Can Your Company be Sued for Discrimination Against the Unemployed?

Refusing to consider applicants who are unemployed might lead to discrimination claims.

Can your company refuse to hire – or even consider hiring – applicants who are out of work? This has been a very hot topic in the last few years, as the continued effects of the Great Recession have forced many into the ranks of the long-term unemployed.

Economists and statisticians caution us that recent declines in unemployment numbers don’t necessarily mean that those who want jobs are finding it easier to get them. Instead, at least part of the improvement is due to a more depressing fact: Many who have been out of work for a long time have simply given up on their job search. As a result, the number of Americans who remain able to work and want to work, yet don’t have jobs, is significant.

Some employers have adopted policies of refusing to consider hiring anyone who is currently unemployed. Aside from ruling out large numbers of potential applicants – some of whom might be stellar candidates – this practice has another potential drawback: It could be discriminatory, depending on the circumstances and on state law.

Federal Protections for the Unemployed

No federal law specifically prohibits discrimination against the unemployed. However, employers who refuse to consider anyone who isn’t currently working might run afoul of Title VII and other federal discrimination laws.

Although employment status isn't a protected characteristic, like race, age, or disability, screening out the unemployed could still result in a  discrimination claim. An applicant could bring a disparate treatment charge – a claim that the employer intentionally treated members of a protected class differently – if the employer counts current unemployment against only certain applicants. For example, an employer who doesn't consider whether male applicants are currently employed but does look at job status for female applicants is discriminating based on gender.  Similarly, an employer who takes a close look at the employment status of candidates with obvious disabilities, but doesn’t do so for other applicants, could face a disability discrimination charge.

An employer that adopts a blanket policy of screening out all applicants who are currently out of work could also face a disparate impact charge, claiming that its apparently neutral selection practice has a disproportionately negative effect on applicants in a protected category. Even if the employer applies this factor consistently as a negative mark against all unemployed applicants, the result might be discrimination. Because unemployment rates are higher for African Americans, Native Americans, and Latinos, this policy could disproportionately affect applicants in these groups.

Other Federal Efforts to Protect the Unemployed

A few years ago, the Equal Employment Opportunity Commission (EEOC) held a meeting and heard testimony on whether employers are refusing to consider applicants who are unemployed. Speakers mentioned job postings that explicitly limit the applicant pool to those who already have a job; in other words, those who are out of work need not apply.  Although this meeting got a lot of press, however, the EEOC hasn’t taken any action so far.

President Obama also tried to protect the unemployed in his 2011 jobs bill. His bill would have prohibited employers from posting job advertisements that limit the applicant pool to the employed only or from refusing to hire unemployed applicants. However, this effort was unsuccessful.

State and Local Laws Prohibiting Unemployment Discrimination

Two states -- New Jersey and Oregon – have passed laws that prohibit employers from discriminating against applicants who are out of work. Under these laws, employers may not post job advertisements that include current employment as a job requirement or state that only employed applicants will be considered. New York City and the District of Columbia also prohibit employers from discriminating against those who are out of work. To find out more about state-specific discrimination laws, see Nolo's articles on  Employment Discrimination in Your State.

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