Pennsylvania Labor and Employment Lawyer & Attorney : McNees Wallace & Nurick Law Firm : Human Resources, Workplace and Business Law : Harrisburg, Lancaster, Allentown, Lehigh

The EEOC released its Annual Report on the Federal Workforce for Fiscal Year 2007 (period October 2006 to September 2007).  For those employers who may be benchmarking against the federal government, it seems to me that the government performs at a level that the EEOC would never accept from other employers. Here is a sampling of report’s findings:

·         The federal government employs almost 2.6 million workers of which 56.8% are men and 43.2% are women.

·         The federal workforce’s demographic composition is 7.8% Hispanic or Latino; 65.8% White; 18.4% Black or African American; 6% Asian; 0.2% Native Hawaiian/other Pacific Islander, 1.7% American Indian/Alaskan Native; and 0.2% reported 2 or more races.

·         Hispanic or Latinos, Whites, women and persons of Two or More Races remained below their overall availability in the national civilian labor force, as reported in the 2000 census (CLF).  Black or African Americans, Asians, Native Hawaiian/Other Pacific Islanders, American Indian/Alaska Natives and men remained above their overall availability in the CLF.

·         Federal employees and applicants filed 16,363 complaints alleging discrimination.

·         Unlawful discrimination was found in 2.8% of the 7,673 cases that were closed on the merits.

·         85% of federal agencies provided their EEO staff with required training.

·         58% of federal agencies have an Anti-Harassment Policy.

The good news is that the government is evaluating its EEO performance and publishing the results.

• Email This
• Print
• Comments
• Trackbacks

Most hiring decisions are predicated in some part on subjective criteria. Let’s take for example, “Attitude and communication skills” which are on the top the hiring criteria for Phil Gerbyshak at Slacker Manager’s based on his post 5 Must Have Skills. Undoubtedly these traits were assessed by one or more members of the Phil’s hiring team based on how the candidates presented themselves at the interview. This hiring approach is universally practiced by companies across the country and loathed by government enforcement agencies.

The EEOC and OFCCP have initiatives targeting an employer’s selection process. The EEOC announced its focus on employment testing and screening resulting in a fact sheet Employment Tests and Selection Procedures. Likewise, OFCCP has a program targeting Systemic Discrimination, which examines criteria used in the hiring process. Subjective criteria are scrutinized because of the fear that they will be manipulated for a discriminatory purpose.

Courts examining subjective hiring criteria have not outright prohibited their use, but have cautioned against their advancement because they are “easily fabricated”. Recently in Wingate v. Gage County School District, the Eighth Circuit Court of Appeals ruled that an employer’s use of subjective criteria did not create an inference of age discrimination when objective criteria were also utilized to make the employment decision.

The legal analyses of subjective hiring criteria revolve around theories of disparate treatment or disparate impact. The measure of compliance has its origin in the Uniform Guidelines on Employee Selection Procedures, which define interview questions as means of selection criteria and set forth the parameters for compliance.

The legal compliance for disparate treatment focuses on the following:

• Whether the subjective criteria are job related
• How they are measured
• Whether the criteria are uniformly applied

According to Section 30 the OFCCP Compliance Manual, employers that utilize subjective hiring criteria will be evaluated for disparate treatment based, in part, upon their use of “safeguards” in the hiring process:

Safeguards consist of efforts made by the contractor to limit the possibility of differential application of the selection criteria/processes. In other words, treating members of a minority group or women differently than others in the application/evaluation of the criteria/processes. An example of a uniformly applied subjective process with safeguards could be an interview where all persons who pass the required test are interviewed regardless of minority or sex status; all interviewers are professionally trained in interviewing; all persons interviewed are asked the same questions; responses are documented; and answers are all evaluated in the same manner.

The legal compliance hurdles for disparate impact have a slightly different focus. The EEOC describes this process as follows:

• If the selection procedure has a disparate impact based on race, color, religion, sex, or national origin, can the employer show that the selection procedure is job-related and consistent with business necessity? An employer can meet this standard by showing that it is necessary to the safe and efficient performance of the job. The challenged policy or practice should therefore be associated with the skills needed to perform the job successfully. In contrast to a general measurement of applicants’ or employees’ skills, the challenged policy or practice must evaluate an individual’s skills as related to the particular job in question.
• f the employer shows that the selection procedure is job-related and consistent with business necessity, can the person challenging the selection procedure demonstrate that there is a less discriminatory alternative available? For example, is another test available that would be equally effective in predicting job performance but would not disproportionately exclude the protected group?

Employers who want to assess attitude and communication skills should consider the following additions to their hiring procedures:

• Make attitude and communication skills an express criteria in job descriptions and summaries of minimum job requirements
• Describe its job relatedness and business justification
• Assess whether the criteria is creating an adverse impact
• Implement “safeguards” in the hiring process describe in OFCCP Guidance

• Email This
• Print
• Comments
• Trackbacks

The OFCCP reports a record $51.7 million recovered for 22,251 workers. Of the recovery, 98% was collected for cases of systemic discrimination in the application process because of unlawful employment policy or practice according to a published account. Much of the monetary recovery came from the 14 cases of systemic discrimination referred to litigation with the DOL’s lawyers.

Government contractors are selected for audit in several ways including the use of a mathematical model that predicts the likelihood of a finding of systemic discrimination. The model analyzes data from five years of OFCCP compliance evaluations to formally identify and characterize relationships between reported EEO-1 workforce profiles and findings of discrimination. The OFCCP publishes compliance lists for one year audit cycles beginning in October of each year.

We have been involved in many of these style OFCCP audits and the approach is the same. The audit is triggered by an anomaly in a business' EO Survey which shows a statistical disparity in either hires or terminations. For example, the percentage of minority applicants differs by more than 80% from the percentage of minorities hired (the four-fifths rule). The investigation into the disparity in the hiring process follows the road map set out in the OFCCP's Compliance Manual as follows:

• Summarizing the hiring process by obtaining an employer's summary
• Establishing the minimum objective criteria for the position.
• Evaluating the Pass/Fail Points for disparate impact (i.e., when does an applicant move to the next step of the process).
• Evaluating both the objective and subjective criteria for uniform application to all applicants and for business relatedness.
• Evaluating specific safeguards as to the application of selection criteria including how well each is documented for each applicant.
• Measuring statistical disparity by Impact Ratio Analysis (IRA) of each step and criteria.

There are many problems with the OFCCP's investigatory process, a few of which are described as follows:

1.    The OFCCP loathes subjective hiring criteria. I had a client who required that its customer service candidates be "personable and friendly". The OFCCP started out with the position that this was not a "job-related" criteria. When that didn't fly with its own legal department, the OFCCP interviewed every hiring manager and asked them to define how it applied the "personable and friendly criteria". When the hiring manager responses weren't exactly the same, the OFCCP found adverse impact because the hiring procedures weren't uniformly applied to all applicants.

2.    The OFCCP's standard for adequate record keeping of each hiring decision is extremely high and it finds that inadequate records are a form of systemic discrimination.

3.    Finding adverse impact based on the four-fifths rule is a joke in terms of its lack of statistical significance. The rule has its origin in the EEOC's Uniform Guidelines on Employee Selection Procedures. However, knowing that the OFCCP uses this flawed measure makes it all the more important to use this measuring stick when self-assessing your employment practices.

Once the OFCCP makes a finding of a prima facie case of pattern and practice discrimination, it will presume that all members of the class are victims of discrimination and assess liability against the contractor.   The employer can only argue about who is eligible for an award and how much. This is where an employer must decide to dig in its heals and litigate or settle.

A settlement with the OFCCP for systemic discrimination in the hiring process will include back pay plus interest and job offers to the affected class, internal mandated and OFCCP approved training, follow up reporting to the OFCCP and publicity in the form of an OFCCP Press Release.

• Email This
• Print
• Comments
• Trackbacks

The Amendment to Executive Order 12989 has government contractors and subcontractors scrambling to evaluate their legal obligations. Details remain sketchy, but the following information may help prepare a compliance strategy:

What is the Effective Date for Using E-Verify?

Employers have no immediate requirement to start using E-Verify. According to a SHRM news report, the deadline for federal contractors to sign up for E-Verify “still needs to be determined” and will be made public through the standard government regulation process, U.S. Citizen and Immigration Services (USCIS) Acting Director Jonathan Scharfen said, following his testimony June 10, 2008, on E-Verify before the House Immigration, Citizenship, Refugees, Border Security and International Law Committee. Once a deadline has been determined, E-Verify will be able to handle the roughly 200,000 contractors who will have to sign up or risk losing their federal contracts, he said.

Which Employers will be Covered?

The Amendment to E.O. 12989 requires E-Verify use for (i) all persons hired during the contract term by the contractor to perform employment duties within the United States; and (ii) all persons assigned by the contractor to perform work within the United States on the Federal contract.The original E.O. 12989 set forth the parameters of the order by referencing the debarment provisions of the Federal Acquisition Regulations. Based on the combination of references it appears that the new E-Verify system will be applicable to the employees of all first tier contractors (and their affiliates) and the employees of sub-contractors working on the government contract. It is unclear whether E-Verify applies to existing contracts and/or existing employees.

Are there Alternatives to E-Verify?

An alternate program called New Employee Verification Act (NEVA) (H.R. 5515), has been introduced by Rep. Sam Johnson, R-Texas. NEVA would transform the current paper-based employment verification process by requiring employers to participate in one of two electronic employment verification systems. Employers would enroll through their state’s existing “new hire” reporting program which was originally designed to enhance child support enforcement. The new hire-reporting program is an electronic portal already used by 90 percent of U.S. employers. Commentators have noted “serious flaws” in this program too.

Have the Accuracy Issues with E-Verify been Resolved?

The DHS report “Debunking the E-Verify Error Rate” touting the accuracy of the E-verify System is based on 1000 queries conducted by an independent reviewer noted automatic confirmation of 942 (94.2%) of the sample queries. Five (.5%) of applicants were able to resolve the mismatch by correcting information with the Social Security Administration. The balance of 52 (5.2%) applicants could not be hired because of unconfirmed information. There is no analysis as to whether the rejected applicants where illegal workers or erroneous rejections.

GAO Report issued on June 10, 2008 entitled “E-Verification: Challenges Exist in the Implementing the Mandatory Electronic Employment Verification System” evaluates the accuracy of E-Verify as follows:

According to USCIS, under the current voluntary program the majority of E-Verify queries entered by employers--about 92 percent--confirm within seconds that the employee is authorized to work. About 7 percent of the queries cannot be immediately confirmed as work authorized by SSA, and about 1 percent cannot be immediately confirmed as work authorized by USCIS because the employee information queried through the program does not match information in SSA or DHS databases. With regard to SSA tentative nonconfirmations, USCIS and SSA officials told us that the majority of erroneous tentative nonconfirmations occur because employees' citizenship or other information, such as name changes, is not up to date in the SSA database, generally because individuals have not contacted SSA to update their information when changes occurred.

Should a Contractor get a “Head Start” by signing up for E-Verify in Advance of the Effective Date?

A wait and see approach may still be the best play as the uncertainties of the effective date and coverage are resolved by regulations. In any event, employers should carefully considered a compliance strategy based on yet unresolved contingencies:

• Scope of Operations covered by E-Verify
• Whether Verification applies to existing employees or just new hires
• Effect on Hiring and Retention of Workforce
• Centralization of Hiring Process
• Communication with No-Match Employees and/or Applicants
• Assistance to Employees in correcting No-Match
• Appreciating the Scope of the No-Match Safeharbor and IRCA's Anti-discrimination protections

• Email This
• Print
• Comments (1)
• Trackbacks

On June 6, 2008, President Bush amended Executive Order 12989 to require that all federal contractors verify the legal status of their employees by using the government’s electronic employment verification system or face sanctions including debarment from future contracts:

Executive departments and agencies that enter into contracts shall require, as a condition of each contract, that the contractor agree to use an electronic employment eligibility verification system designated by the Secretary of Homeland Security to verify the employment eligibility of: (i) all persons hired during the contract term by the contractor to perform employment duties within the United States; and (ii) all persons assigned by the contractor to perform work within the United States on the Federal contract.

DHS has designated E-Verify as the employment eligibility verification system for all federal contractors and touted its effectiveness:

More than 69,000 employers currently rely on E-Verify to determine that their new hires are authorized to work in the United States. Employers have run more than 4 million employment verification queries so far in fiscal year 2008. Of those queries, 99.5 percent of qualified employees are cleared automatically by E-Verify.

Commentators have questioned the accuracy and capacity of the E-Verify system. Michael Aitken, SHRM Government Affairs Director has said, “ mandating participation in a system that doesn’t really work won’t give employers the tools they need to ensure a legal workforce.” DHS has responded publicly in its release “Debunking the E-Verify Capacity Problem.” I have suggested taking a Wait and See Approach to E-Verify. However, the wait is over for government contractors who will soon see how the system fairs. Bush’s Order has no clear effective date, but appears to be prospectively applicable to new or renewed government contracts.

• Email This
• Print
• Comments
• Trackbacks (1)

The EEOC announced a $1 million settlement for sex discrimination against men arising from a restaurant’s preference for hiring and promoting only women into bartending positions. The lawsuit highlights the tension between a business’s marketing efforts and legal compliance. What marketers may pander to in the name of “customer preference,” employment laws prohibit as discrimination.

Businesses spend millions of dollars to find out what motivates customers to buy by evaluating their preferences. Demographics play an important role in tying the right product to the right market. Also critical is having the “right” salesperson to make the pitch.

A business’s natural, but unlawful reaction may be to make staffing decisions based upon appealing to a target demographic group.  The “customer preferences” for the right salesperson cannot create employer hiring or promotion criteria for someone of a particular gender, religion, age, etc. Courts have universally rejected this form of customer preference, except in the narrow case where it is a Bona Fide Occupational Qualification (BFOQ). A BFOQ may exist where it is necessary for the purpose of authenticity or genuineness, such as, a model for gender specific clothing. 

In its lawsuit, the EEOC said that Razzoo's, a Cajun food restaurant chain, refused to hire or promote men to the position of bartender. The EEOC had evidence that the restaurant's management set up and communicated to managers by e-mail, a plan for an 80-20 ratio of women to men behind the bar. Male applicants and servers were told that management wanted mostly “girls” behind the bar. Men who worked as servers at the restaurant were generally denied promotion to bartender because of their gender. The few men who were promoted to bartender were not allowed to work lucrative “girls-only” bar­tend­ing events.

The EEOC’s settlement with Razzoo shows a developing trend in the agency of making an employer improve its approach to human resources. In addition to paying $775,000 to be divided among a class of male applicants, male servers, and male bartenders who were discriminated against, Razzoo's was also required to retain the services of a human resources consultant or to develop an in-house human resources department spending no less than $225,000 for these human resources services.   Razzoo's agreed to injunctive relief requiring training on equal employment opportunity for all its employees, the posting of an anti-discrimination notice, and EEOC monitoring of employee complaints of discrimination.

Suzanne M. Anderson, EEOC supervisory trial attorney and lead counsel on the lawsuit, summed up the EEOC’s position by saying that, "Some may think that sex sells drinks, but gender ratios are illegal… Razzoo's decision to hire and promote by gender is a clear violation of federal law. A hiring ratio is illegal whether it is 80-20 whites to blacks or 80-20 women to men."   It will be interesting to see how far the law will go in policing an employer’s efforts to appease a customer preference. For example, would an OBGYN practice be subject to an EEOC lawsuit if it specifically hired a female doctor based on the preference of its patients?

• Email This
• Print
• Comments
• Trackbacks