ost companies are already recruiting online, posting jobs and accepting résumés on the Internet, and corresponding with job candidates by e-mail. In the coming years, digital recruiting and hiring are expected to continue their explosive growth. By 2008, the Department of Labor predicts, employers will spend 10 times as much on electronic recruiting as they do today. But with e-recruiting comes many new legal liabilities. Joseph Beachboard, a partner in the labor and employment law firm Ogletree, Deakins, Nash, Smoak & Stewart, identifies the five biggest e-recruiting risks and what you can do to safeguard your company.

What’s the first issue that arises when a company institutes an online recruiting system?

One of the legal risks is that employers, feeling overwhelmed by the amount of résumés they get, turn to résumé-screening software. That way they don’t have to look at every single résumé that comes in; the screening software helps select the best applicants [by screening for certain words or phrases]. Well, that approach only works as well as the software, and there’s a significant legal risk in making a poor selection in your résumé-screening software.

What can happen with the wrong software?

Depending on how it sorts, it may exclude groups of people from various protected categories. There was a lawsuit against Walt Disney World, alleging that their screening software created a sort of reverse selection process. Rather than deleting résumés, it picked out the ones that had the words or phrases the company was looking for. The argument was that the words used by the screening software were not necessarily the same words that members of the African-American community would use to convey information. They might very well be qualified for that job, but they didn’t use the terms that this résumé-screening software was using, because they were terms that would primarily be used by Caucasians. The case was settled relatively quickly. There’s very little information on what the words were.

What’s the second potential problem with e-recruiting?

It concerns the impact e-recruiting has on who you consider for a job and ultimately hire -- and how that affects the diversity of your workplace. By using online recruiting as a means of identifying potential employees, are you excluding large portions of the population? For instance, there’s the argument that more young people use the Internet than old people. So if you rely exclusively on e-recruiting, then you’re probably going to get more young applicants than older applicants. There are also arguments that generally, fewer minorities than whites have computers. So you might be excluding some of those people by primarily requiring that applications be done electronically. That can create disparate impact: certain protected groups have less chance to be hired than others.

And the third issue to watch out for?

You’ve got the question of who is an applicant. Many employers -- if they have federal contracts -- must answer this question in order to meet obligations to the Office of Federal Contract Compliance Programs. These employers are required to track what’s called applicant flow data. They’re required to keep an eye on who’s applying for jobs and what protected categories these applicants are in, and then how many of those people are actually hired for those jobs. If you’re a federal contractor, the OFCCP will review that information and make sure you’re hiring people to work on federal contracts that reflect the general population. Even if you’re not a federal contractor, you still have to keep information about who’s applying, because you may be sued for discrimination; the EEOC may come in and challenge your hiring practices.

How does e-recruiting figure into this?

Who your applicants are and where they fall in the different protected categories is important information. The question is: As you get these résumés, how can you possibly track them all? Considering that someone can send a résumé to literally thousands of employers, it creates a very big problem to track who is considered to be an applicant. So that’s a huge issue.

And the fourth trouble spot?

There’s an issue with the collection of the information itself. Can you properly comply with all the different hiring requirements that might apply in your state, and still find yourself [in gray areas in another state]. California laws place a lot more limitations on the amount of information employers can collect than might be the case in Texas. So if you’re collecting information from someone in California, and you’re based in Texas, but you’re doing it all electronically, whose law governs? Could you be collecting information from that California person that would be lawful if you were both in Texas, but may not be in California?

What’s the final area of concern?

In the electronic context, there’s more risk of getting yourself into trouble by making a comment or asking something that you wouldn’t in the hard-paper format. If you’re advertising in a newspaper, you have X amount of characters, so you’re pretty succinct. On Web sites, you can go into as much detail as you want. You can put pages of information up there about who would be the best candidate. That can be good for the applicant, but depending on the nature of the information, can also come back and be pointed to as evidence of discrimination.

The second component of that is the general informality that exists online. If an HR person starts engaging in an e-mail correspondence with an applicant, people aren’t as careful in those e-mail discussions. They might say something or ask for some information that would be improper, something that may later come back [to haunt them] when the applicant doesn’t get the job: "See, it didn’t have anything to do with my qualifications; it was because she or he learned I was Asian or disabled or gay."

Let’s address these problems. First, what’s your advice to an HR professional considering résumé-screening software?

Make a very educated decision about the right software for your company. You should probably involve your labor counsel to make sure you’re making the right decision and to evaluate whether that system creates any specific legal risks.

Second, how can HR avoid disparate impact in its e-recruiting?

To begin with, it would be a mistake to abandon traditional methods of recruiting. When you start e-recruiting, you obviously broaden the number of applicants who can apply, because it’s much easier. But as we discussed, you can limit the pool of people in protected categories: older workers and minorities, arguably. So you still have to maintain the traditional methods of recruiting. You also have to constantly be reviewing the results of your e-recruiting system and asking yourself: Are we drawing the right mix of people for this job from the standpoint of avoiding a disparate-impact issue? You need to constantly check to make sure you’re achieving the results of creating a diverse workplace and thereby insulating yourself to some degree from liability and litigation.

What about the question of who is and who isn’t an applicant?

An applicant is defined by most of the federal agencies as someone who’s expressed an interest in a job. Well, that’s pretty darn broad. You could just walk in and say, "Wow, this looks like a nice place to work!" Now, have you just expressed an interest and therefore become an applicant for that job? Some agencies would say yes. So you must have a very detailed system [narrowing the definition] that says: If you’re going to apply for a job -- not just inquire about hiring -- you have to go through this application procedure, and you have to submit something in writing that says you’re interested in a specific position.

What else?

As part of that procedure, I think it’s important that the company maintain a dialogue with the individual -- thanking them, alerting them that they’ve received the résumé. Some employers are sending voluntary self-identification forms electronically now. If you were governed by the OFCCP, that would be a standard part of your application procedure. But you can also design something that would be sent back to you electronically, and that will help you gather and keep that information.

What about the state-law quandary?

The most critical thing is to limit the information collected to that which HR legitimately needs to make the hiring decision. Be circumspect in what information the company is collecting. Because I don’t think any HR professional is going to know what the law is in all 50 states. That would be one remarkable HR person.

How should HR address the informal nature of e-recruiting?

Employers need to stick to the application procedure they draft. People tend to be a little less formal online, and it’s easy to slip away from it because you’re in a hurry and just want to send a note back to this applicant. There are a lot of things that can go wrong, and if people don’t stick to these procedures, they’re going to be finding themselves in a lot of trouble down the road.