On June 1, 2011, New Jersey became the first state to prohibit employers from discriminating against the unemployed in print and Internet job advertisements. Under the new law, employers cannot knowingly or purposefully publish a job posting that states (1) current employment is a qualification for the job; (2) currently unemployed applicants will not be considered for hire; or (3) only currently employed job applicants will be considered for hire. Despite the breadth of these prohibitions, the law permits an exception for employers who publish a job posting that only seeks applicants currently employed by that employer. Employers who violate the law are subject to a civil penalty of up to $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each subsequent violation. The law expressly disavows a private right of action for aggrieved persons.

Other states, including New York, have advanced similar proposals, as has the U.S. House of Representatives, which, as recently as July 12, 2011, proposed HR 2501[1] (otherwise known as the “Fair Employment Opportunity Act of 2011”; hereinafter, “the proposed Act”). The proposed Act, however, extends rights and protections to the unemployed well beyond those provided under New Jersey’s law and other states’ proposals, including whistleblower/retaliation provisions and generous remedies. To understand the full scope of these expansive rights and protections, this alert discusses who is subject to and affected by the proposed Act, as well as the unlawful practices, enforcement mechanisms and remedial schemes detailed therein.

Coverage

The coverage of the proposed Act is quite expansive, as covered employers are defined as anyone engaging in commerce (or any industry or activity affecting commerce) with 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year. An employer can be (1) any person who acts, directly or indirectly, on behalf of the employer in the hiring process, and (2) any successor in interest of the employer. Also covered under the proposed Act are employment agencies, which are defined as any person who regularly procures employees for an employer or procures opportunities for individuals to work for an employer, as well as an agent of such a person and any person who maintains an Internet website that publishes advertisements or announcements of job openings.

“Affected individuals” under the proposed Act (who, therefore, are entitled to relief) include any person who was refused consideration for employment or was not hired by an employer because of the person’s employment status, or any person who was not considered, screened, or referred for employment opportunities by an employment agency because of the person’s employment status.

Discrimination Defined

Under Sections 4(a) and (b) of the Act, it is an unlawful practice for

  • an employer or employment agency to refuse to offer or consider for employment an individual simply because of his unemployed status;
  • an employment agency to limit, segregate, or classify individuals in any manner that may limit their access to information about jobs or referral for consideration of jobs because of their unemployed status;
  • an employer or employment agency to publish in print, on the Internet, or in any other medium, an advertisement or announcement for any job that includes:
    • any provision stating or indicating that an individual’s unemployed status disqualifies the individual for a job;
    • any provision stating or indicating that an employer will not consider an applicant for employment based on that individual’s unemployed status; and
    • (for employers only) a direction or request that an unemployment agency take an individual’s status as unemployed into account in screening or referring applicants for employment.

The proposed Act also provides a limited exception that permits the employer or employment agency to consider an applicant’s unemployed status if there is a bona fide occupational qualification that the applicant be employed in a similar or related job for a reasonable period of time before hiring.

Retaliation/Whistleblowing Protections Defined

Not only does the proposed Act prohibit employers from interfering with, restraining, or denying the exercise of (or the attempt to exercise) any right provided therein, but Section 4(c) provides whistleblowing protections to individuals, where the employer or employment agency refused to hire, discharged, or in any other manner discriminated against the individual for

  • opposing any practice made unlawful by the proposed Act;
  • filing any charge, or instituting (or causing to be instituted) any proceeding under or related to the proposed Act;
  • giving (or about to give) any information in connection with any inquiry or proceeding relating to any right provide under the proposed Act; or
  • testifying (or about to testify) in any inquiry or proceeding relating to any right provided under the proposed Act.

Enforcement & Remedy

An affected individual, as well as others similarly situated, may file suit to recover damages or equitable relief for violations of Sections 4(a) and (b) against any employer or employment agency in any court of competent jurisdiction. The Secretary of Labor may also receive, investigate, and attempt to resolve complaints of Section 4 violations, and bring an action in any court of competent jurisdiction to enforce the law.

Under the proposed Act, an affected individual may bring a private action no later than 2 years (3 years for “willful” violations) after the date of the last event of the alleged violation, unless the limitations period is tolled while the Secretary considers the complaint. Furthermore, the right to bring a private action ceases when the Secretary brings an action (1) for an injunction to restrain violations of Section 4, or (2) to recover damages available under Sections 4(a) and (b), with exception.

Any employer or employment agency that violates Sections 4(a) and (b) shall be liable to any affected individual for

  • actual damages equal to either the amount of
    • any wages, salary, employment benefits, or other compensation denied or lost to such individual resulting from the violation; or
    • in a case in which wages, salary, employment benefits or other compensation have not been denied or lost to the individual, any actual monetary losses sustained by the individual as a direct result of the violation, or a civil penalty of $1,000 per violation per day, whichever is greater;
  • the interest on the above-described amount (calculated at the prevailing rate);
  • an additional amount as liquidated damages equal to the sum of the above-described amount and interest (except that if an employer or employment agency proves that it violated Section 4 in good faith and that the employer or employment agency had reasonable grounds for believing that it did not violate the section, a court may use its discretion to reduce the amount and interest owed); and
  • for such equitable relief as may be appropriate, including employment and compensatory and punitive damages.

In addition to the above-provided remedies, a court shall allow for reasonable attorney fees, reasonable expert witness fees, and other costs of the action.

As noted earlier, the Secretary may bring an action in any court of competent jurisdiction to enjoin violations and seek other relief to prevent future violations. The Secretary also may recover damages for violations of Sections 4(a) and (b), a civil penalty of not less than $250 per violation of Section 4(c), or such other equitable relief the court deems appropriate. Any sums recovered by the Secretary on behalf of the affected individual shall be held in a special deposit account and shall be paid, on order of the Secretary, directly to each affected individual.

Take-away

Employers should pay careful attention to the rights and remedies afforded to applicants and employees under the proposed Act. In comparison to the New Jersey law, the proposed Act affords applicants significantly broader protections against discrimination based on unemployed status, as well as rights for employees who blow the whistle on such discrimination. In addition, unlike the New Jersey law, the proposed Act provides a private right of action and a sizeable array of remedies. Accordingly, to brace for the prospect of new lawsuits and steep penalties, employers should review carefully their hiring procedures, including those of their regularly-used outside employment agencies/recruiters.

Employers also should be cognizant that the proposed Act adds to an ever-growing patchwork of legislation and proposed legislation intending to lower the unemployment rate in a sluggish economy. The hiring process, in particular, has received a tremendous increase in legislative attention in recent years both at the federal and state levels, including last year’s plethora of laws and proposed laws to ban credit checks. Furthermore, the proposed Act continues a troubling trend of expansive whistleblower protections recently provided in landmark federal legislation. Thus, given the current state of New Jersey law and the extensive protections of the proposed Act, employers must closely follow future developments.