How Obama's White House Stops Employers from Hiring

How Obama's White House Stops Employers from Hiring


With 23 million Americans still needing full-time jobs, you would think the Obama administration would be doing everything possible to encourage hiring. At the least, you might expect them to tone down activities that would discourage hiring--that is not the case.

From Obamacare’s extra fees holding back workforce expansion to efforts to hike the minimum wage, this White House has repeatedly raised the cost of adding personnel. Less visible has been how the Obama administration has increased the risks assumed by any entity that hires new workers – such as the risks ladled on by an increasingly aggressive EEOC.

The Equal Employment Opportunity Commission is responsible for enforcing federal anti-discrimination laws. Under the Obama administration, the EEOC has ramped up its investigations of businesses large and small. In its 2012 annual review, the agency reports “The EEOC's private sector administrative enforcement activities secured more than $365.4 million in monetary benefits in FY 2012, the highest level of monetary relief ever obtained by the Commission through the administrative process…”

Recently, it has especially focused on so-called “systemic” discrimination. That is, instead of dealing with individual accusations of mistreatment, the EEOC now pursues one-off complaints as possible clues to ongoing bias, putting firms through the wringer as they attempt to cooperate with vast demands for past records and other subpoenaed materials. 

In the past such investigations have focused mainly on large enterprises. For instance, in July 2011 the agency announced a $20 million agreement with Verizon in settlement of the country’s largest-ever disability lawsuit. The company was accused of using strict attendance policies that “systemically” discriminated against persons with disabilities. Though successful in that case, the EEOC has more recently been rebuffed numerous times for its free-range pursuits. Last yeara federal judge tossed its subpoena demanding nationwide employment data in a case involving just two complaints – both from Colorado workers - against employer Burlington Northern. 

Today, such investigations can target small companies as well. Last year in Massachusetts, a coffee chain endured a year of investigators quizzing their baristas about the gender, body type and race of their co-workers, even though, according to the restaurant owner, the firm had never had any complaint of discrimination. A local politician railed that the EEOC was a “meddlesome, overblown, intrusive federal agency.” 

In Tucker, Georgia, the EEOC brought charges of sexual harassment against the owners of Sangria’s Mexican Café in Tucker, Georgia, even after they had agreed to post notices and offer training to ward against future violations. A jury awarded four employees $51,700 in damages, monies the 22-employee restaurant claimed might put them out of business. Chad Schultz, the lawyer defending the owners said, “This is a perfect example of the EEOC gone wild. It pursued this small business, with no previous dealings with the EEOC, like it was a Fortune 500 Company…Heaven help the small business that becomes the target of the EEOC.”

Heaven help them indeed. Or perhaps the federal courts will rein in the agency. Just recently, a judge sanctioned the EEOC for making the defendant’s discovery more excessively “time consuming, laborious and adversarial than it should have been” while pursuing a sexual harassment claim against The Original Honeybaked Ham. In another case last year against a warehousing and pallets supplier, Propak Logistics, a judge ruled against the EEOC, charging it had engaged in unreasonable delay, which constituted prejudice against the defendant. Other cases dismissed in 2011 included one involving a corporate events and convention planner, the Freeman Companies--the court ruled against the EEOC’s position that it can disregard the statute of limitations in bringing discrimination charges.

For many small businesses, simply keeping up to speed with changing regulations is challenging. Elizabeth Milito, Senior Executive Counsel of the NFIB, says, “Our members want to comply with the law. They don’t want to discriminate against applicants or employees, but they struggle to decipher confusing and sometimes contradictory laws.” She points out that small firms typically don’t have HR execs or in-house counsels available to wade through the legalese. 

In the past year, one of the more vexing issues has been conflicting signals on the use of background checks and the hiring of criminals. A year ago, the EEOC determined that policies that preclude hiring people with criminal records have a “disparate racial impact,” since African American men are seven times more likely than whites to have been in jail. The agency urged employers, instead of ruling out such hires, to take into account the "nature of the crime, the time elapsed, and the nature of the job” in deciding whether or not to take on an individual.

In other words, firms will be required to perform extensive research, which could prove costly. (As some have pointed out, there could be no faster way to discourage hiring blacks.) Worse, some businesses are prohibited to hire ex-cons by law; complying with the EEOC mandate could expose them to prosecution elsewhere. As Newsmax reports, this problem was exposed when the EEOC “took action against G4S Secure Solutions, which provides guards for nuclear power plants…for refusing to hire a twice-convicted thief as a security guard – even though Pennsylvania state law forbids hiring people with felony convictions…” 

The small business community still faces tough times. A recent poll conducted by the National Federation of Independent Businesses shows optimism of that group at 2008 levels, and below the depths recorded during the 1991-1992 and 2001-2002 recessions. Worse, far more business owners reported declining sales and profits that logged in with an increase. Since everyone, including President Obama, has noted the importance of small companies in creating jobs, it seems an especially poor time to further burden struggling businesses with more regulatory uncertainty and expense. No one condones workplace discrimination, but neither does the EEOC’s aggressive overreach seem warranted.