On June 2, 1965, under a mandate established by Title VII of the Civil Rights Act of 1964, the U.S. Congress created the Equal Employment Opportunity Commission (EEOC) to enforce federal anti-discrimination laws related to employment. The expectation was that African Americans would be prime beneficiaries of the EEOC. There was no assumption that the EEOC, on its own, could reverse deep-rooted employment discrimination against blacks. But in the late 1960s there was optimism that, in combination with equal educational opportunity and the strong demand for unionized workers in the well-paid manufacturing jobs that marked the post-World War II decades, the EEOC could help to ensure that an ever-increasing number of blacks would ascend to the American middle class.
African Americans as a group are better educated than they were in the 1960s, and, as discriminatory norms and practices have lessened, large numbers of college-educated blacks have experienced upward employment mobility into professional, technical, and administrative occupations. But the promise of a large-scale ascendancy of blacks to middle-class status, characterized by secure and well-paid employment, has not been fulfilled. Our basic thesis is that, in combination with the institutions of racism which remain widespread in American society, the erosion of secure and well-paid employment opportunities is a major reason for the persistence since the 1980s of African Americans as disproportionately disadvantaged. Our contribution to the larger debate on the economics of race is to focus on the role of corporate resource allocation as the prime determinant of the quantity and quality of employment opportunities in the economy. The decline of middle-class employment opportunities has adversely affected the majority of the U.S. labor force of all races, ethnicities, and genders. African Americans, however, have been more vulnerable than other demographic groups to this decline.
U.S. institutions of corporate governance vest power over major resource-allocation decisions in the hands of senior executives, supported by their hand-picked corporate boards. Given the enormous size of the major business corporations and their centrality to economic activity, the resource-allocation decisions made by senior executives of major U.S. corporations profoundly influence the operation and performance of the economy as a whole—including the availability, or not, of secure and well-paid employment opportunities. The failure to include an analysis of corporate resource allocation and how it has changed over the past half century in the policy debate on income inequality is what we call the “equal employment opportunity omission.”
Employees are the driving force of an organization and can crystallize success or hasten the demise of a company. As a general matter, problem employees can be avoided or terminated. The law, federal, state or common, influences both of these areas of potential managerial action. The law in this area gives employers wide latitude to act in the best interest of their business. However, that latitude is bounded by important laws on both the state and federal levels and is most pronounced in the area of discrimination. It is important for managers to be aware of the potential pitfalls in the hiring process to ensure compliance with the law and to avoid the problem employees. This article reviews some the legal implications of the most popular hiring methods used by employers.
Keywords Age Discrimination in Employment Act (ADEA); American with Disabilities Act (ADA); Common Law; Employment "At Will"; Equal Employment Opportunity Commission (EEOC); Statute; Title VII of the Civil Rights Act of 1964 (Title VII)
Law: Employment Problems
If a business hires a problem employee or a previously good employee turns bad, a business can suffer. A problem employee may use personal insults; invade colleagues' personal space; initiate uninvited personal contact; rely on threats or intimidation, tell sarcastic jokes, tease or insult colleagues; use their status to humiliate others, initiate public shaming or status degradation; give dirty looks; act unduly selfish or greedy; engage in petty bickering. Essentially, a problem employee is a jerk. The problem employee can cause lost productivity, decreased moral and increased costs associated with training and locating new hires to replace the problem employee or other employees that may have departed because of the problem employee.
Employee problems can be avoided through the hiring process, handled through managerial attempts to change problem behavior or by terminating the employee. An employer can typically fire an employee for any reason or no reason under the employment at will doctrine. Employment at will states that an employee without a fixed term of employment can be fired for any reason or no reason and is an accepted basic rule of employment law. A fixed term of employment generally means that the parties have an employment contract. However, the employment at will doctrine is limited by the provisions of the federal antidiscrimination statues mention later. Additionally, some employees may argue that an implied employment contract existed and was created by an employee handbook or policy manual.
From a legal perspective, there are more wrongful discharge cases than hiring lawsuits brought by unsuccessful applicants. The law tends to be less sympathetic to claims of individuals who have been denied an opportunity to obtain employment as opposed to employees whose employment, perhaps after long tenure, had been wrongfully ended. Additionally, an unsuccessful job seeker is less likely than a discharged employee to file a lawsuit because the loss is less tangible and because they are likely pursuing other employment options concurrently. However, from a business perspective, avoiding a bad hire is far easier and cheaper than discharging an employee and searching for a replacement.
The Hiring Process
The first line of defense for employers is to avoid hiring the wrong people. As a general matter, employers enjoy fairly wide discretion to adopt hiring practices that they deem valuable to their organization. This wide latitude is reflected in the manner in which the laws are written. The laws generally prohibit employers from behaving in certain ways as opposed to requiring employers to behave in certain ways; in that way, the law is more proscriptive than prescriptive. Employers may engage a variety of methods to develop a pool of potential new employees including; want ads, employment agencies, and hiring halls. The employer may screen that pool of applicants with application forms, interviews, references, or other methods of soliciting information about the individual and may require aptitude tests, physical ability tests, or drug tests. As noted, an employer's use of any particular method will violate the law only if it violates a specific legal proscription (Rothstein, 2004).
Laws Governing Hiring
There are four main sources of law that regulate the hiring process.
- For the public sector, or government, employees and some governmentally regulated employees, constitutional protections apply. As an overall observation, the Constitution of the United States regulates only government activity; private party conduct is not directly controlled by the Constitution. While rights akin to constitutional protections may be made applicable to private citizens or companies by way of statute or common law, those rights do not emanate directly from the Constitution. However, when a government employer acts, the full panoply of constitutional protections is invoked. For example, fourth amendment protection against unreasonable searches and seizures applies to drug testing of both public employees and private sector employees when the drug testing is governmental mandated.
- Second, there are federal statutes that regulate various aspects of the hiring process. For example, the Employee Polygraph Protection Act prohibits most polygraph testing in the private sector.
- Third, state constitutional law and state and local statutes also regulate the hiring process. For example, numerous states have laws prohibiting blacklisting an inquiring into an applicant's HIV status.
- Fourth, the common law, primarily tort or civil wrongs, may be available to applicants to redress injuries arising from defamation, invasion of privacy, intentional infliction of emotional distress, and other harms. The common law may also make remedies available to third parties to redress harms caused by the hiring process. Negligent hiring is an example of when an employer may be liable to a third party for hiring an inappropriate employee that caused injury to that third party (Rothstein, 2004).
Much of the legal controversy surrounding the regulation of the hiring process has to do with the regulation and access to information. There are few federal laws that are particularly important to employment, generally; Title VII of the Civil Rights Act of 1964 (Title VII), Age Discrimination in Employment Act (ADEA) and the American with Disabilities Act (ADA).
- Title VII was the first federal legislation to give broad protection against employment discrimination with respect to compensation, terms, conditions or privileges of employment based on "race, color, religion, sex [including pregnancy] or national origin" by employers, labor organizations and employment agencies.
- Three years later, Congress enacted the ADEA that extended similar coverage provided by Title VII to age discrimination.
- In 1990, Congress passed the ADA to prevent employment discrimination against people with physical or mental disabilities. The ADA prohibits discrimination and require employers to make reasonable accommodations to qualified individuals.
Employers with a minimum of fifteen employees under Title VII and ADA (minimum of twenty under the ADEA) that are engaged in activities that affect interstate commerce are covered by the anti-discrimination laws. With that introduction, we can review some law related to some popular hiring methods (Rothstein, 2004).
Methods for Hiring
Want ads are popular way for employers to gain interest in a position they are offering. Section 704(b) Title VII states that it is an unlawful employment practice for an employer, a labor union, or an employment agency to publish any notice or advertisement indicating any preference, limitation, specification, or discrimination in employment based on race, color, religion, sex [including pregnancy] or national origin. Many of the cases brought under this provision involve gender. For example the Equal Employment Opportunity Commission (EEOC) guidelines state that the section prohibits placing advertisements in the gender segregated newspaper columns. The ADEA contains a similar prohibition on age based want ads. Both of these federal laws coordinate with state fair employment acts and nearly every state has enacted legislation similar to the federal laws. Some state laws are broader than the federal law and may also prohibit discrimination based on factors such as marital status or sexual orientation.
Employment agencies are an important source of new employees...