Magazine article Workforce Management

Employee Referral Programs, Selective Campus Recruitment Could Touch off Bias Charges

Magazine article Workforce Management

Employee Referral Programs, Selective Campus Recruitment Could Touch off Bias Charges

Article excerpt

New EEOC guidance puts a greater burden on employers to ensure that recruiting practices do not foster discrimination in assembling an applicant pool

COMPANIES ARE EXPANDING campus recruiting and pouring resources into employee referral programs, which have become the preferred methods for attracting high-quality candidates. The upswing in hiring through these methods, however, translates into a higher risk of discrimination charges.

The new EEOC Compliance Manual, issued on April 19, 2006, updates guidance on the prohibition of discrimination under Title VII of the Civil Rights Act of 1964. The manual explicitly warns that recruiting only at select colleges or relying on word-of-mouth recruiting, which includes employee referral programs, may generate applicant pools that do not reflect diversity in the labor market.

The new manual places a greater burden on employers to eliminate potential sources of discrimination in hiring. Workforce management executives might operate with full awareness of the legal pitfalls involved in the later stages of the recruiting process, hut constructing an applicant pool carries its own set of potential lawsuits. In the rush to fill positions, these risks are too often ignored.


The EEOC's list of "best practices" in the new manual explicitly recommends that employers eliminate word-of-mouth recruiting in non-diverse workplaces.

"Given the new guidelines, the EEOC will begin to look more closely at employee referral programs," says Gayla Crain, managing partner at Epstein Becker Green Wickliff & Hall in Dallas. "Employers should expect to he asked to document the applicant pool generated by the program."

Documentation is a major issue.

"Employers are good about keeping records for candidates who are interviewed and hired, but they often fall short on retaining documentation related to the applicant pool," Crain says.

Reliance on the employee referral program at Carl Buddig & Co., a major Chicago-area meat processor, led to discrimination charges when the EEOC discovered that African Americans were rarely hired. After two and a hall years of litigation, the company paid $2.5 million and revamped its recruiting process in September 2004 to settle the lawsuit.

"Selection guidelines are in place and apply to employee referrals," Crain says. "Employers should review their programs to determine if minority employees are referring only minority candidates, or nonminority employees are referring only nonminority candidates."

Crain advises employers to ensure that at least 20 percent of the applicants produced through the referral program are minorities and that at least 20 percent are female for predominantly male positions or 20 percent male for female positions.

"If the employee referral program does not generate these results, the employer should take this as a warning sign and add another source of applicants to balance the pool," she says.

For jobs that have that have historically drawn relatively few male applicants, such as administrative assistant or secretary positions, the EEOC is less likely to challenge the referral program. But if the recruiting process fails to produce a sufficient number of applicants by race or national origin, the EEOC will scrutinize the practice.

To balance the pool, employers can use job boards, community resources or recruiting firms in an attempt to fix the problem.

"The enforcement agencies will look at the employer's efforts to correct the balance," Crain notes.


In addition to the warnings about word-of-mouth recruiting, the new EEOC manual reminds employers that they might be in violation of Title VII if a statistically significant racial disparity results from recruiting exclusively from predominantly white schools or predominantly black schools. The manual states that employers are responsible for ensuring that the applicant pool reflects the composition of the qualified labor force. …

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