Buried in the text of President Obama’s jobs bill is a provision named the “Fair Employment Opportunity Act,” which would make it illegal for employers to discriminate against the unemployed. At a recent town-hall event, the president singled out this provision as a much-needed federal safeguard against businesses’ reluctance to hire, in the words of one softball questioner, “really good candidates that suffered from a downward trend in their credit history due to lack of job opportunities.” Like many of the policies outlined in the president’s plan, the measure sounds like a well-intentioned effort to help the 9 percent of Americans who are currently unemployed. In reality, it is little more than a talking point that, if enacted, could exacerbate the very problem it means to solve.
However, as much as the White House would like to believe that its various “stimulative” policies, proposed tax increases, and regulatory behemoths have nothing to do with it, the unemployment rate remains high, and discrimination is certainly not to blame. Furthermore, it is the means by which the White House seeks to end this “discrimination” that has critics so alarmed.
Under existing federal law, employers are already prohibited from discriminating based on race, religion, sex, or national origin. Obama’s plan would effectively add “employment status” to that list, a classification that brings with it an array of special protections — most notably the right to sue and recover damages for violations. Businesses deemed to be in violation of the act could face a court order and be forced to pay a fine of up to $1,000 per day or “reasonable attorney’s fees,” including “expert fees,” and other damages as high as $5,000.
Chai Feldblum, a member of the Equal Employment Opportunity Commission, the body that would be charged with enforcing the new rule, called it “a perfectly reasonable policy step [that] would allow people to bring a claim directly . . . without having to go through the whole ‘disparate impact’ analysis.” Translation: The provision would make it much easier for unemployed individuals to file, and potentially win, discrimination lawsuits. Further translation: The provision is a windfall in the making for trial lawyers, a loyal Democratic constituency.
Under current law, which does not classify the unemployed as a protected class, individuals claiming discrimination must prove that a certain employment practice has a “disparate impact” on a particular class of people (e.g., the unemployed). Obama’s proposal would place that bar significantly lower. Any unemployed person who applied for and was subsequently denied a job could present a prima facie claim for discrimination based on two easily verifiable facts: 1) The individual was unemployed when he applied for the job; and 2) he didn’t get the job.
As a result, despite the inevitable he-said, she-said nature of the cases likely to be brought under this new rule, it would be exceedingly difficult to get even the most unwarranted claims thrown out before trial, thus imposing a substantial burden, in time and money, on businesses regardless of whether or not they have done anything wrong. As the editors point out, there are plenty of reasons why businesses may consider unemployed individuals to be less desirable job candidates, none of which constitute “nefarious discrimination.”
Ironically enough, the threat of an expensive lawsuit inherent in the president’s proposal could end up compelling businesses to discriminate against unemployed individuals by refusing to interview or otherwise consider them for hire in the first place, which is precisely the problem the new rules aim to alleviate. But even then, employers would not escape legal action.
The provision also targets businesses that “fail or refuse to consider for employment” individuals based on their employment status, the inevitable result being a vicious feedback loop in which businesses are technically in violation of the new rule if they refuse to consider unemployed applicants because they fear being accused of violating the rule. It is not unreasonable to predict that this would discourage employers, already wary of a second recession, from hiring altogether.
With the Bureau of Labor Statistics reporting zero net jobs created in August, and its September report believed to show an increase in the unemployment rate, it is understandable that the president would like to reverse that trend. Unfortunately, the Fair Employment Opportunity Act seeks to accomplish that goal by, in essence, forcing businesses, under threat of costly litigation, to hire the unemployed. In practice, it would almost certainly set back the prospects of the unemployed (at least for vast majority who don’t happen to be trial lawyers).
— Andrew Stiles is the Franklin Center’s 2011 Thomas L. Rhodes Journalism Fellow.