As employers increasingly turn to RPOs they need to make sure the firm they hire is well grounded in fair hiring laws, because they could be held liable for the firm’s violations.
“It’s a good best practice to have,” counsels Christopher Olmsted, a specialist in labor and employment law and partner in the San Diego firm Barker, Olmsted & Barnier. Now, in the wake of a new federal appeals court decision, proper vetting is “even more important,” he says.
Last month, the 2nd District Court of Appeal based in New York, said an employer is liable for the misdeeds of its hiring agents, even if it considers them independent contractors.
Said the court: “We hold that an employer may be held liable for discrimination by third parties, including independent contractors, that the employer authorizes to make hiring decisions on its behalf.”
The case arose when a candidate was rejected for a job showing apartments to potential tenants because, the candidate alleged, he was too old. Michael Halpert, the candidate, sued Manhattan Apartments, the rental company. But it said it wasn’t liable because one of its independent contractors was involved and under previous decisions it wasn’t responsible for the actions of a third-party recruiter.
The New York Appeals court rejected that contention and ruled, “If a company gives an individual authority to interview job applicants and make hiring decisions on the company’s behalf, then the company may be held liable if that individual improperly discriminates against applicants on the basis of age.”
In Olmsted’s view, an RPO or HR outsourcer given authority to make hiring offers, would become an agent of the employer. And under the law the employer is responsible for the actions of the agent.
At the other extreme is simple name generation or application screening where all candidates meeting the job requirements are submitted. “If they are just shuffling paper, then there’s no hiring authority involved,” Olmsted says.
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But what about those (very common) situations where a third party is retained to source and screen candidates? Or conduct a first interview? Or rank them, and present the list?
That’s where things get murkier, he agreed. “The case does very little to tell when this agency agreement arises,” he says. “As soon as the recruiter is given some responsibility… then the question arises.”
In an analysis he wrote for the law firm’s website, Olmsted advises, “When hiring recruiters or other service providers, engage in ‘HR due diligence’ by confirming their understanding of and commitment to EEO practices.”
Technically, the opinion of the New York appeals court applies only to federal courts in the second district. However, like Olmsted, attorneys across the country are advising employers to be especially careful when hiring outside recruiters.