1006 HR Magazine: Legal Trends

By Jonathan A. Segal Oct 1, 2006
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HR Magazine, October 2006




As systemic discrimination enters the EEOC's crosshairs, HR should spot risky practices.

First in a two-part series

Hunting for the right people to lead organizations always has had many pitfalls, but this year the practice became even riskier when the Equal Employment Opportunity Commission (EEOC) launched an initiative to fight systemic discrimination.

Although this anti-bias initiative is by no means confined to C-suite recruiting, it merits particular attention when employers fill top-level positions because the EEOC is stepping up its efforts to shatter glass ceilings relating to both race and gender.

To guide employers in the right direction, HR professionals will need to do more than familiarize themselves with the initiative. HR should promptly re-examine requirements in job descriptions for executives and in recruiting procedures.

HR professionals also should take stock of risky practicessuch as relying on word-of-mouth referralswhich may need to be changed. Or, employers also may decide to take other proactive steps. For example, when winnowing down candidates, they might voluntarily follow the relatively stringent requirements set up for federal contractors who have Internet applicantseven if these requirements do not apply to their organizations. Such precautions could help employers duck costly class actions.

The challenge facing HR can be tough indeed, especially since systemic discrimination ordinarily is not limited to an individual decision or decision-maker, but rather is a product of the organization's broader policies, practices and/or culture. Further, it often is without conscious discriminatory intent.

But HR can track down and root out such discrimination through deliberate examinations of recruitment and screening processes. Without such diligent effort, employers face a far greater risk of litigation under the EEOC's new initiative.

Systemic Discrimination Targeted

In March of this year, the EEOC published its Systemic Task Force Report, in which it concluded that identifying and investigating systemic discrimination, and litigating when systemic discrimination is present, should become "a top priority."

The report listed 100 specific action-oriented recommendations to enable the EEOC to become more effective in uncovering, fighting and remedying systemic discrimination. The EEOC's report addresses strategies for the agency to combat systemic discrimination, focusing on operational considerations rather than substantive areas of systemic discrimination.

While the EEOC's initiative for fighting systemic discrimination will not be limited to race and color discrimination or recruiting, it is highly likely that the agency's efforts will focus heavily on race discrimination. After all, race is still the most frequently alleged basis of employment discrimination under federal law, accounting for 35.5 percent of the charges filed with the EEOC in 2005.

Because race bias is still the most frequent charge, the EEOC may focus its attention on top-tier jobs, since these still tend to be the least diversified positions in most companies. Most federal agencies for years have been short of funds, meaning they like to pursue the most dramatic cases they can and get the biggest bang for their buck. Wouldn't pursuing charges at the top levels have that effect? Wouldn't such attention also prompt companies to hire and promote more diverse candidates in the lower ranks who could eventually rise to these positions?

Another factor that may serve to draw greater attention to systemic discrimination among an organization's top tier is the use of the new EEO-1 reports. Starting with EEO-1 reports for the 2007 reporting cycle, due in September 2007, employers must break down the larger category of "officials and managers" into two smaller subcategories that are based on the employee's level within the company: executive/senior-level officials and managers, and first/mid-level officials and managers.

This segmentation will throw a spotlight on diversity at an organization's highest levels, where minorities and women generally have the hardest time gaining access. As a result, companies where minorities and women are more highly concentrated in lower-level management positionsand less fully represented in upper levelswill have that fact revealed by the new reports.

And this information will be impossible to hide. The reports must be filed with the government and are discoverable by plaintiffs' lawyers, who could use them as strong statistical evidence in support of glass-ceiling litigation.

For employers, the key is to identify the systemic problem before the government or private plaintiffs do. The EEOC's policy section on race and color discrimination in its Compliance Manual, published on April 19 of this year, is a useful guide in assessing systemic practices that may give rise to systemic discrimination claims arising out of the selection process.

Job Requirements Subject to Attack

Rooting out suspect practices really should begin with the job requirements themselves. As a general rule, an employer has the right to establish the requirements for a particular job as long as the requirements are EEO-neutral. However, even race-neutral job requirements may violate Title VII if they have a statistically demonstrated adverse impact on a racial group.

If a job requirement is shown to have such an adverse impact, the employer generally must show that the requirement is job-related and consistent with business necessity, which is a very difficult burden for employers to satisfy.

In its Compliance Manual, the EEOC discusses the potential for adverse impact with educational requirements. The example given by the EEOC involves an executive secretary position in which other successful secretaries lack the requisite college degree.

While educational requirements may be problematic for non-senior positions, they should be less of a problem for senior/executive positions. Generally speaking, greater educational levels ordinarily are more defensible the higher the position is within the organizational structure.

However, as the EEOC's example makes clear, the determination of whether a particular requirement is defensible will depend on, among other factors, whether other employees performing the same or substantially similar jobs meet the particular requirement. Accordingly, even at the senior levels, educational requirements may be assailable if incumbents do not satisfy them. This suggests that companies run by entrepreneurs, who may or may not have higher-level education (think of Bill Gates, who never graduated from college), may have more difficulty with this issue than other companies.

More likely to be problematic for senior-level/executive positions are experiential requirements expressed in large quantitiesfor example, the successful candidate must have 15 years' managerial experience. Due to historic and current societal discrimination, some highly qualified racial minorities may not yet have the number of years of experience asked for if the requirements are unreasonably and/or unnecessarily high.

This does not mean that employers should or must reduce requirements. It is not a question of expecting or accepting less. What it does mean is that employers must determine what is truly required in terms of years of experience and when additional experience is not essential, but merely helpful. After all, at some point there are diminishing returns in terms of the learning curve.

For example, with regard to the 15 years' requirement, perhaps only 10 years is truly necessary, with the other five years being beneficial but not critical. If so, the employer may wish to state a 10-year rather than a 15-year requirement.

This is important not only for legal but also for business reasons. Racial discrimination is bad business, as there is a great business benefit from tapping into the talent of diverse racial communities.

Word-of-Mouth Referrals

Sometimes the most direct path to land top executives, as well as talent in many lower-level positions, may appear to be through word-of-mouth referrals. Yet while word-of-mouth referrals can be effective, reliance on them may turn into a fast track to a claim of systemic discrimination.

The Compliance Manual notes that "while word-of-mouth recruiting in a racially diverse workforce can be an effective way to promote diversity, the same method of recruiting in a nondiverse workforce is a barrier to equal employment opportunity if it does not create applicant pools that reflect the diversity in the qualified labor market."

Even if the workforce in general is racially diverse, word-of-mouth recruiting for executive/senior-level positions may be unlawfully discriminatory if the C-suite isn't diverse.

The potential problem with word-of-mouth recruiting relates to the larger problem of homogeneous recruitment sources. As the Compliance Manual cautions, "Title VII is violated by recruiting persons only from largely homogeneous sources if the recruitment practice has a racial purpose, or if it has a significant racial impact and cannot be justified as job related and consistent with business necessity."

Employers need not eliminate word-of-mouth recruiting, which can be very valuable in identifying potential candidates. What employers ordinarily should not do is rely exclusively or primarily on word-of-mouth recruiting, regardless of the level of position the employer is seeking to fill.

Targeted And General Recruiting

More specifically, employers are well advised to take affirmative efforts to use heterogeneous recruitment sources. Ideally, this also should include some targeted recruitingsuch as specifically recruiting racial minorities.

While an inclusive recruitment effort to ensure a diverse applicant pool should not violate Title VII, employers need to be careful in how they achieve diversity in the applicant pool. If a recruiting effort targeted only a particular racial group without any corresponding general recruiting, an employer could be found in violation of Title VII. The reason: It could be argued that the recruiting effort, either intentionally or unintentionally, excluded from consideration racial groups that were not the object of the targeted recruiting.

Employers that want to make use of targeted recruiting should include it in their initial general recruiting efforts, rather than waiting to see how diverse their applicant pool may be. Engaging in targeted recruiting after initial efforts have failed to produce a diverse applicant pool may, in conjunction with other factors, carry an inference of discrimination (see, for example, Rudin v. Lincoln Land Community College, 420 F.3d 712 (7th Cir. 2005)).

Proactive Screening

HR also can help supply an organization with the right questions during screening, and guide an organization away from stereotypes and assumptions that lead down the wrong path.

In its Compliance Manual, the EEOC provides chilling examples of how systemic racial discrimination persists in screening. It points to a 2002 experiment ("Are Emily and Brendan More Employable than Lakisha and Jamal?") conducted by Marianne Bertrand and Sendhil Mullainathan of the University of Chicago Graduate School of Business. In the experiment, more than 5,000 resumes were submitted in response to 1,300 advertisements in Boston and Chicago newspapers for numerous positions. Resumes of persons with names more common among whites were 50 percent more likely to result in interviews than equally impressive resumes of persons with names more common among blacks.

The survey also found that there was a statistically significant difference in call-back rates between whites with higher-quality resumes and whites with lower-quality resumes. But there was not a statistically significant difference in call-back rates between high-quality and low-quality resumes among blacks. Bottom line: Race trumped credentials.

At best, such bias is unintended. However, in the Compliance Manual, the EEOC gives an example of conscious bias in the screening processeliminating from consideration resumes from applicants with ZIP codes from predominantly black or Latino geographic areas.

Without imputing the motives of their colleagues, HR professionals may want to take steps to ensure that biaseither intentional or unintentionaldoes not cause resumes containing racial and other EEO-related characteristics to be eliminated from consideration.

Where the potential pool of qualified applicants is too large, HR professionals need to develop a protocol for narrowing the pool in a nondiscriminatory way. For affirmative action employers, the new Internet application regulations provide some guidance.

According to the final regulations, an "Internet applicant" means any individuals who meet all of the following four criteria:

  • The individuals express interest in employment through the Internet or related electronic data technologies.
  • The employer considers the individuals for employment in particular positions.
  • The individuals demonstrate that they possess the basic qualifications for the positions.
  • The individuals at no point in the selection process prior to receiving an offer remove themselves from further consideration or otherwise indicate that they do not have a continuing interest in the positions.

As for the third criterion, an employer can narrow the pool of individuals possessing the basic qualifications by using EEO-neutral data-management techniques "that do not depend on assessment of qualifications, such as random or absolute numerical limits" (41 C.F.R. 60-1.3(3)). For example, the employer might elect to review only the first 30 resumes received, or every fifth resume. These are two mutually exclusive options. If reviewing the first 30 does not produce an adequate number of applicants, then the employer can use other EEO-neutral techniques, such as looking at every fifth resume. In either case, the employer is to document the data-management technique used.

Although neither the preamble to the final regulations nor the final regulations themselves specifically say so, the preamble contains an example that suggests a contractor is not locked into the first set of basic qualifications it establishes. Rather, if it receives an excessive number of responses with the first set of basic qualifications it establishes, the employer may continue to add to the list of basic qualifications until the number of individuals who satisfy the basic qualifications is manageable, as long as the employer does not consider any individual for the particular position before it has finalized its list of basic qualifications.

While the regulations from the Office of Federal Contract Compliance Programs cover only affirmative action employers, the process they set forth provides a best practice all employers can consider for winnowing down the applicant pool without engaging in racial or other unlawful discrimination. The key is to:

  • Develop EEO-neutral criteria without looking at individual resumes.
  • Document the criteria to be used.
  • Apply the criteria consistently.

Next Steps

Of course, the rubber meets the road in the interview and decision-making process, where a prize candidate may emerge or be lost. Even if HR successfully steers an employer away from systemic discrimination as it recruits its future leaders, many pitfalls remain once the initial screening has been completed and interviews begin, as next month's article will explore.

Author's Note: This article should not be construed as legal advice or as pertaining to specific factual situations.

Jonathan A. Segal, Esq., a contributing editor of HR Magazine , is vice chair of the Employment Services Group of Wolf Block LLP. Based in Philadelphia, Jonathan's practice concentrates on planning, counseling and training to minimize an employer's exposure to litigation and unionization.

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