More on Convictions And Hiring, Wisconsin Style

A very troubling recent decision out of the Wisconsin Labor and Industry Review Commission should give pause to any employer that does criminal background checks for its Wisconsin employees.  The case is a very clear representation of how state employment commissions are working to undercut employers’ ability to minimize risk to their work force and customer base.

In this case, the Commission was faced with a claim of discrimination by Walmart when it fired one of its forklift drivers after discovering that he had been convicted of sexual assault, first degree reckless endangerment, and false imprisonment, stemming from a domestic incident with his then girlfriend.  The employee’s girlfriend tried to breakup with him and in response, the employee threatened her with a gun and a knife, threatened to commit suicide, and forced her to have sex with him against her will.  When it discovered these facts, Walmart terminated the employee from his warehouse forklift driver position.

Under Wisconsin law, an employer cannot discriminate against an employee because of a criminal conviction unless the crimes are “substantially related” to the particular requirements of the employee's job.  Amazingly, the Commission determined that because the crimes were committed at home, and not at the workplace, and occurred in response to a dating relationship, there was little danger of a repeat occurrence on the job.  The Commission also found that Walmart’s strict oversight of its warehouse operations would likely deter any sexual assaults by the employee in the future.  The Commissions reasoning is, shall we say, sparse – it does not explain why someone who sexually assaults a person in their home is not likely to do it at work, particularly when the evidence presented showed that the employee would be left unsupervised in the warehouse for extended periods of time.

I don’t have a good response to the Commission’s very troubling decision.  Walmart presented the evidence required under the statute and older case decisions to justify its action.  The Commission simply rejected the evidence and precedents.  As a result, employers contemplating taking an adverse action based on a conviction record in Wisconsin should carefully articulate all possible connections between that conviction, and the job in question.  Perhaps if Walmart had demonstrated that the warehouse was opened to customers, or that the employee would be dealing with significant numbers of female employees, the result might have been different.

The Pernicious Impact of Long-Term Unemployment

A hallmark of the current awful economy (I know, I know, the President keeps saying things are getting better, but the short answer is that without full-time jobs becoming available, things are getting worse for much of working America, not better) is the number of people who have been unemployed for an extended period, in some cases dropping out of the workforce altogether. Economists have long known that the longer you are not working, the harder it is to find a job. But now there's some hard data that quantifies just how difficult it is for the long-term unemployed to get back in the game.

In an article entitled "Out of Work over Nine Months? Good Luck Finding a Job", the WSJ notes that more than 3 million Americans have been out of work for more than a year, and that doesn't even include the numbers who have simply stopped looking. Many of them will likely never work again, in fact.

Part of the reason for that depressing conclusion is that people who've been out of work for a long time are stigmatized by companies, to the extent that even qualified candidates with a long jobless stretch are rejected by employers.

The article cites a study by two Swedish economists who applied for more than 3500 jobs using some 8500 fictitious resumes. Some of the phantom applicants had uninterrupted employment histories, some had unemployment histories previously, some were currently unemployed, and the lengths of unemployment for the applicants varied.

The study showed that short-term spells of unemployment (six months or less) didn't really affect job seekers' prospects, and might even have been an advantage for low-skilled positions. But for low- or medium-skilled positions (which didn't require a college degree), being unemployed for nine months or more caused a precipitous drop in the callback rate. The pattern wasn't nearly so bad for college degree positions--another reason you should tell your kids to finish college. And even for long-term unemployed, once they started working, the stigma of being jobless virtually disappeared when they applied for their next position.

How does the Swedish study apply to United States? Although the job markets are relatively similar, there's at least some evidence that US employers take a harsher view of long spells of unemployment.

The lesson here-employers need see passed unemployment histories and try to determine if the individual reflected in the resume actually has a desirable skill set. As usual, focus on specifics that relate to a particular position, look for explanations for the unemployment, and assess the actual qualifications of the potential hire. Notwithstanding the concern that long unemployment raises with most employers, companies are likely passing up what are effectively bargains if they allow a visceral reaction to unemployment to affect their analysis.

Hiring Qualifications Don't Justify Wage Discrepancies (After a Time, Anyway)

(This entry courtesy of my associate here in Chicago, Susan Baker).

Gender-based pay discrimination is under a political and legal spotlight and has been since the Ledbetter case several years ago.  Accordingly, it’s crucial for employers to understand if and how their employment policies result in compensation disparities and when these disparities have to be remedied.  It’s also important for a company to understand that potential plaintiffs have more than one option to sue their employers--Title VII or the Equal Pay Act (“EPA”) or both--and those options vary significantly in terms of their process and requirements.

Under Title VII, a gender discrimination plaintiff has to prove that her employer intended to discriminate against women by paying them less.  In its defense, an employer need only provide a legitimate, nondiscriminatory reason for its actions.  But in an EPA case, once a pay disparity is established, the employer has to prove that the difference in pay is the result of a factor other than sex.  In other words, the employer must prove that its legitimate business policies (which can't be based on gender in any manner) accounted for the difference in pay.

In many cases, we see such gender-neutral policies at work in hiring.  An employer may favor hiring people with advanced degrees, or particular work experience, or some type of specialized education, that results in women starting at lower salaries than their male counterparts.  The key point to remember is that these types of criteria should only have an effect on the initial compensation decision--once the employees have been working under an employer's performance standards for a while, the hiring criteria should diminish in importance, and the company's performance requirements should dictate compensation levels. 

These were the tough lessons learned for an employer in a recent Seventh Circuit opinion. The plaintiff brought a gender-based pay discrimination claim under Title VII and the EPA and succeeded on both after the Court engaged in a detailed audit of the employer’s pay practices.

As we've noted before, one of the pleasures of working in Chicago is reading the oft entertaining opinions of the Seventh Circuit.  In demonstrating the diminishing utility of hiring criteria over time, Judge Easterbrook here used an analogy that resonates with all dejected law school applicants  who fared poorly on the admissions test, the LSAT.  He explains that although the notorious exam affects the probability of admission to law school, it has no effect on a student’s grades once enrolled, nor does it affect future job opportunities.  This, Easterbrook declares, is just like a sex discrimination claim arising under the EPA:  nondiscriminatory reasons for pay disparities such as education and experience, for example, can properly affect the differences in starting salaries between men and women, but such factors do not, and should not, affect increases in pay once the person is steadily employed.  At that point, performance on the job is what counts, and any original gap in starting salaries should begin to close so that employees doing the same job under the same standards receive the same compensation.

This case emphasizes that employers must be keenly aware of pay disparities and the reasons behind them.  Any factors affecting employees’ starting salaries should gradually disappear, and, eventually, there should be no difference in compensation between employees who work in the same position and contribute to the company on the same level.  This remains true even if it means that women receive greater compensation increases as compared to men in order to close that gap.