Avoid Getting Sued Risks and Rewards in Recruitment Record Keeping
The Office of Federal Contract Compliance Programs filed the complaint against Goodyear in June 2006. The OFCCP completed nearly 4,000 compliance evaluations in 2006 and recovered $51.5 million for workers subjected to unlawful discrimination, an increase of 14 percent from 2005 and a 78 percent increase compared with 2001.
This significant jump in monitoring and enforcement activity was fueled in part by the OFCCP’s new active case management system, which uses statistical tools to prioritize reviews of recruiting and employment practices at companies with federal contracts. The OFCCP is reviewing a much larger portion of the federal contractor universe than it has in the past.
In addition to increased monitoring from the OFCCP for federal contractors, recruitment-related record-keeping requirements for all companies may fall under scrutiny from the Equal Employment Opportunity Commission when applicants allege discrimination.
As recruiters face greater time-to-fill pressures and employers increase Internet and recruitment agency sourcing, the risks arising from poor record-keeping practices grows. At the same time, careful record keeping throughout the recruitment process can produce valuable data that helps move employers beyond compliance and into the realm of better business intelligence.
Clarity and consistency
"It’s important to have the right process for gathering applications," cautions W. Christopher Arbery, a partner specializing in employment law in the Atlanta office of Hunton & Williams. "Employers must correct any lack of clarity stemming from multiple methods for applicants to express interest."
Legal experts agree that one of the largest record-keeping risks arises when employers assume that they are not responsible for records on applicants that the recruiting agencies screen out. "In addition, employers need to ensure that their recruiters and the agencies they use are gathering the right information, whether they are using a separate tear-off or form or a set of fields for applicants to self-identify," Arbery notes.
Employers must carefully review the record-keeping practices of any recruiting agencies employed.
"The employer is still responsible for all recruitment-related record keeping," says Kacy Margaret Marshall, an associate specializing in employment law at Fisher & Phillips in Fort Lauderdale, Florida.
"Even if the agency warrants that it complies with all requirements, the employer must confirm that the agency is maintaining proper records," Marshall says. "Ultimately, responsibility for compliance rests with the employer."
The OFCCP issued its final rules on record-keeping requirements for Internet applicants in 2006. Some employers are now controlling their liability under the new rules by carefully defining basic qualifications for positions and establishing protocols for accepting applications and "expressions of interest."
Employers are also using random cutoffs to reduce the number of applications considered, posting salary ranges to eliminate candidates with expectations outside the range, and excluding all unsolicited résumés.
Although some questions about the Internet applicant record-keeping requirements remain unanswered, Arbery and Marshall report that their clients have not encountered serious difficulties with the new rules. Instead, most problems continue to arise from broader issues in record keeping.
In OFCCP and EEOC investigations, the HR function is responsible for producing documentation. With the OFCCP, the risk for companies is debarment. "But the OFCCP does not look to debar companies," Arbery notes. "Instead, it attempts to reach conciliation agreements and to achieve compliance."
The EEOC, however, puts more teeth into enforcement, Arbery says.
"When it finds a company in violation, it is more likely now than it was five years ago to go to court with it," he says. "If the EEOC finds an adverse impact and determines that the employer intentionally engaged in insufficient record-keeping practices, it may go for damages."
Marshall notes that both the OFCCP and EEOC infer that the failure to provide adequate recruiting records may be an attempt to conceal discriminatory practices.
"The EEOC’s ‘adverse inference’ concept comes into play when employers have not met the record-keeping requirements of the ADA, ADEA or Title VII of the Civil Rights Act," she says. "The OFCCP also maintains a similar position that if the employer destroyed or failed to preserve records, it may presume that the information was unfavorable to the employer."
One of Marshall’s clients came under an EEOC charge when an applicant with a Latino name alleged that he applied for a position and was rejected, and then applied again under an Anglo name and was accepted. The applicant filed a discrimination charge with the EEOC, which issued a cause.
The company could not produce the proper records, and the EEOC inferred that the missing records contained incriminating information. The company was forced to enter a conciliation agreement.
"Record retention should always be a concern for the company," Marshall says. "Witnesses may leave the company; records are all you can rely on."
All employers should periodically review their recruitment record-keeping practices for compliance with federal regulations. This review can be combined with an evaluation of all data collected during recruiting to ensure constant improvement in the hiring process and a holistic approach to compliance and business results.
"Today, protecting a company’s interests goes far beyond collecting the right information during the recruiting and hiring process," says Gregory Fenton, manager of global HR services at PricewaterhouseCoopers. "It now extends to how that data supports business strategy and compliance requirements in an increasingly scrutinized hiring environment."
As the HR outsourcing market and enhanced recruiting technology have evolved in recent years to support multiple business models, one of the key selling points of the applications continues to be data collection and analysis, Fenton says. These applications provide the ability to identify, capture, integrate and use candidate and new-hire data to support workforce management and protect multiple interests in terms that can be understood by business managers.
"Over the last few years, companies have begun to employ applications and strategies supplied by HRO and ATS vendors, often in the form of data warehousing and enterprise-wide integration efforts," Fenton says. As these efforts mature, recruiters and executives can take several steps to successfully manage data and performance measures.
"First and foremost, better recruitment record keeping allows more data to be captured and shared across the enterprise in a way not seen in the past," Fenton reports. HRO and ATS vendors have long promoted integration. With the advent of better record-keeping and reporting architecture, integration is a real possibility.
"The architecture is deep in that it can capture all the data required by the government," Fenton notes. "It is also varied. Not only does it allow new ways to review and report data, it also allows candidates to share more pertinent facts not always captured in previous generations of systems."
Sound data management requires consistent record-keeping practices.
"Leading companies understand that good processes—and training to adhere to these strategies—captures good data and begets good decision-making," Fenton says. "They now employ recruiters and partner with vendors who know that business success is more than just time-to-fill metrics."
Trained recruiters understand the data collected and use them to set recruiting strategy and to ensure a consistent experience across all candidate pools.
The best applications today can capture required and voluntary information and integrate that data in a way that is scalable, Fenton says. Compliance requirements can now be better met because the data are stored in a common language in a common place. The scalability factor is becoming more prevalent as performance and learning management systems begin to draw from data initially captured in the hiring process.
"What we’re seeing in the marketplace is the ability to warehouse incoming data from recruiting that captures information on skill sets and other factors," Fenton says. "Then as other applications come into play—succession planning applications, for example—you already have skill sets and profiles in the system. It’s an immature model, but more companies are adopting it and looking for integration."
The early adapters are companies that have moved with outsourcing vendors to gain scalability. "It works well for companies that are willing to centralize," Fenton says. "It also helps with compliance because you have consistent processes."
Recruiters may create errors as they input data, but warehousing creates guidelines and a process that minimizes input problems. Recruiters know in real time if they have entered data incorrectly, before the error becomes a compliance issue.
Sound record keeping and compliance start before the candidate applies for a position, through the use of good systems and process management, Fenton says. "It continues with the understanding of how to use the data, how to execute strategies that develop the workforce and protect the company, and, finally, through managing key constituencies with a consistent approach."