“It’s a good best practice to have,” counsels Christopher Olmsted, a specialist in labor and employment law and partner in the San Diego firm Barker, Olmsted & Barnier. Now, in the wake of a new federal appeals court decision, proper vetting is “even more important,” he says.

Last month, the 2nd District Court of Appeal based in New York, said an employer is liable for the misdeeds of its hiring agents, even if it considers them independent contractors.

Said the court: “We hold that an employer may be held liable for discrimination by third parties, including independent contractors, that the employer authorizes to make hiring decisions on its behalf.”

The case arose when a candidate was rejected for a job showing apartments to potential tenants because, the candidate alleged, he was too old.  Michael Halpert, the candidate, sued Manhattan Apartments, the rental company. But it said it wasn’t liable because one of its  independent contractors was involved and under previous decisions it wasn’t responsible for the actions of a third-party recruiter.

The New York Appeals court rejected that contention and ruled, “If a company gives an individual authority to interview job applicants and make hiring decisions on the company’s behalf, then the company may be held liable if that individual improperly discriminates against applicants on the basis of age.”

In Olmsted’s view, an RPO or HR outsourcer given authority to make hiring offers, would become an agent of the employer. And under the law the employer is responsible for the actions of the agent.

At the other extreme is simple name generation or application screening where all candidates meeting the job requirements are submitted.  “If they are just shuffling paper, then there’s no hiring authority involved,” Olmsted says.

But what about those (very common) situations where a third party is retained to source and screen candidates? Or conduct a first interview? Or rank them, and present the list?

That’s where things get murkier, he agreed. “The case does very little to tell when this agency agreement arises,” he says. “As soon as the recruiter is given some responsibility… then the question arises.”

In an analysis he wrote for the law firm’s website, Olmsted advises, “When hiring recruiters or other service providers, engage in ‘HR due diligence’ by confirming their understanding of and commitment to EEO practices.”

Technically, the opinion of the New York appeals court applies only to federal courts in the second district. However, like Olmsted, attorneys across the country are advising employers to be especially careful when hiring outside recruiters.

He sued under the Age Discrimination in Employment Act, which,  like Title VII of the Civil Rights Act, prohibits discrimination, but which, unlike Title VII, hasn’t received the same attention from Congress over the years.

Gross won $47,000 from an Iowa jury. The verdict was upheld on appeal. But Thursday, in a historic employment decision, the U.S. Supreme Court overruled the lower courts in Gross v. FBL Financial Services, declaring that it is up to plaintiffs to prove age bias was the reason for an adverse action against them by an employer.

The court’s decision throws out a long-standing rule by which an employee could prevail on an age bias claim if they could prove age was a factor, even if it wasn’t the only one. Once the employee plaintiff established that with evidence, it was up to the employer to show a legitimate reason for taking the action it did.

These so-called “mixed motive” cases reflect such real-world situations as where layoffs fall disproportionally on older workers who tend to have higher pay than younger workers. In that kind of case, replacing older workers with younger ones may be one of multiple reasons considered by the employer. To make a bias case, however, a dismissed worker previously needed only to show that age discrimination was a part of the decision. That shifted the legal burden to the employer who then needed to show that the decision — in this example a layoff — would have been handled the same way regardless of worker age.

The Supreme Court ruling, written by Clarence Thomas and decided on a 5-4 vote, invalidates this two-step process — shifting the burden of proof — and places the entire burden of proof on the employee.

“The burden of persuasion does not shift to the employer even when a plaintiff has produced some evidence that age was one motivating factor in that decision,” Thomas writes in his decision.

Congress amended Title VII when a similar court decision threatened to derail protection against race, religion, and other forms of discrimination. Age protection is not part of Title VII, but was enacted in the Age Discrimination in Employment Act and was not affected by the Title VII amendments.

That point was made in the majority decision. “Unlike Title VII, the ADEA’s text does not provide that a plaintiff may establish discrimination by showing that age was simply a motivating factor,” Thomas writes in the opinion. “We cannot ignore Congress’ decision to amend Title VII’s relevant provisions but not to make similar changes to the ADEA.”

Advocacy groups such as the AARP were quick to denounce the opinion and called on Congress to overrule it with legislation.  Business groups, on the other hand, hailed the decision. Without it, said the National Federation of Independent Business, employers would have been subjected “to countless allegations of discrimination.”

Chief Justice John Roberts and Justices Antonin Scalia, Anthony Kennedy, and Samuel Alito joined Thomas in the majority. Justices Stephen Breyer, David Souter, Ruth Bader Ginsburg, and John Paul Stephens dissented.

Foreshadowing the Firefighter Case?

The split, along ideological lines, is a possible foreshadowing of the pending decision in Ricci v. DeStafano, the case of the New Haven firefighters who lost a chance at promotion when their civil service promotional test results were invalidated.

In that case (story here), not one black firefighter scored high enough to be considered for promotion, while 18 of the top 20 scorers were white; two were Latino. The Civil Service Board in New Haven, Connecticut, which conducted the test, refused to certify the results, meaning no promotions were given. The basis for that decision lies in the disparate impact test of Title VII.

While in the Gross v. FBL Financial Services case the issue was age discrimination and the ADEA, the court’s conservatives have leaned toward making discrimination harder to establish. The Gross decision continues that trend and suggests Ricci could be decided in favor of the firefighters by the same 5-4 majority.

Of course, that’s just tea-leaf reading. The court has other options, including sending the case back to a lower court with specific instructions, should it wish to duck a decision in that emotionally charged case, complicated now by the nomination of Sonia Sotomayor to the Supreme Court. She was one of three judges to sign off on the two-paragraph appeals court decision upholding the lower court’s ruling in favor of New Haven.

Happy Monday, everyone!

If “Reevaluate background screening program” isn’t on your list, add it now because you can bet that should the EEOC come calling it will do it for you.

Ever since 2006 when the Equal Employment Opportunity Commission adopted a series of changes that have come to be known as the “Systemic Initiative,” EEOC field offices have been aggressively pursuing cases where one or more forms of discrimination permeate a company’s hiring practices. These can be as overt as the $20 million settlement last month against LA Weight Loss Centers for refusing to hire men. Or they can be as unintentionally discriminatory as refusing to hire anyone with a violent criminal record.

This latter instance was the heart of the leading U.S. case on background screening, El v. SEPTA.

Douglas El was fired as a driver of the mentally and physically disabled when a criminal check turned up a juvenile murder record. His attorneys sued showing that the policy has a disparate impact on Blacks who are more likely to have a record than whites. The Third Circuit Court of Appeals in Philadelphia upheld the employer in the case, but recruiters should take little comfort in that decision.

“The third circuit dropped lots of hints,” says EEOC attorney Carol Miaskoff, that it would have ruled differently, but for a lack of expert witnesses on the part of El’s attorneys. They chose not to counter testimony by noted criminologist Dr. Alfred Blumstein that a person with a criminal record is more likely to recidivate, even if, as in El’s case, the conviction was 40 years old.

So why should this prompt a new year’s review of hiring practices?

Arthur Cohen

This means that it’s not enough to simply adopt a policy against hiring felons, say, or someone with a poor credit history or with a less-than-honorable military discharge. Instead, says Merrily Archer, a former attorney with the EEOC who is now in private practice with Fisher & Phillips in Denver, employers need to ask “Is there any nexus between the criterion and the job we are hiring them to do?”

Merrily Archer

While the policy seems logical enough, is it really? Why pick five years and not four or two or seven?

Cohen, himself an attorney and vice president of operations and general counsel of background screener Concorde, Inc., counsels that employers “ought to be considering how they would articulate, if they are ever asked, why they chose the policy they did, on what research was the policy based, and why was it structured the way it was.”

The basis for a particular need not be unassailable, if that were even possible. Instead, said the federal court in the SEPTA decision, “We require that employers show that a discriminatory hiring policy accurately — but not perfectly — ascertains an applicant’s ability to perform successfully the job in question.”

How did SEPTA, the employer, show that? By bringing in a criminologist to testify to recidivism. Had El’s attorneys brought in one of their own, many lawyers including most of the labor lawyers we spoke with, suspect the appeals court would have decided differently and sent the case back for a jury trial.

If only for that reason you should have some data to support your employment policy.

“What makes the SEPTA case so noteworthy in my opinion is that the indication is that the participation of a criminologist has relevance to the preparation of a policy involving a review of the criminal records,” says Cohen says.

Or to put it another way, if an unsuccessful candidate sues says Cohen, “By all means this could turn into a war of the experts.”

So as you go about reviewing your pre-employment screening procedures it would be wisest to test the policies in two ways: Against the EEOC’s own guidelines for criminal convictions and against the SEPTA court’s declaration that “discriminatory hiring policies accurately but not perfectly distinguish between applicants’ ability to perform successfully the job in question.”

One more thing to consider: Congress has shown an inclination recently to expand protection against discrimination. In September it passed a law that expressly overrode the Supreme Court’s narrow reading of some of the protections of the Americans With Disabilities Act.  And the new Congress is expected to approve two measures expanding the right of workers to sue for past discriminatory acts and limits an employer’s defenses to equal pay actions.

As attorney Archer suggests, “Better buckle your seatbelt and get a good attorney.”