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Prohibited Discrimination in Hiring: Disparate Treatment and Disparate Impact

Editor’s Note: For more answers to common nonprofit tax and legal questions, don’t miss our upcoming event on April 17th at 1PM with Jeffrey Tenenbaum, Partner and Chair of Nonprofits Practice Group of Venable, LLP, represented below. Find out more and register here.”

Question:

What are nonprofits required to do/abide by regarding employment discrimination in hiring practices? Are there any notable exceptions for nonprofit organizations (due to mission, background, and other primary components of the organization?)

Answer:

Prohibited Discrimination in Hiring: Disparate Treatment and Disparate Impact

Megan Mann, Esq. Megan Mann, Esq.

With very few exceptions, nonprofits, like all employers, are required to abide by federal, state, and local human rights laws—namely, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, and their state and city counterparts. These laws cover hiring practices, including recruiting, job advertising, interviewing, and job placement, and prohibit discrimination on the basis of race, sex, national origin, disability, or any other protected characteristic protected under the relevant law. Employers should be aware that discriminating against an applicant because she is pregnant is discrimination “because of sex.” It is also extremely important that employers be mindful of the local laws at issue, which often extend protections to additional people, protecting characteristics such as sexual orientation or family responsibilities, and which may have a lower threshold for triggering employer coverage.

Prohibited discrimination in hiring can manifest in two ways: disparate treatment and disparate impact. Nonprofit employers, like any employer covered by the law, should take steps to avoid, or remedy where necessary, discrimination in either form. Disparate treatment involves decisions made because of a protected characteristic. Employers should absolutely refrain from hiring practices that are based, in whole or in part, on one or more protected characteristics or in any way indicate a preference for a certain religion, sex, race, national origin, or other such characteristic protected under the law. Title VII does provide a very limited exception in the disparate treatment scenario, where the religion, sex, or national origin (not race) is a bona fide occupational qualification for employment (“BFOQ”). However, the Equal Employment Opportunity Commission (“EEOC”) has explained that this exception is intended to apply to, for example, an Italian restaurant hiring an Italian chef over a chef of another national origin.

Disparate impact discrimination, on the other hand, refers to hiring practices which, on their face appear neutral and non-discriminatory, but which have a particularly negative impact on a certain group of applicants. For example, an employer’s background check process or other applicant screening may be evenly applied to all applicants, irrespective of race or gender, but it may have the effect of screening out women (or at least have a disproportionately negative effect on them as opposed to men).

Additional considerations for employers include: (a) the ADA’s prohibitions on certain pre-employment inquiries and exams that inquire into whether an applicant is disabled or the nature or severity of an applicant’s disability; (b) the ADA’s requirements regarding accommodation issues for new (and existing) employees; (c) Title VII’s religious accommodation requirement; and (d) recordkeeping requirements for applicant and new hire information, as imposed by human rights laws and EEOC regulations.

Exceptions Germane to Nonprofits

Certain Activities: Although certain state or local laws prohibit discrimination on the basis of certain legal non-work activities (e.g., sports, hobbies, etc.), nonprofitmaking organizations may find that they fit into a common exemption in these activities laws: discrimination or preference in hiring may be permissible where the outside activity, although legal, presents a material conflict of interest with the business operations. For example, a gun-control organization may choose not to hire someone known to be an avid collector of assault weapons and still be in compliance with this type of law.

Religious Organizations: Title VII permits a religious organization to make hiring decisions on the basis of an individual’s particular religion, whether or not the individual plays a direct role in the organization’s religious activities. However, this exception is limited strictly to the consideration of religion; the organization still cannot discriminate on the basis of an applicant’s race or gender. Certain state or local laws have similar exemptions. The question of what constitutes a religious organization for this purpose is a fact-based inquiry. Certain organizations have been considered to be “religious” by the courts because of their mission and activities, or separately, because of their ownership or control.

Educational Institutions: Similarly, Title VII provides a specific exemption for educational institutions, regarding the hiring and employment of employees of a particular religion, where the school or institution (a) is in whole or in substantial part, owned, supported, controlled, or managed by a particular religion or religious corporation, or (b) uses a curriculum directed toward the propagation of a particular religion.

Indian Tribe: In very limited circumstances, where the nonprofit organization qualifies as an “Indian tribe” under the law, it may be exempt from Title VII coverage.

The preceding question was submitted through GuideStar’s social networks, and the answer was provided by Megan H. Mann, Esq, Associate, Labor and Employment Practice Group for Venable LLP. Megan Mann’s practice areas include employment counseling and litigation, labor relations, and commercial litigation. Ms. Mann represents clients in a vast array of industries, including hospitality, food service, education, construction, security, real estate, pharmaceutical services and financial services.

Topics: Legal
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