This issue’s guest expert is David Scheffler, director of recruitment compliance for HRworks, a national recruitment firm specializing in EEO/affirmative action compliance.

Q: How can a company determine if it is unwittingly practicing systemic discrimination?With new scrutiny around systemic discrimination from both the Office of Federal Contract Compliance Programs (OFCCP) and Equal Opportunity Commissions (EEOC), what steps should be taken to prevent lengthy and expensive repercussions?

A: Blatant discrimination has thankfully been all but eliminated from the hiring and promotion practices in most U.S. corporations. However, subtle, systemic discrimination is on the rise, and both OFCCP and EEOC have undertaken aggressive initiatives to uncover it, stop it, and penalize those who are practicing it. And, safe to say, the majority of corporations charged with and found to have engaged in systemic discrimination have been shocked by that discovery.

Consider these two recent headlines:

FedEx Express, in April 2007, tentatively reached a $54.9 million settlement with about 20,000 current and former employees of color who accused the firm of discrimination. The culprit? A test, required for anyone being considered for promotion. Because the test was unrelated to the specific requirements of the job, it was found to adversely and disproportionately impact certain minority groups.

Still pending is a lawsuit filed earlier this year by EEOC againstWalgreens, America’s largest drugstore retailer. The suit alleges that the company discriminated against thousands of African-American employees by assigning them to low-performing stores and denying them promotions as a result of what EEOC called “subjective promotion practices.”

In these and dozens of other investigations and lawsuits, the companies did not likely intend to discriminate. But intent is irrelevant if hiring and promotion practices are found to be discriminatory. And the resultant damage to a company’s reputation and bottom line can be significant.

These cases stem from the heightened efforts of both OFCCP and EEOC to stop systemic discrimination. EEOC’s initiative, called ERACE (Eradicating Racism and Colorism from Employment), focuses on combating and correcting discriminatory employment practices related to hiring and promotions. This was prompted, EEOC says, by an increased use by employers of arrests and conviction records, employment and personality tests, and credit scores in determining eligibility for employment or promotion.

On the surface, the use of these and other tools may seem to be appropriate—or even benign – practices. However, if the criteria being judged are unrelated to the requirements of the job, they can result in a disproportionate number of minorities being excluded from job opportunities.

The litmus test for determining if your company is systemically discriminating is actually fairly simple. Your hiring and/or promotional practices must be:

• Job-related,
• Validated according to Uniform Guidelines on Employee Selection Procedures standards, and
• Necessary to complete a particular job. If your hiring practices do not meet these criteria you are at risk for a costly and potentially brand-damaging investigation and lawsuit.

To ensure that your practices are in compliance, and to avoid an EEOC or OFCCP investigation, you should undergo a self-analysis looking at adverse impact by hiring stage. This will enable you to focus your efforts on any problematic areas, and to take swift, corrective action. The following steps and recommendations will guide you through that analysis:

• Thoroughly review all job descriptions. Any job posted internally or advertised externally should include a detailed description of the qualifications a candidate must possess to be considered for the job.
• Examine all aspects of hiring practices by job type. Carefully evaluate your entire selection process (tests, pre-screens, interviews, etc.) to ensure each is necessary and applied consistently and fairly. For example, an open position that requires a personality test for some candidates, and not others, is a red flag to compliance auditors.
• Don’t confuse “recruiting” with “hiring.” Just because you’ve made good-faith efforts to broaden your applicant pool (and have been successful in doing so) doesn’t mean your hiring and promotion practices are nondiscriminatory.

EEOC will look for disproportionality among candidates who are evaluated at each stage and those that move forward to the next step in your selection process.

1. Work with your attorneys. Legal counsel should be aware of and participate in any analysis of your practices. They may be able to identify subtleties that otherwise go undetected, and advise how to proceed if any problems are detected.
2. Fix the problem. If the analysis uncovers any unnecessary or inconsistent procedures, act quickly to address and correct them.

Systemic discrimination can be quite costly to your company and, most important, to the candidates who have been treated unfairly. Proactively analyzing and correcting flawed hiring and promotion practices today will prevent lengthy and expensive legal actions in the future.

View the original article in Business & Legal Reports, Inc's Affirmive Action Solutions Newsletter November 2007 Issue 183