration for available jobs.” Cepero concluded that: “employers, in SHRM’s experience, whether operating in the currently challenging economy or in more robust times, are focused on finding the right people for the job, regardless of whether or not they are currently employed.” Similarly, another panelist testified that “under the widespread practice that I have seen employers follow, the simple fact that the applicant is or was unemployed does not operate to disqualify the applicant. The reason the employer may decline to hire the applicant will be the underlying reason the applicant became unemployed, and typically it is job-related.” For example, the panelist explained that if an applicant’s unemployment is due to the fact that he or she was fired for cause due to workplace violence, that reason may rightly disqualify the unemployed applicant from further consideration.

Coming after the EEOC’s recent hearing on the use of credit history as an employment screening tool, Wednesday’s hearing is another signal that the Commission is focusing on hiring practices.

A full list of panelists and links to their testimony can be found here.