A Look At The Toughest Unemployment Discrimination Law

by Pepper Hamilton LLP
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Originally Published in Employment Law360 on March 20, 2013.

Employers in New York City are just beginning to grip the scope of a new law that gives job applicants protection from unemployment discrimination.1 Set to take effect June 11, 2013, the law was enacted by the city council on March 13 when it overrode Mayor Bloomberg’s veto. The law, which amends the New York City Human Rights Law, governs both advertisements for jobs as well as the hiring process.

It prohibits employers from advertising job vacancies in any manner that makes current employment a prerequisite for consideration or states that unemployed candidates will not be considered for the position. The law also makes it illegal for employers to consider an individual’s unemployment status in hiring and other employment decisions unless one has a substantially job-related reason for doing so.

Employers are asking: What exactly does this law cover, and how do I comply with it?

What the New Law Covers

Unlike recently enacted laws in other jurisdictions such as New Jersey, Oregon and the District of Columbia,2 which have merely made “unemployed-need-not-apply” advertising illegal or provided for limited administrative remedies, this new law is the most far-reaching in the nation. It treats unemployment status in the same manner as other commonly protected classifications such as race, age, national origin, gender, disability and sexual orientation under the city’s comprehensive anti-discrimination law, which covers employers with four or more employees working or living in New York City.3

The controversial measure protects those “not having a job, being available for work, and seeking employment” and prohibits employers from basing employment decisions regarding “hiring, compensation or the terms, conditions or privileges of employment on an applicant's unemployment.”4

It does, however, allow employers to consider an applicant’s unemployment in limited situations and provides employers with certain rights and defenses. For instance, the law allows employers to inquire into the circumstances surrounding an applicant’s separation from prior employment; consider “substantially job-related qualifications,” such as the need for an applicant to have a current and valid professional or occupational license, certificate, credentials or minimum levels of education, training or actual job experience; and limit job openings or give priority to internal candidates.5

Likewise, the law does not apply to actions taken pursuant to a collective bargaining agreement.6

Remedies and Costs of the New Law

The new law permits aggrieved applicants to file discrimination charges with the city’s Commission on Human Rights7 or, alternatively, privately sue the prospective employer in court for discriminatory treatment8 or under a disparate impact theory.9 The commission can require an employer to “cease and desist” from maintaining discriminatory hiring practices, force an employer to hire the rejected candidate and order back- and front-pay awards, including compensatory damages for emotional distress and other nonmonetary damages.10

The commission can also impose maximum civil penalties ranging from $125,000 to $250,000 per violation, depending on the nature of the employer’s conduct.11 Those who sue privately in court can additionally recover punitive damages, demand injunctive relief and be awarded attorney’s fees and costs at the discretion of the courts.12

A Troubling Feature of the New Law

The most troubling part of the new law is that it makes employers susceptible to suit (possibly on a class-wide basis) based on allegations that a company’s hiring policies or practices have an overall “disparate impact” on the unemployed without arguably any need to identify the specific offending practices or policies.13 This is hardly a demanding standard for plaintiffs to meet, given that, as Mayor Bloomberg recognized when he vetoed the proposed bill, it is reasonable to assume that city employers more often hire the employed than the unemployed.

In essence, the measure may actually be construed by the courts to reverse the standard evidentiary burden and require a company to defend its processes by “pleading and proving” as an affirmative defense that its challenged hiring system is based on permissible “substantially job-related qualifications” and/or does not have a discriminatory impact.14

Even if proven to be job-related, a potential plaintiff may then have another chance to prevail if he or she can prove that a better-suited “alternative” with “less disparate impact” than presumptively legitimate hiring practice or policy exists, and the employer cannot establish that the plaintiff’s proposed alternative would “not serve [the] entity as well.”15 This multipart, shifting, subjective and unforgivably complex standard is poised to cause employers significant grief and litigation expense.

Six Steps to Comply with the New Unemployment Discrimination Law

This law opens up a new frontier in the area of employment discrimination. Understanding the contours of this new law and ensuring compliance is unlikely to be as straightforward as it has been when employers were “only” required to avoid discrimination against applicants based on their race, age, sex and other traditional protected classifications. The following six steps should assist employers in complying with this new law.

First, employers should examine closely their advertisements and any portions of their Web sites focusing on recruitment and available jobs. Any offending language should be removed.

Second, any managers looking to fill positions who previously expressed a preference favoring the employed or disfavoring the unemployed should be advised that these types of preferences no longer may be part of their decision-making process.

Third, employers should review and, where necessary, consider revising their discrimination policies and other materials to insert this newest form of discrimination as a protected classification.

Fourth, employers should review and, where needed, revise their recruiting policies and practices to comply with the new law before it goes into effect. Employers should pay special attention to common interview questions that may make inquiries about current unemployed status, examine any minimum job experience and qualification standards and update candidate evaluation systems and materials to eliminate any favoritism afforded to those who are employed or disadvantages visited upon those who are unemployed.

Fifth, employers in New York City should train recruiting and hiring personnel, as well as all those that interview candidates, to be aware of what the law prohibits and be mindful of their questions. This law is not intuitive, and questions can be asked one way that may be permissible and another way that may arguably violate the law.

Sixth, given that many headhunters and recruiting firms operate outside of New York City, local employers should consider affirmatively telling referral agencies in writing not to disfavor or exclude applicants who are unemployed.

Given the large number of unemployed workers in New York City, this statute may well turn into a heavily litigated area of the law. Following the above steps may eliminate or minimize employer liability to this new form of employment discrimination.

Endnotes

1 See Introductory Number 814-2012 (Ver. A), “A Local Law to amend the administrative code of the city of New York, in relation to prohibiting discrimination based on an individual's unemployment,” New York City Council, available at http://legistar.council.nyc.gov/Legislation.aspx (Insert “Int. No. 814-A” into the page’s search box.).

2 See N.J.S.A. 34:8B-1 (2013) (eff. Jun 1, 2011); Oregon Senate Bill 1548 (eff. Mar. 27, 2012) (to be codified in Chapter 659A of the Oregon Revised Statutes); D.C. Code § 32-1362 (2012) (eff. May 31, 2012). Similar bills have been introduced in a number of other states and in the U.S. Congress but have failed to become law. Given the persistence of high unemployment, one can expect legislators to renew their interests in these measures and reintroduce protections for the unemployed during the 2013 legislative cycle.

3 Int. No. 814-A amends Title Eight of the Administrative Code of the City of New York (commonly known as the “The New York City Human Rights Law”); see also NYC Admin. Code §§ 8-102(5).

4 Int. No. 814-A, §2.

5 Int. No. 814-A, §3 (to be codified at NYC Admin. Code §§ 8-107(21)(b)-(c)).

6 Int. No. 814-A, §3 (to be codified at NYC Admin. Code §§ 8-107(21)(c)(1)(d)).

7 NYC Admin. Code § 8-109.

8 NYC Admin. Code § 8-502.

9 Int. No. 814-A, §3 (to be codified at NYC Admin. Code §§ 8-107(21)(e)).

10 NYC Admin. Code § 8-120(a).

11 NYC Admin. Code § 8-126(a).

12 NYC Admin. Code § 8-502(a), (f).

13 Int. No. 814-A, §3 (to be codified at NYC Admin. Code §§8-107(21)(e)).

14 Int. No. 814-A, §3 (to be codified at NYC Admin. Code §§8-107(21)(e)(1)-(2)).

15 Int. No. 814-A, §3 (to be codified at NYC Admin. Code §§8-107(21)(e)(2)).

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