The Trojan horse for trial lawyers in Obama's jobs bill

A little-known provision in the jobs package proposed by Barack Obama will certainly create some jobs — in the trial lawyer industry.  The Hill’s Pete Kasperowicz notices that the bill would make it illegal for businesses to discriminate against the already-unemployed while making hiring decisions, a provision that will almost certainly keep businesses from taking any risk in expansion until absolutely necessary:

President Obama’s American Jobs Act, which he presented to Congress on Monday, would make it illegal for employers to run advertisements saying that they will not consider unemployed workers, or to refuse to consider or hire people because they are unemployed.

The proposed language is found in a section of the bill titled “Prohibition of Discrimination in Employment on the Basis of an Individual’s Status as Unemployed.” That section would also make it illegal for employers to request that employment agencies take into account a person’s unemployed status.

It would also allow aggrieved job-seekers to seek damages if they have been discriminated against. This provision in particular prompted Rep. Louie Gohmert (R-Texas) to argue that Obama’s proposal is aimed at creating a new, special class of people who can sue companies.

“So if you’re unemployed, and you go to apply for a job and you’re not hired for that job, see a lawyer,” Gohmert said on the House floor. “You might be able to file a claim because you got discriminated against because you’re unemployed.”

When people see this, especially those who like Obama and his team have never run a business, their first impression might be, “Well, golly, that seems fair.”  Anyone who has ever dealt with the hiring process as a business owner or manager knows differently.  The EEOC already has anti-discrimination laws in hiring and compensation for innate characteristics of applicants such as gender, age, ethnicity/race, and in most states sexual orientation.  Those laws put an onerous burden on employers to essentially prove themselves innocent when those who don’t get hired file complaints and lawsuits.  Discrimination is the easiest claim to make and nearly impossible to defend without spending a fortune on data collection, advertising, training, and legal fees.

Employers already know that questions about age, marital status, religion, and the like are out-of-bounds during job interviews because of how easy even innocent questions on these topics will bolster later claims of discrimination.  This law would threaten to make the topic of  job history off-limits as well.  It’s absurd to think that recent job history is somehow an unfair criterion to use when evaluating competing candidates for a position.  Unless the job involves unskilled labor, a candidate who has not worked in two years will not be as valuable to a company as one that has maintained his or her skills up to the moment.  If businesses are no longer allowed to evaluate candidates based on objective value, then what are they supposed to use for hiring criteria?

This is no small point for employers, either.  I spent almost 15 years as a hiring manager, and I know from experience that there is a strong correlation between stable employment histories and successful hires.  That was as true in recessions as it was in boom times.  At my last firm, that correlation was so strong that our HR team would question any hiring choice with any kind of spottiness in the employment record.

All this provision does is give those who don’t get the position a big invitation to file a lawsuit, especially against the deep-pocketed companies we’re hoping to convince to hire people now.  That will certainly benefit the lawyers who take these cases in order to get a piece of the shakedown money they can get out of these companies, but all that does is heighten the risk of hiring for businesses enormously.  If a company has a position that attracts 20 applicants, they have to consider the possibility that the new hire will cost them compensation for one employee and settlements for 19 non-employees, unless the business goes out of their way to hire the person who has been unemployed the very longest and therefore doesn’t have the same market value for their labor or for the company.

How many businesses will offer new positions in this kind of regulatory and legal climate?  Only those who absolutely cannot afford to not hire, and the inevitable costs of fighting the claims that arise will ensure that they won’t have the cash to do any hiring for a while afterward.

No one who is serious about setting an environment for job creation would include a Trojan horse like this in a jobs bill.  This is nothing more than a payoff for trial lawyers and a pander to those unfortunate people who have been out of work for a long time.  The latter might think that Obama’s protecting their interests, but he’s really just guaranteeing that they won’t ever see the kind of job creation that would put them back to work.

Update: A Hot Air reader reminds me that not all trial lawyers are bad guys.  His e-mail was pretty long, so I’ll just cut to the conclusion:

I agree that a provision making not hiring the unemployed illegal is a bad idea, and I suppose I don’t expect you to sing the praises of trial lawyers any time soon, but some acknowledgment of the role we do play in maintaining a free society (and allowing a free market to operate with less regulation because people and corporations are held responsible for their actions!) would be both responsible and appreciated.  Either way, keep writing and I’ll keep reading – I enjoy the site, and your writing in particular, immensely.

Well, consider it done.  I agree with this statement, and in fact, uh, some of my good friends are trial lawyers.  (It’s true!)  But it’s also true that the personal-injury industry as a whole has made it more difficult to do honest business, too, and that’s especially true in areas like hiring.  Making businesses even more susceptible to shakedowns where no real wrong has occurred is bad policy and just plain counterproductive to a free society and a free market, and eventually becomes a backdoor way to transfer wealth by force from the productive to the unproductive, which is only lucrative in the end to those attorneys who shepherd the wealth (and keep a good chunk of it for themselves).