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The resignation of Yahoo Inc. CEO Scott Thompson last week, after it was discovered that he’d falsified information on his résumé, highlighted the importance of companies thoroughly reviewing the credentials of any job candidate. But recent policy shifts by the U.S. Equal Employment Opportunity Commission and a proposal by the White House have called into question certain hiring criteria long considered standard by many employers. As businesses steadily replace jobs that were lost in the recent economic downturn, managers, human resources staff, and executives will be looking to in-house counsel for guidance in hiring decisions. Now is a good time for companies to take a fresh look at their hiring policies, say lawyers at Nilan Johnson Lewis, a Minneapolis-based management-side firm. Policies about the criminal backgrounds of prospective hires, for instance, are not regularly reviewed by employers, says Joseph Schmitt, a partner in Nilan’s labor and employment group. But thanks to new guidance from the EEOC, Schmitt says those policies are “now front and center” in hiring considerations. Last month, the EEOC issued revised guidelines for employers’ consideration of arrest and conviction records in making hiring decisions. “It’s the direction that we expected the EEOC to go,” says Schmitt, “and they went there.” The decision has roots in Title VII of the Civil Rights Act of 1964, which prohibits “disparate impact” discrimination, and Schmitt says the data shows exclusions based on criminal records have a disparate impact on minorities. The EEOC is increasingly targeting different sources of systemic discrimination, he adds. Although it isn’t practical to do so, Schmitt says the EEOC expressed a clear preference that employers consider each job candidate on an individual basis, as the nature of the applicant’s conviction, the nature of the particular job, and how much time has elapsed since the applicant was convicted will raise different levels of concern about different types of criminal backgrounds. He advises employers to carefully consider the business relationship between the particular job and hiring exclusions due to a criminal conviction. The EEOC indicated that its guidelines were changed in response to legal and social changes that have transpired since its last guidance on the issue was released in 1990. David James, who chairs Nilan’s labor and employment practice group, says the Commission’s thinking is evolving on other fronts as well. Years ago it was commonplace for employers to use credit checks to screen job applicants, a practice the EEOC questioned due to its potential for discrimination. “Most employers have come to the conclusion that it’s not a productive way to identify strong candidates,” says James. The EEOC is asking employers to similarly rethink other criteria, asserting a similar theory in its disfavor of education attainment policies in hiring criteria. Even the requirement of a high school diploma, says James, has been viewed by the Commission as having a disparate impact on members of the disabled community, for example. Another area that employers need to be concerned about is recent buzz about creating a protected class for unemployed Americans. According to the Bureau of Labor Statistics, more than 12 million people in the U.S. are unemployed, and about 5 million of those unemployed have been out of work for 27 weeks or more. Last fall, President Barack Obama proposed making it an unlawful employment practice to refuse to hire an applicant because of their unemployed status or the length of their unemployment. Although the proposal stalled with lawmakers, two states—Oregon and New Jersey—have passed legislation limiting the consideration of unemployment in hiring. Although he says the issue is nascent enough to not be overly worrisome for companies, James encourages employers to think about why they would consider unemployment a factor in hiring decisions. In response to President Obama’s proposal, Congressman Louie Gohmert (Republican-Texas) expressed concern last fall that such a policy, if enacted, would encourage lawsuits from the millions of Americans who are currently unemployed. There are legitimate concerns when hiring long-unemployed workers, such as a lack of familiarity with recent technological advances. If legislation is ultimately passed, James says employers who are challenged in court should be prepared to establish that hiring decisions were made independent of employment status.

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