On July 12, House reps. Rosa DeLauro (D-Conn.) and Hank Johnson (D-Ga.) introduced groundbreaking legislation that would prohibit discrimination against the unemployed in hiring. The Fair Employment Opportunity Act of 2011, H.R. 2501, bans both employers and recruiters from refusing to consider unemployed applicants. This legislation is sorely needed: It has become commonplace in this recession for employers to refuse to consider applicants who are not employed at the time of application. A quick search of Craigslist’s employment postings on July 9 revealed that positions as varied as restaurant manager in Detroit; part-time cook in Arlington, Va.; tax manager in a New York City certified public accounting firm; and marketer with a company in Salem, Ore., all required applicants to be currently employed. This policy has tragic consequences for unemployed job seekers, reinforces a permanent underclass and may well subject employers to claims of discrimination based on a disparate-impact theory of discrimination, given that it has the hardest impact on older workers, disabled workers, racial minorities and women.

That this trend has emerged during an enduring recession is perhaps not surprising. However, it is particularly alarming to think that this trend is growing even as the labor market fails to turn itself around. The Department of Labor’s monthly report on jobs and unemployment for June astounded economists of all stripes. The report, issued on July 8, showed that several major industries shrank; indicators that typically grow before employers begin to add more jobs, such as wages and number of hours in an average work week, also shrank. The unemployment rate rose to 9.2%, the highest in 2011, up from 9.1% in May.

A total of 14.1 million people are unemployed (not including those who have simply given up and dropped out of the labor force). There are now 6.29 million unemployed who have been unemployed for longer than 27 weeks: 44.4% of the unemployed, double the amount who have been unemployed for less than five weeks. If companies are permitted to bar the unemployed from hiring simply because they are unemployed — often through layoffs, not through any fault of their own — a large, unemployable underclass will grow, preventing the economic growth the country needs.

UNEMPLOYED NEED NOT APPLY

Because no law yet exists that explicitly bans discrimination against the unemployed, employers in many states have explicitly stated in their advertisements that they will not give hiring consideration to the unemployed. Sony Ericsson, the global phone manufacturer, made waves nationally this spring when it announced in an ad on a job-recruiting Web site for one of the 180 new jobs it is bringing to the Buckhead, Ga., area: “NO UNEMPLOYED CANDIDATES WILL BE CONSIDERED AT ALL.” (A company spokeswoman later stated that the ad’s language was a mistake and had been removed.) Other employers leave this objectionable language out of job ads but still refuse even to look at the applications of the unemployed. Recruiters confirm that job searches take longer for individuals who are not employed than those who are employed. The Equal Employment Opportunity Commission has taken notice: It held a public hearing in February, in response to a request from several members of Congress, to look at the “emerging trend” of refusal to consider the unemployed and determine whether such refusal exposes employers to disparate-impact claims, because of the large percentage of the unemployed population made up of minorities.

In March, Gov. Chris Christie of New Jersey signed into law P.L. 2011, c.40, which took effect on June 1 and prohibits employers from knowingly publishing advertisements for job vacancies that state that only the employed will be considered. However, this law may well exacerbate the problem and drive it undercover: It does not bar discrimination against the unemployed. It only bars putting that discrimination in writing. The Fair Employment Opportunity Act of 2011 solves this problem by prohibiting the discrimination itself in addition to barring job advertisements warning the unemployed not to apply.

Because racial and ethnic minorities, older workers, people with disabilities and women are more likely to be unemployed or out of the work force in disproportionately greater numbers, discrimination against the unemployed disparately impacts these groups and thus may violate federal and state anti-discrimination laws. The Civil Rights Act of 1991 codified earlier U.S. Supreme Court precedent establishing a cause of action for disparate-impact discrimination when facially neutral policies fall more harshly on one group than another and cannot be justified by business necessity. See Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e-2(k)(1)(A)(i); Griggs v. Duke Power Co., 401 U.S. 424, 430-32 (1971) (absence of discriminatory intent does not redeem procedures that disproportionately impact minorities); see also Smith v. City of Jackson, Miss., 544 U.S. 228 (2005) (extending disparate-impact analysis to claims under the Age Discrimination in Employment Act, albeit with a narrower scope); Raytheon Co. v. Hernandez, 540 U.S. 44, 50 (2003) (recognizing that disparate-impact claims are cognizable under the Americans With Disabilities Act).

Unemployment rates for many racial and ethnic minorities are disproportionately high: The unemployment rate for African-Americans in June remained flat at 16.2%, compared to the 9.2% overall rate. Although the unemployment rate for Latinos fell to 11.6% from 11.9% in May, it is still disproportionately high. Discrimination against the unemployed affects these groups at a higher rate than their white counterparts.

As another example, women are more likely than men to be out of the work force temporarily either after giving birth or to care for young children, although those who are not seeking to enter the work force are not reflected as “unemployed” in the Department of Labor statistics. Any policy of not hiring the unemployed would disproportionately affect women, and in addition would, for most women, entirely eliminate the option of staying home for a few years with young children before re-entering the work force at a later date.

LEGISLATION MUST BE PASSED

Although courts may ultimately conclude that discrimination against the unemployed is unlawful because of its disparate impact on already protected categories of workers, it is important that the Fair Employment Opportunity Act be passed to bar such practices explicitly. The existence of such policies undermines the public policy behind existing anti-discrimination and anti-retaliation laws in that employees who already fear retaliation will no longer report unwanted sexual advances, unequal pay decisions or other discrimination or retaliation if they know they will never be able to find another job once fired.

That new boss who comes in and decides not to treat employees of a certain race with respect will have no incentive to behave appropriately and lawfully, because she knows no one will dare report her to human resources if they ever want to work again. The boss who conditions a promotion on sexual favors knows he will get them; faced with an alternative of never working again, his subordinate will see no choice but to go along. The new mother or father will think twice about taking any Family and Medical Leave Act-protected time off with the birth of a baby; the sick or injured will put off needed treatment or surgery rather than risk throwing away their entire careers over missing a few weeks of work. This is especially true because many anti-discrimination statutes, including Title VII and state laws, cap the damages available under them at low levels (e.g., $300,000 for Title VII): Even if a worker brought suit and won at trial, she would not recover enough to compensate her for the rest of her career up to retirement.

The Fair Employment Opportunity Act provides for uncapped actual damages of any wages, salary, other compensation or benefits denied or lost, in addition to liquidated damages, compensatory and punitive damages, and other equitable relief.

Discrimination against the unemployed does the nation a great disservice in other troubling ways. By discouraging employees who are aware of serious illegalities to refrain from blowing the whistle for fear that they will never work again once fired, public health and safety is compromised. Often this will have dangerous or even deadly results: The nurse who notices that the hospital isn’t following proper standards of care won’t dare report the problem. Neither will the nuclear engineer who knows that a power plant doesn’t have a well-functioning cooling system, or the trucker who notices that a shipping company hasn’t secured a precarious load of hazardous chemicals. Investors and federal and state governments will be cheated out of billions of dollars, when the accountants, medical billers, brokers and bankers who notice fraud don’t report it, knowing that if they do, they will never work again.

Discrimination against the unemployed has sky-high societal costs, including negative effects on the economy, public safety and fraud and creation of a permanent unemployable class. It is time for Congress to step up and pass the Fair Employment Opportunity Act.

Alison Asarnow is an associate at Katz, Marshall & Banks, a Washington-based employment law and whistleblower-protection firm. Debra S. Katz is a name partner at the firm and specializes in the representation of corporate and environmental whistleblowers and the handling of sexual harassment and employment discrimination matters.