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Law Introduced in NYC Council that Prohibits Discrimination Based on Unemployment Status

By Carrie Corcoran

On March 28, 2012, legislation was introduced before the New York City Council (“NYC Council”) that, if enacted, will extend employment discrimination protections to unemployed job seekers.  In a climate of persistently high unemployment rates and many discouraged – and disgruntled – jobless persons, it should come as no surprise that, along with New York City, legislatures across the nation are considering drastic measures.  Some of these laws have even passed. 

A year ago, New Jersey was the first state out of the gate when it enacted legislation to protect unemployed job seekers.  New Jersey’s legislation, however, is much narrower than many subsequent efforts by state and local governments to protect the jobless.  Specifically, New Jersey only prohibits job advertisements that exclude unemployed candidates.  The legislation explicitly precludes a private cause of action for spurned job hunters.  Rather, it provides for fines ranging from $1,000 for the first violation, $5,000 for the second violation, and $10,000 for additional violations.

Contrast the District of Columbia’s new legislation, signed by the mayor March 19, 2012 and currently undergoing its (usually pro forma) review by Congress.  This law prohibits an “employing agency” (broadly defined)  from not only disqualifying unemployed persons in want ads, but also from failing or refusing to “consider” or “hire an individual as an employee because of the individual’s status as unemployed.”  The legislation permits a narrow defense that the employing agency may consider unemployment status if “an individual’s employment in a similar or related job” in a proximate time period is a “bona fide occupational qualification reasonably necessary to successful performance” in the job at issue (e.g., a technology-sector employee who must possess fresh skills and up-to-date knowledge).  Disappointed job seekers in the District of Columbia can file an administrative charge or sue in court for the full range of remedies, including compensatory damages and attorneys’ fees.

The legislation introduced before the NYC Council more closely resembles the District of Columbia’s legislation than it does New Jersey’s.  The proposed law seeks to broadly ban employers and employment agencies from basing employment decisions “on the unemployment status of the applicant or employee.”  The scope of the legislation, however, is somewhat limited by an exemption that permits employers to “request[] or us[e] unemployment status information that is substantially job related” for a “bona fide reason.”  The proposed law also allows employers to “inquir[e] into the circumstances surrounding an applicant’s or employee’s previous termination or demotion, including whether such adverse action was based on cause.”  Additionally, the legislation would proscribe job ads that exclude unemployed applicants.  Under the New York City Human Rights Law, of which this proposed legislation is part, employees benefit from an expansive, employee-favorable interpretation, a three-year statute of limitations, and the full array of damages, including punitive damages.

With respect to prohibiting employers from issuing advertisements that exclude jobless applicants, these provisions are less controversial and, to whatever extent this practice exists, inadvisable.  Besides fairness issues and potential bad press, this practice may also lead to litigation under existing anti-discrimination laws.  The NYC Council’s press release announcing the legislation highlighted the potential disproportionate impact on minorities due to the higher rates of unemployment among African Americans and Hispanics.  At an Equal Employment Opportunity Commission meeting last year that explored the treatment of unemployed job seekers, a Department of Labor representative also reviewed statistics and concluded that such exclusions may cause “disparate impacts among racial minorities, among workers with disabilities, and among older workers.”

But transforming unemployment status into a protected category is a horse of a different color.  This blog has previously commented on the nettlesome nature of a similar proposal in the context of President Obama’s American Jobs Act.  Although a job applicant’s race or gender (for example) bears no rational connection to an applicant’s qualifications for a particular job, an applicant’s job history – including its continuity and the reasons for any gaps – may relate to an applicant’s relative merit for a particular position.  A job seeker who has been unable to obtain, or retain, employment due to an inability to show up to work (or interviews) on time is justifiably a less attractive candidate than someone who, all other things being equal, has no punctuality issues.  The explanation that “I decided not to hire the candidate who was fired for persistent tardiness” might tread uncomfortably close to unlawfully considering an individual’s status as unemployed.  Notably, the New York City law would permit employers to inquire about the employee’s termination for tardiness.  But, in litigation, the employer would have to undergo the burden of proving that punctuality was “substantially job related” and that it had a “bona fide reason” for using the information regarding the prior termination in making its decision.

Although legislators are rightly concerned with assisting jobless persons and reducing barriers to their re-entry into the workforce, the unintended consequence of these laws may be to increase the cost of doing business for employers due to an influx of new lawsuits by rejected applicants.  This result might increase the employment opportunities for labor and employment attorneys, but not the millions of unemployed.