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The U.S. Equal Employment Opportunity Commission (EEOC) recently held a public Commission meeting to hear testimony from representatives of various stakeholder groups as well as social scientists and the Federal Trade Commission on the growing use of credit histories as selection criteria in employment.

In this week’s podcast installment, we’ll be talking about the use of credit histories as selection criteria with Daniel Schwartz. Mr. Schwartz is a member of the law firm of Pullman & Comley, and has extensive trial and litigation experience in both federal and state courts. He represents employers in various employment law matters such as discrimination, human resources, retaliation and whistle blowing, and wage and hour issues. He is the author of The Connecticut Employment Law Blog, and is a frequent presenter on a wide range of employment law topics. His full contact information can be found at his firm’s website,www.pullcom.com. You can follow him on Twitter @danielschwartz.

Last Tuesday, President Obama called on the Senate to pass the Paycheck Fairness Act, calling it a “common sense bill.”

Allan Dinkoff, an employment lawyer in the New York office of Weil Gotshal & Manges, disagrees. Mr. Dinkoff concedes that expansion of anti-retaliation provisions and studying persistent differences between the earnings of men and women may be common sense, but “the core of the bill is anything but common sense.”

An article appearing in Forbes quotes Mr. Dinkoff: “The bill risks altering in very fundamental ways how corporate America compensates its employees without any real justification for imposing that burden.”

The heart of Mr. Dinkoff’s argument is as follows. Under the existing law, employers are permitted to pay men and women different amounts, as long as that difference is because of a reason ‘other than sex’. The Paycheck Fairness Act would eliminate the ‘reason other than sex’ defense and substitute “a requirement that the employer prove that its pay practices are divorced from any discrimination in its workplace or at the employee’s prior workplace, that the pay practice is job related, and that it is consistent with ‘business necessity’”.

To give this argument a little more context, the Forbes article provides the following three examples in which a male employee and a female employee occupy the same position:

Scenario	Current Law	Paycheck Fairness Act
Male and female offered same starting pay; female accepts offer, male negotiates; male ends up with higher pay because of negotiation	OK	NO
Male and female offered starting salary of $1K more than pay at previous job; male ends up with higher pay because of higher previous earnings	OK	NO
Male and female earning same pay; male asks for raise, female does not; male gets raise and ends up with higher pay	OK	NO

These aren’t the only examples. Here’s another one:

Scenario	Current Law	Paycheck Fairness Act
Male is promoted from Position A to Position C, while female is promoted from Position B to Position C. Position A pays $3K more than Position B. Upon being promoted to Position C, each employee is given a 5% raise	OK	NO

We could think of examples all day. The point is that under the Paycheck Fairness Act, employers would be limited in how they addressed differing salary histories for new employees, differing compensation demands of new and existing employees, pay increases for promoted employees, etc. Employers would have to “prove” that any differences in pay are not attributable to discrimination. Essentially employers would have to prove that they’re being fair. As Steve Browne noted on a previous installment of The Proactive Employer Podcast, “fairness” puts the responsibility on the other person. When making compensation decisions, we shouldn’t be fair; we should be consistent.

What is Family Responsibility Discrimination?

Family Responsibility Discrimination occurs when individuals with caregiving responsibilities – to children, parents, or disabled family members – are treated differently because of these responsibilities. To better understand what FRD is, consider the following examples of real-life situations in which individuals have successfully sued their employers*:

a mother was terminated from her job “because she was no longer dependable since she had delivered a child”;
a male Maryland State Trooper was denied leave to care for his newborn baby and told by his supervisor that his wife would have to be “in a coma or dead” for a man to qualify for leave as the primary caregiver;
an employer told a mother that he didn’t think mothers should work, saying “I don’t see how you can do either job well,” and that “women are not good planners, especially women with kids”;
an employer stated that he preferred to hire unmarried, childless women because they would give 150% to the job.

Another example of FRD (and one that I experienced firsthand two years ago): an interviewer asking female candidates – but not male candidates – if they plan to have children.

Is FRD Prohibited by Law?

The EEOC has issued the following guidance on FRD:

“Although the federal EEO laws do not prohibit discrimination against caregivers per se, there are circumstances in which discrimination against caregivers might constitute unlawful disparate treatment…” (EEOC Enforcement Guidance: Unlawful Disparate Treatment of Workers With Caregiving Responsibilities)

There are several different scenarios in which family responsibility discrimination constitutes unlawful disparate treatment under Title VII or the ADA. These scenarios include:

sex-based disparate treatment of female employees, focusing on sex-based stereotypes;
stereotyping and disparate treatment of pregnant employees;
sex-based disparate treatment of male employees, such as the denial of childcare coverage available to female employees;
disparate treatment of an employee with caregiving responsibilities for an individual with a disability;
harassment resulting in a hostile work environment for an employee with caregiving responsibilities.

It’s important to recognize that what initially appears as family responsibility discrimination may actually be sex-based or disability-based disparate treatment.

Proactive Steps For Employers

In order to ensure your workplace is free of family responsibility discrimination, follow these five common-sense steps:

Treat all employees the same: one of the most basic ways to avoid the problem is to treat all employees – and applicants – the same. When making employment decisions, ensure these decisions are based on sound business reasons and not on personal beliefs or preconceptions;
Have an EEO policy, and enforce it: your policy should clearly define which groups are protected from discrimination. Employees should know about your policy, and understand it. If an employee files a compliant under the policy, that complaint should be investigated thoroughly and promptly, and corrective action should be taken where appropriate;
Train managers and supervisors: managers and supervisors should understand the relationship between family responsibility discrimination and federal and state EEO laws. Reinforce that employees should be evaluated on performance all employment decisions must be based on legitimate, non-discriminatory reasons;
When interviewing, ask only job-related questions: focus on the applicant’s qualifications and ask questions related to the candidate’s ability to perform the essential functions of the job. Questions about marriage, children, or plans to have children could result in a failure to hire claim if the applicant is not selected;
Document, document, document: in the event of a performance problem, that problem should be thoroughly documented. If an adverse employment action is taken, and there is no record of poor performance, the lack of documentation may support a claim of discrimination based on a protected characteristics.

As always, the key to avoiding discrimination liability is to treat all individuals the same, and base employment decisions on valid business reasons.

*Examples from Michael Fox’s Jottings By An Employer’s Lawyer

I have a guest blog post featured on the CPEhr blog. The post is the first in a two-part series. The post, “Increased DOL Enforcement Calls for Proactive Measures”, discusses the changes at the Department of Labor since the swearing in of Hilda SolisSecretary of Labor. Particular emphasis is given to the “We Can Help” public outreach campaign, which focuses on wage and hour issues. Wage and hour issues are the fastest growing type of litigation and pose the greatest employment litigation risk to American businesses today.

You can view the first post here. The next post will focus on concrete proactive measures employers can take to prepare.

Our discussion on recruiting, the EEOC and discrimination with Karen Mattonen is now available. You can listen to the podcast installment here (Installment #15). You can also subscribe to the podcast via iTunes, google, and other podcatchers here.

We also have a new video entitled “Are You Compliant?”

It’s easy to feel overwhelmed when thinking about EEO compliance. It seems like one issue just piles on top of another. When looking at EEO compliance, take a breath and call Minimax Consulting’s Equal Employment Advisory and Litigation Support Division. We can tailor analyses to examine your compliance across the entire employment lifecycle: recruiting and hiring, initial assignment, initial pay, compensation, promotion, termination, and reduction in force planning. We offer proactive employment litigation risk management services with open pricing. Get your compliance and employment law issues in order – call Minimax Consulting for a free consultation.

You can view the video on SlidesShare.

Stephanie is headed to Chicago today for #HRevolution – look for my recap of the event early next week.

The Proactive Employer

Credit Histories as Selection Criteria in Employment

The Paycheck Fairness Act- (Un) Common Sense?

Family Responsibility Discrimination

What is Family Responsibility Discrimination?

Is FRD Prohibited by Law?

Proactive Steps For Employers

Guest Post Featured on CPEhr Blog

Friday, 5/7 on The Proactive Employer