American Jobs Act Proposes Ban on Employer Refusals to Hire the Unemployed

October 7, 2011

If enacted, President Obama’s proposed American Jobs Act would ban employers with 15 or more employees from discriminating against the unemployed by making it illegal to categorically exclude applicants who are out of work. The impetus for this provision appears to be an increase in job advertisements that explicitly exclude the jobless, using statements such as “must be currently employed.” The bill would not only ban these types of advertisements, but also enable applicants who believe they were not hired because they are unemployed to sue the prospective employer.

The proposed legislation has caused debate over whether it makes sense to exclude an applicant solely because he or she is unemployed given the current economic environment. When U.S. unemployment rates were low, particularly in the late 1990’s, an applicant’s long stint of unemployment was usually a red flag. The assumption was that an individual who could not find and maintain employment when employment was plentiful must have undesirable qualities. In current economic conditions that assumption may be invalid because many qualified applicants are out of work for extended periods through no fault of their own.

Earlier this year, the Equal Employment Opportunity Commission weighed in on the issue, which it described as an “emerging practice,” by holding public hearings on the practice of employers excluding unemployed applicants. At the hearings, employee advocates contended the practice could be illegal already under existing anti-discrimination laws because it could have a disparate impact on minority groups, whose unemployment rate is significantly higher than whites, on older Americans, who have remained out of work longer than young employees in the current recession, as well as on women and the disabled, who also tend to have higher rates of unemployment.