AMERICAN JOBS ACT PROHIBITS DISCRIMINATION ON THE BASIS OF AN APPLICANT’S STATUS AS UNEMPLOYED

AMERICAN JOBS ACT PROHIBITS DISCRIMINATION ON THE
BASIS OF AN APPLICANT’S STATUS AS UNEMPLOYED

President Barack Obama’s recently proposed American Jobs Act (the “Act”) includes anti-discrimination provisions designed to protect the unemployed. Section 374 of the proposed legislation is intended to prevent employers from discriminating against job applicants based on their “status as unemployed.”

As currently written, the Act would prohibit employers from failing or refusing to consider for employment an individual because of that individual’s status as being unemployed. The Act would also prohibit employers from publishing any advertisements indicating an individual’s status as unemployed disqualifies the individual for any employment opportunity or stating the employer will not consider or hire any individual based on the individual’s status as unemployed. Though employers may not disqualify job applicants solely based on their status as being unemployed, the Act includes language clarifying that it is not intended to “preclude an employer or employment agency from considering an individual’s employment history, or from examining the reasons underlying an individual’s status as unemployed.”

While it is far from clear that the American Jobs Act will be enacted in its current form or that the anti-discrimination provisions will be included in the final version of the legislation, employers should strongly consider adopting hiring practices that do not directly take employment status into account. Even if the proposed legislation is not enacted, employers still face potential liability if they adopt policies that bar consideration of unemployed applicants.

During congressional hearings in February 2011, the Equal Employment Opportunity Commission indicated it has been investigating hiring practices that disqualify employees based on their status as being unemployed and has been evaluating whether such policies have a disparate impact on persons in certain protected classes. Employers that disqualify unemployed applicants may run the risk of facing a disparate impact lawsuit in which members of a specific race, sex, or other protected category could argue that the employer’s policy has a disparate impact on their protected group.