By Amy Traub and Paul White

Law360 (June 8, 2020, 3:58 PM EDT) --

Amy Traub

Paul White

As employers who are negatively affected by COVID-19 begin to make efforts to rebuild their businesses, they may be faced with a series of complicated decisions about their workforce.

In addition to updating new safety rules and enhanced workplace precautions in real time, employers also need to navigate a number of regulations and other issues related to recalling employees from furlough, rehiring laid-off employees and hiring anew.

For employers who are now making these kinds of decisions, the workforce looks vastly different than it did only three months ago. On the labor demand side, employers may still look for ways to minimize headcount as the pandemic continues, yet still ensure they have enough employees to meet an uncertain demand, regardless of whether business operations return gradually or quickly.

There are also substantial changes on the labor supply side, as the pool of available workers now includes a large number of former employees, recently unemployed applicants, and a wave of recent graduates trying to gain a foothold in the labor force. A further wrinkle is that certain sources of labor supply may diminish. For example, older previous employees and/or those with certain health conditions may decline to renew their participation in the workforce even if the company seeks their services.

Employers have to make decisions such as which locations to reopen and how many jobs to fill at each location, as well as when these decisions should be implemented. Furthermore, employers have to consider which factors should be used in choosing among and between furloughed employees, employees who previously were laid off, and/or a larger volume of external candidates available to fill those jobs.

For each of these decisions, employers face the possibility of allegations of discrimination. While employers must always be wary of the risk of an individual claiming disparate treatment under these circumstances, the subjects of this article are the broader risks of disparate impact and systemic disparate treatment claims. Below is a list of some key considerations for employers to reduce their exposure to allegations of various types of systemic discrimination claims.

General Considerations in Rebuilding a Workforce

As businesses look to reopen in the wake of this pandemic, it is anyone's guess the types of disparate impact and disparate treatment claims that might ultimately be filed.

While traditionally such claims might have been based on age, gender, national origin or race — all of which remain a possibility — given the unique circumstances presented by COVID-19, employers might begin to see more unique systemic impact claims filed by groups of individuals who may be (or may be perceived to be) medically vulnerable, those with child care or other familial responsibilities, people who indicate a preference for working remotely, etc. Careful analysis should therefore be conducted to ensure there are no trends in the data that could support an allegation of systemic discrimination.

In addition, an employer must be mindful of the important choice of which labor supply sources — current employees, former employees or external applicants — it will look to in order to rebuild its workforce. This decision alone could land an employer in hot water if, for example, it were to decide to hire entirely anew from an external applicant pool and choose all younger people to fill jobs previously filled by older workers who were laid off due to the pandemic.

The older workers might claim that their prior employer's seemingly neutral practice of hiring anew, as compared to rehiring the previously laid off workers — an option that might never have dawned on the employer in the first place — disparately impacted older people. They might also argue that the company intended to use an external applicant flow because it knew that this would yield a younger workforce.

Either way, the consequence to the company from a statistical perspective is the same — the data will require analysis up front in order to identify what the issue might be. 

Other issues that may impact the analysis include whether:

• Furloughed employees are recalled or former employees are rehired based on seniority or some other objective criteria;
  
  
• Former employees are asked to reapply for their positions and onboarded as new employees;
  
  
• Former employees are given a preference for rehire, compared to external applicants;
  
  
• Former employees are hired for the same position they had pre-COVID-19;
  
  
• Former employees are hired back as employees or contractors;
  
  
• Former employees are hired back as full-time or part-time employees;
  
  
• Former employees will be hired back into exempt or nonexempt positions;
  
  
• To reinstate the tenure of former employees, including their benefits; and
  
  
• The pay level will be the same or lower than at the time of termination.

Considerations for Recalling Furloughed Employees and/or Rehiring Laid-Off Employees

It could very well be the case that not all employees who were furloughed at the beginning of COVID-19 continue to be needed, such as where the business determines that it can only sustain the return of 10 call center operators but 20 are currently on furlough. How will the employer decide which 10 will be recalled to their jobs and when, and which 10 will remain on furlough or be terminated?

It might also be the case that an employer who previously has taken the more permanent step of laying off, as compared to furloughing, 30 retail associates now finds itself in the position of needing 10 of them back. Which will be contacted and offered the opportunity to be rehired? Will the decisions be based on objective factors, such as years of service/seniority, particular skill sets, or salary grade or amount, or will they be based on more subjective factors?

If employers use the performance measures of furloughed or laid-off employees in making the recall or rehire decision, for example, then the question of whether performance evaluations prior to the lockdown were fair, job-related and consistently handled may be relevant.

The issues described above obviously suggest that considerations for recalling and rehiring employees should include complying with anti-discrimination laws such as federal, state, and local disability and age discrimination laws.

For example, when considering whether to recall or rehire older or immunocompromised individuals, or individuals who were diagnosed with COVID-19, employers should be aware that they cannot discriminate against employees who are older, disabled or regarded as disabled. Employers also may not retaliate against any employees who took leave because they were diagnosed with COVID-19 or took other leave because of COVID-19.

Considerations for Hiring Anew From an External Data Pool

When evaluating whether to hire new employees, employers should consider all qualified candidates fairly and without regard to any protected characteristics, as they would with any business decision.

In particular, one might think that employers should not inquire about or take into account whether a candidate had COVID-19 in the past, is susceptible to COVID-19 based on his or her age or disability status, or has taken leave in the past for reasons associated with COVID-19. However, it has been suggested that companies will be negligent if they do not determine certain aspects of their employees' COVID-19 exposure because failing to do so might expose the company to other kinds of liability. 

Proactively Analyze Applicant Data in Real Time

If the ramp-up of the workforce is somewhat gradual, employers have a unique opportunity to make real-time decisions in such a way that over time they achieve and maintain legal compliance. In order to do so, employers should compare the demographics of the candidates who receive job offers to the characteristics of the pool of qualified, interested and similarly situated applicants. 

Collect Relevant Data

In addition to the information employers traditionally maintain on employees and applicants, the COVID-19 era may introduce the collection of other employee information such as ability to work from home, the signing of a waiver to return to the office, and the voluntary disclosure of health-related concerns.

Employers should maintain this information, as required or permitted by applicable laws, as it may be useful in evaluating any disparate impact on certain protected groups of individuals or defending against potential discrimination claims. For example, health information maintained by an employer must be kept confidential and separate from the employee's regular file.

If possible, applicant flow data should be structured in a way that one can identify for each open position the people who were competing against one another for the position, who made it through to the next stage in the hiring process, detailed disposition reasons to explain why a candidate did not pass through to the next stage (including candidates who voluntarily withdrew), the criteria by which candidates were evaluated (and each candidate's score for the criteria), who was provided an offer for each position, and who was eventually hired for each job.

External Labor Market Benchmarks 

Although well-maintained applicant flow data is usually the best indication of the relevant labor pool by which to assess hiring decisions, it still may be the case that employers will be challenged by plaintiffs or regulators who use external labor market availability benchmarks, such as from the American Community Survey produced by the U.S. Census Bureau.

If an outside party has reasons to question the accuracy and reliability of the company's applicant flow data, they may instead rely on these outside benchmarks. It is often the case that the conclusions drawn from these alternative sources are different, which then puts the spotlight on the relative appropriateness of each data source as they apply to each particular employer.

Timing Considerations

If the economic recovery process is gradual, and employers have multiple rounds of hiring and reductions over time, then all of the above topics become more important. Employers may be challenged not only on the decisions made at each stage, but they may also be challenged on the cumulative effects of all of these decisions. The most appropriate statistical analysis is the one that best reflects the actual decision-making process.

Other Considerations

Employers can expect to be challenged on the decisions made after, and during the onset of, COVID-19. As such, it would be natural for plaintiffs and the courts to want to first understand the demographics of the workforce before the onset of the pandemic, followed by a comparison to the workforce during and after the pandemic.

As such, now is an opportunity for employers to ensure their employee data is complete and accurate, starting at least as far back as January. At the same time, it is especially prudent that employers maintain data to document both the layoff and hire decisions made since then, including but not limited to:

• Who was eligible for selection — essential jobs, performance measures, etc.?
  
  
• What was the outcome of the selection — furlough, termination, pay cut, hire, rehire?
  
  
• Where were the affected people — certain locations, offices, stores, headquarters?
  
  
• When were the decisions communicated and then put into effect, in stages or all at once?
  
  
• Why were some people selected and others not — performance, location, essential jobs, turned down an offer to return, etc.?
  
  
• How were the decisions made? Who made the decisions, what factors were considered in determining each person's outcome, and who made sure each stage of the process was documented and disposition reasons were maintained throughout?

Final Recommendations

Employers should recognize that their decisions on recalling furloughed employees, rehiring former employees and hiring new employees may be scrutinized and result in disparate treatment and disparate impact claims.

To limit these types of discrimination claims, employers should review the business reasons for these decisions and ensure that they comply with anti-discrimination laws. Employers may also consider performing statistical analysis, whether in a disparate impact or systemic disparate treatment context to confirm that their practices do not reveal a disproportional impact on any particular groups of individuals.

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Amy Traub is a partner and chair of the labor and employment group at BakerHostetler.

Paul White, Ph.D., is a partner at Resolution Economics LLC.

BakerHostetler associate Saima Sheikh contributed to this article.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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