APPLICANT TRACKING, SYSTEMIC DISCRIMINATION AND THE NEW, IMPROVED EEOC AND OFCCP
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1 APPLICANT TRACKING, SYSTEMIC DISCRIMINATION AND THE NEW, IMPROVED EEOC AND OFCCP Speaker: Mickey Silberman, Esq. Jackson Lewis LLP Managing Partner, Denver Office (303)
2 Introductory Statement THE MATERIALS CONTAINED IN THIS PRESENTATION WERE PREPARED BY THE LAW FIRM OF JACKSON LEWIS LLP FOR THE PARTICIPANTS OWN REFERENCE IN CONNECTION WITH EDUCATION SEMINARS PRESENTED BY JACKSON LEWIS LLP. ATTENDEES SHOULD CONSULT WITH COUNSEL BEFORE TAKING ANY ACTIONS AND SHOULD NOT CONSIDER THESE MATERIALS OR DISCUSSIONS THEREABOUT TO BE LEGAL OR OTHER ADVICE. 2
3 About the Firm Jackson Lewis LLP is dedicated to representing management exclusively in workplace law and related litigation. With 34 offices nationwide, the firm has a national perspective and sensitivity to the nuances of regional business environments. Guided by the principle that a positive work environment results in enhanced morale and increased productivity, the firm devotes a significant portion of its practice to management education and preventive programs. This approach helps limit exposure to grievances, charges and lawsuits. 3
4 About the Presenter: Mickey Silberman Mickey Silberman is a Senior Member of Jackson Lewis Affirmative Action/Diversity Practice Group and is the Managing Partner of the firm s Denver, Colorado office. Mickey represents management exclusively in all areas of employment law and specializes in EEO, affirmative action and diversity. During the past few years, Mickey has directed the defense of hundreds of OFCCP audits and EEOC systemic discrimination investigations throughout the country. He spends much of his time counseling employers regarding the strategic design and development of applicant tracking, pre-employment testing and other hiring procedures in response to the OFCCP s new Internet Applicant Rule and the EEOC s increased focus on hiring discrimination. 4
5 Applicant Tracking and Systemic Discrimination: The New Rules For many years, employers (government contractors in particular) have had the obligation to maintain race and gender data of employment applicants However, the government EEO enforcement agencies, EEOC and OFCCP, historically did not pay much attention to applicant tracking data and it typically was not a focus during discrimination investigations During the past few years, all that has changed Now, the EEOC and OFCCP are intently focusing on applicant trends and often bringing back huge financial settlements from those investigations So why the big change? Let s take a look 5
6 Applicant Tracking and Systemic Discrimination: The New Rules (continued) Several factors have emerged during the past few years to create a perfect storm to make applicant tracking convoluted for employers Technology happened Employers have dramatically increased the use of preemployment tests and the use of third-party vendors to administer aspects of the applicant process such as drug screens, criminal background checks, etc. EEOC and OFCCP have refocused their enforcement efforts to seek broad patterns of adverse impact in employers hiring processes so they can uncover hidden barriers to equal employment opportunity Let s explore each of these. 6
7 Applicant Tracking and Systemic Discrimination: The New Rules (continued) The Internet and other electronic technologies have radically transformed the applicant tracking landscape Historically, employers tracked applicant data by hand on a hardcopy applicant flow log or manually inputted the data into an electronic spreadsheet Typically, the data included on the these applicant flow logs was minimalistic and did not (1) include detailed information about the hiring stage at which each applicant fell out of the process or (2) the reasons why each applicant was not selected However, during the past several years, employers have dramatically increased the use of on-line automated applicant tracking systems and the use internal applicant databases that allow employers to (1) efficiently store huge amounts of detailed data and (2) easily retrieve and analyze the data as they consider applicants for employment 7
8 Applicant Tracking and Systemic Discrimination: The New Rules (continued) The Internet and other electronic technologies have radically transformed the applicant tracking landscape (continued) The effect of these developing technologies is that employers now can quickly and easily analyze large amounts of applicant data to determine who is most qualified for employment openings But, employers are not the only ones who can broadly and deeply analyze the data. Third parties such as the EEOC, OFCCP and private plaintiffs attorneys can demand the same detailed data and can easily manipulate it to determine if applicants from protected groups (such as minorities and females) are disproportionately rejected for employment openings and the reasons for those rejections Unsuspecting employers often design these sophisticated electronic applicant tracking processes without regard to the consequences from a legal perspective (more to come on that below) 8
9 Applicant Tracking and Systemic Discrimination: The New Rules (continued) Employers have dramatically increased the use of preemployment tests. Additionally, employers are increasingly using third-party vendors to administer the tests as well as drug-screens, criminal background checks, etc. Employers have gravitated to pre-employment tests because they assume they are a neutral, objective selection devise However, pre-employment tests can often be a trap for the unwary. Typically these are off-the-shelf tests purchased from a third-party and it is often difficult to show that the test is truly predictive of success for the employer s specific job Third-party vendors increasingly are being retained to administer distinct stages of the applicant process on an employer s behalf [such as criminal background checks] and generally maintain electronic data in systems specifically designed to easily generate detailed reports. Unfortunately, these reports can be used against the employer by the EEOC, OFCCP and private plaintiffs counsel 9
10 EEOC s Increased Focus on Systemic Discrimination These revolutionary changes have coincided with the EEOC s and OFCCP s increasingly changed focus from compliance agencies focused on one-zees and two-zees to robust enforcement agencies seeking out systemic discrimination In 2005, the EEOC established the Systemic Discrimination Task Force to substantially enhance the EEOC s focus on class-action type discrimination The Task Force researched the EEOC s systemic discrimination work and found: The EEOC did not effectively use its access to employment data (including applicant data) to identify systemic discrimination The EEOC lacked the appropriate technology to support systemic litigation The EEOC was not appropriately staffing its systemic discrimination cases with expert statisticians, testing specialists and attorneys 10
11 EEOC s Increased Focus on Systemic Discrimination (continued) On April 4, 2006, recognizing that the Commission could not effectively combat discrimination without a strong nationwide systemic program, the EEOC unanimously voted to shift the EEOC s emphasis to the investigation and litigation of systemic discrimination The Commission is now more focused on investigating neutral policies and practices that have a disparate impact upon protected groups than it had been previously This enhanced focus on disparate impact has brought employers applicant and hiring processes directly into the EEOC s sights 11
12 EEOC s Increased Focus on Systemic Discrimination (continued) Since the adoption of the Task Force Recommendations on April 4, 2006, the EEOC has: Developed systemic discrimination plans for each of the 15 district offices aimed at identifying and prosecuting systemic discrimination Increased the filing of systemic discrimination litigation cases by 10% in 2006 Repeatedly re-emphasized the EEOC s focus on systemic litigation: The EEOC will seek to litigate systemic discrimination cases with broad impact and affecting a large number of workers. - Commissioner Earp, November 15, 2006 The EEOC will focus on systemic discrimination, but cases filed under the initiative are still a year or two away. - General Counsel Ronald Cooper, March 21,
13 EEOC s Increased Focus on Systemic Discrimination The Results are In, and Growing EEOC Systemic Claims Commissioner charges signed Suit filings with 20+ victims Suit resolutions with 20+ victims Suit resolutions with 100+ victims FY 2006 FY
14 Practical Implications of the EEOC s New Focus As part of its Systemic Discrimination Initiative, the EEOC increasingly has focused upon employers applicant and hiring processes Garden-variety individual failure-to-hire EEOC charges often grow into EEOC systemic investigations of employers overall applicant and hiring process. Often times, the employer s response to the Charge is the trigger for the systemic discrimination investigation We treated the Charging Party just like all other applicants defense can open the door to a systemic focus 14
15 The EEOC s Hot Selection Criteria The EEOC believes certain hiring criteria disproportionately have a disparate impact on racial/ethnic minorities or other protected groups including: Pre-employment tests Credit Reports Drug Screens Arrest and conviction records Current/pending prosecutions? Active warrants? 15
16 Traps for the Unwary: You re on the EEOC s Systemic Radar IF The EEOC will, in a Request for Information (RFI), request information concerning the applicability of policies or selection criteria to sites beyond the one referenced in the Charge The EEOC will request applicant trend data involving other applicants, other positions or other locations beyond that specified in the Charge Excel Spreadsheet on a CD-ROM The EEOC will request information about pre-employment test validation studies The EEOC will ask how the selection criterion is relevant to job performance The Charging Party (typically at the EEOC s prompting) separately will also initiate a charge against your third-party background check vendor/service 16
17 The New Improved OFCCP Until a few years ago, the OFCCP was an affirmative action compliance agency The OFCCP generally focused on technical paperwork issues related to good faith efforts, listing job openings with state employment services, proper postings on employee bulletin boards, etc. However, during the past few years, the OFCCP has fundamentally transformed itself into a systemic discrimination enforcement agency The OFCCP s focus today is on finding and eradicating systemic discrimination, focusing almost exclusively on the employers applicant and hire processes 17
18 The Genesis of the OFCCP s Enforcement Approach to Applicant and Hire Systemic Discrimination Since 2002, the OFCCP increasingly has also focused on systemic discrimination The OFCCP is seeking to identify and eradicate broad patterns of discrimination in employee selection processes and pay practices. The OFCCP will usually target applicant and hire process because that s where the big volume is The OFCCP no longer focused on technical issues or one-zees and two-zees The OFCCP wants to find and eradicate systemic problems The OFCCP seeking statistically significant indicators Red Flags. These Red Flags arise most often in applicant and hire data The OFCCP needs a legally sound enforcement approach. As a result, it published the Internet Applicant Rule in 2006 to clarify employers obligations to maintain and track applicant flow 18
19 Results from OFCCP s Increased Focus on Systemic Discrimination During the past few years, the OFCCP has used this changed enforcement approach to bring back increasingly larger monetary settlements $26,220, $34,479, $45,156, $51,525, $51,780,950.and obtain monetary settlements for more employees/applicants , , , ,251 For the dollars totals and employee/applicant numbers above, the vast majority resulted from settlements of applicant to hire adverse impact 19
20 The EEOC and OFCCP Muscle Up To increase the tools they have to investigate complex systemic discrimination claims, the OFCCP and EEOC have retained Ph.D.-level statisticians and testing experts These experts now work closely with OFCCP and EEOC attorneys to develop a systemic discrimination investigation plan early in the process if the agency believes there may be potential systemic issues in the applicant process Employers must be on the lookout for sign the enforcement agency statisticians and/or testing experts are involved in the case. If so, the agency is gearing up for class-action type litigation 20
21 Self-evaluations that reasonably meet the general standards will be found to be in compliance Contractors in compliance do not have to submit raw compensation data to the OFCCP in response to Item 11 of the OFCCP s Scheduling Notice Marginally reasonable self-evaluations will be subject to re-examination in subsequent audits OFCCP can offer written recommendations for improvement If not adopted, compliance coordination will not be obtained in future audits 21
22 Applicant Tracking Vulnerability Audit Given the increased employer use of electronic technologies to track applicant flow, the OFCCP s new Internet Applicant Rule and the agencies greatly increased focus on systemic discrimination in the applicant process employers should conduct a vulnerability audit, including a review of: Definition of Applicant and what electronic methods does the employer and/or its third-party vendors utilize to track data Compliance with the OFCCP s new Internet Applicant Rule Validity and defensibility of pre-employment tests, structured interviews and other selection tools The data the employer is tracking to identify the fall out selection stage for each applicant and the specific reason for falling out of the process Cloak the vulnerability audit under attorney-client privilege 20 22
23 QUESTIONS, COMMENTS AND DISCUSSION 23
24 24
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