As almost everyone knows, last week President Obama presented a $447 billion jobs bill, called the American Jobs Act, to a joint session of Congress full of proposals designed to stimulate the lagging U.S. economy.  What many people probably don’t know is that, tucked into the bill, is a provision that would make it unlawful for employers to refuse to hire someone because that person is unemployed.  This small part of the stimulus bill would create an entirely new protected class under federal discrimination law—the unemployed person.  If enacted it could expose employers to a raft of new employment discrimination lawsuits.

What The Bill Says

Section 375 of the proposed bill  actually has several anti-discrimination provisions.  First, it prohibits employers and employment agencies from refusing to hire an individual “because of the individual’s status as unemployed,” including prohibiting employers from directing employment agencies to do so. It also contains a broad anti-retaliation provision prohibiting employers from interfering or refusing to hire someone because the person reports a violation of the Act.  The Act will provide many of the same remedies available under Title VII of the Civil Rights Act—the same federal law that prohibits discrimination based on race, religion, or sex—including the right to file a charge with the Equal Employment Opportunity Commission (“EEOC”), or file a lawsuit to recover money damages and attorney fees.

The bill would also prohibit employers and employment agencies from expressly advertising in written job posts that unemployed persons are automatically disqualified from applying.

The Rub:  Full Employment…For Employment Lawyers

While the bill expressly states that it is not intended to preclude employers from considering an individual’s employment history or even from “examining the reasons underlying an individual’s status as unemployed,” that subtle distinction will be a small comfort to employers.  Employers routinely scrutinize employment history, and employment “gaps” on a resume have always been a red flag to hiring managers.  Under this new law, however, employers would need to walk a very fine line between scrutinizing only the “reasons underlying” unemployment, while avoiding letting the fact the person is unemployed to begin with affect a hiring decision. 

Those types of mental gymnastics are not only difficult for hiring managers to keep straight while reviewing job applicants, the distinction will be even harder to prove in court if the employer is later sued.  As a practical matter, any unemployed person rejected from a job could demonstrate a prima facie claim for discrimination simply by showing he or she was unemployed and then didn’t get the job.  Further, the cases will invariably turn on "yes you did, no I didn’t" factual disputes about the hiring decision: did the employer make the decision because of reasons underlying the person’s unemployment (lawful) or simply because the person was unemployed (unlawful)?  Because of those subtle factual nuances, and procedural rules that presume the truth of a plaintiff’s allegations until trial, it could be virtually impossible to get even baseless claims dismissed before trial, such as at summary judgment.  That makes defending those cases much more difficult and expensive.

While much remains unsettled about the state of the U.S. economy, including whether Congress will even pass the American Jobs Act, one thing is very certain.  If the current anti-discrimination provision in the American Jobs Act passes, employers will be seeing a lot more discrimination claims from a whole new protected class of protected people–the unhired unemployed.