Posted June 24th, 2013 in Legal Insights with Tags EEOC, hiring, law, legal, Business Law, HR, staffing

Internal Job Referrals and Homogeneous Hiring

With employers incurring significant costs to find the right candidate for open positions, employee referrals have become a valued resource for HR departments. Some larger companies, in fact, have begun creating goals to increase the number or proportion of hires that come from internal referrals. Veena Iyer, a labor and employment attorney with Nilan Johnson Lewis, notes that, despite offering lots of benefits, the practice of referral hiring could result in disparate impact against underrepresented minorities—and an EEOC investigation—if employers aren’t careful. Specifically, because current employees—like the broader population—generally move in homogenous social networks, referral hiring can fail to identify candidates whose racial, ethnic, and socioeconomic backgrounds are different from those in the current workforce. Iyer emphasizes the need for “broad-based” hiring practices that extend beyond word-of-mouth searching to include other forms of job posting and advertising. Such actions will attract “a wider range of candidates with varied backgrounds,” says Iyer, while limiting the risk of any discrimination claims.

Contact Veena Iyer at 612-305-7695 or viyer@nilanjohnson.com.