Making Your Disposition Codes a “Big Easy” Your Practical Guide to Implementation
The strategic use of disposition codes is a crucial element to meet OFCCP compliance obligations. Brandy Luna, Director, Corporate Recruiting at Nelnet, joined DE Executive Director Candee Chambers and Attorney John C. Fox of Fox, Wang & Morgan P.C. to tackle this topic for the final presentation of the conference.
Why Do Employers Have Disposition Codes?
Employers create and document their use of disposition codes to gather and preserve evidence of the “legitimate non-discriminatory explanation(s)” for the adverse action in question, Candee explained.
John discussed the legal requirements behind the use of disposition codes, sharing four presentation slides with all the details. “Disposition codes [are] not a nice to have, [rather they are] a must-have,” John said. He detailed the case law that led to his development of disposition codes in 1979. In essence, the burden-shifting framework for Title VII systemic discrimination cases requires an employer to bear the burden of going forward with their legitimate, non-discriminatory reason(s) for the adverse action at issue, if there is a legally meaningful statistical disparity in the selection for hire or promotion, for example, between any one or more “Protected Groups” and the “Most Favored Group.” For OFCCP audits revealing a legally meaningful statistical disparity, this means providing OFCCP’s Compliance Officers with legitimate non-discriminatory reasons for the adverse action in question. If an employer fails to do so, then the court, or OFCCP, may then conclude that a violation has occurred and determine the appropriate remedy.
John began to recommend that his clients use disposition codes to document Offers and rejections in hiring decisions because of “the enormous number of audits that the Carter administration was bringing through OFCCP” coming on the heels of the United States Supreme Court’s Hazelwood and Teamsters case decisions in 1977. John recommended that employers now use disposition codes to document adverse promotion and compensation decisions because of the OFCCP’s renewed recent interest to investigate unlawful discrimination in promotions and the continuing trend of enforcement agencies to focus on investigations of corporate compensation policies and practices.
Accordingly, if there is a statistically meaningful disparity in selections (for hire/promotion, etc.), an employer’s selection managers/talent acquisition staff must have their documentation as to the “legitimate non-discriminatory explanation(s)” as to why they rejected protected group members disproportionally. Otherwise, they will face a court finding, or OFCCP determination, of liability and be subject to paying damages and other remedies. “If you fail [to provide a legitimate, non-discriminatory explanation], the company fails,” John cautioned.
Reiterating a point made during Candee and John’s presentation the previous day, Candee told the audience that, when they run their Disparity Analyses Report (as required by OFCCP’s Rules), “you really should not have any disparities, it should be 0.00, because everybody should be documenting a legitimate non-discriminatory [explanation] to show that you did your job appropriately.”
Employers Must Create Their Own Unique Disposition Codes
While employers must create their disposition codes for themselves, Title VII and Executive Order 11246 law does not limit the kind and number of disposition codes an employer may use, John explained.
But be careful; employers should never recycle the disposition codes of other companies. “You have to design them for your job and your selection process,” he said. People often ask Candee and John for “the” list of disposition codes. But there is no generally applicable list. “They will be unique to you and different than Jonathan’s and different than Brandy’s,” John noted.
Brandy provided an example. Some positions for which her company hires require “a government security clearance, and to get a government security clearance, you have to be a U.S. citizen. [Accordingly,] one of our codes is that they don’t meet that criteria which may not be appropriate for other organizations to use,” she explained.
Who Should Document a Company’s Disposition Codes?
“Our recruiters document [our disposition codes],” using Workday’s Applicant Tracking System (“ATS”), Brandy said. They are assigned based on the stage of the hiring process, she added.
Candee and John both asked the audience, does your ATS give you the ability to customize your disposition codes? About 70% of the audience confirmed that they used their company’s ATS to document and maintain their disposition codes.
“You need to know that [an ATS comes] with a factory setting and then if you have enough budget,” you need to have the vendor customize your disposition codes or have your in-house engineer do that, John advised. “Every ATS is adaptable and the question is only how you do it and how much money it will take to do it,” he added.
Candee noted the problem of ATS software updates that fail to include the customization the employer has added.
Documenting & Preserving Disposition Codes
John and Candee emphasized the importance of keeping all your paper documentation of legitimate non-discriminatory reasons – including interview notes and even Post-It notes, napkins, and food wrappers – because applicable regulations require employers to retain these documents.
“You need to train your managers on what they can put in the interview notes and what they better never put in the interview notes,” Candee added.
While an employer may think they have everything digitized, they often do not, John pointed out. He cited an instance in which a client stored many of its disposition code documents in a “brown box,” rather than scanning them into their company’s sophisticated and robust 7-figure ATS system.
“Should a company quality control check its use/completion/accuracy and/or retention of its disposition codes?” Candee asked. “Absolutely,” Brandy said, adding that they try to run their quality control checks monthly, but not less often than quarterly.
“My recommendation is that you always use a disposition code that somebody completely outside of the process can look at it, and say oh, it is obvious that Joe did not have as many years of experience as what was required in the job description,” Candee advised. “You don’t want it to be left trying to figure out three months later how and why the selection decision was resolved.”
“You operate at your peril, in my experience, if you do not have a quality control check,” John said, recommending that employers do so monthly.
What Disposition Codes Should an Employer Have?
Employers may find it helpful to organize their disposition code by the kind of rejection, John suggested. An initial consideration is whether a “jobseeker” is even an “Applicant” as the law uniquely defines that term. Were they interested in the open position, and did they sustain their interest? Were they minimally qualified? Also consider, what was the available job? “If it was closed or you have a Data Management Technique operating to limit the consideration of more Jobseekers, you need to have a code for that, because you stopped considering somebody in that pool at some point,” John said.
Each of these “legitimate reasons” for your adverse action could have many different disposition codes to describe them. For example, there are many ways Jobseekers lose interest, such as not returning phone calls, not showing up for the interview, or by taking a competing job.
How Many Disposition Codes Must/Should an Employer Have?
You want as few as you may, but as many as you must, to explain the legitimate non-discriminatory explanation(s) for (each) rejection, John and Candee advised.
“This is not a lawyer decision,” John said, “this needs to be worked out by the people on the ground [i.e.,] compliance, legal, and [talent acquisition].” He added that “the human condition will just not allow for a lot of disposition codes. As a lawyer, I would probably like to have 40 or 50, but that is unrealistic.”
“Most of you will live between five and 15 and most [talent acquisition] people will find their favorite four,” John observed.
“We probably have a total of 40 or 50, but they are broken out into each application stage, and so they are a smaller subset, but in total, we probably have 40 or 50 and a lot of them repeat,” Brandy said.
What Not to Do
“Not better/best qualified” should never be a disposition code because it is too vague, John stated. “Not best qualified” is a conclusion, not an “explanation” of the facts supporting your conclusion. “Put enough meat on the bone so the judge and the investigator can walk the same path that your documenters and selectors did,” he said.
Brandy reported that, while they still use “not best qualified,” a reason must be added, such as education or work experience, etc.
John highly recommended having a disposition code for offers made and declined because, legally, a declined offer equals a “hire.”
Employers should not have a “Hired” disposition code because they are never accurate, John noted. “I have never in my life found a single applicant flow log or ATS log of hires to be accurate,” he said. You can use payroll records to determine which applicants actually hit payroll. “Payroll records are almost always accurate,” John observed.
Closing Thoughts
If an employer has several explanations/reasons for a decision, it should document all of them, John and Candee recommended. That is because OFCCP or a court may not be persuaded by one disposition code but may accept the second or third explanation as valid.
The presenters also noted the importance of training recruiters with disposition codes against each other. Also, if an employer uses talent acquisition staff to prescreen or select candidates for hire, that recruiter must also have training on the employer’s disposition codes.
“And when you disable or activate a new disposition code, train them immediately,” John said. “Do not assume that they are just going somewhere out there in the ether to figure this out. Train them.”