President Obama has proposed the American Jobs Act as a way to increase employment and head off a double dip recession. It has five key components, according to an administration briefing to the National Small Business Association this afternoon. They are 1. Tax Cuts for small business, including significant reductions in payroll taxes; 2. Rebuild and modernize infrastructure, including schools and transportation facilities; 3. Provide pathways back to work for the unemployed; 4. Put more money in the pockets of consumers, including through payroll tax reductions; and 5. Have all of the costs fully paid for as part of long-term deficit reduction. The administration has stated that the elements of the plan have previously enjoyed bipartisan support, which should make passage logical. There is one element of the package, however, that is new and which has not had bipartisan support. That is a provision, part of the “Pathways back to work” portion of the package, which, in the words of the Administration, “would make it unlawful to refuse to hire applicants solely because they are unemployed or to include in a job posting a provision that unemployed persons will not be considered.”
While it may at first glance seem “fair” to prohibit, again to quote the Administration, “employers from discriminating against unemployed workers when hiring,” in fact, this provision would discourage employers from going out and seeking a wide range of applicants. Every unemployed worker who is not hired could file a suit claiming that the reason was his or her status as an unemployed worker. If an unemployed worker is hired, applicants who had been unemployed for a longer time could claim discrimination based on length of unemployment. The prospect of merely being sued, with all the costs that entails in our judicial system, would discourage hiring.
The new proposal, if enacted, would have perverse effects on hiring, leading to the exact opposite result from what was intended, while adding costs to employers. These costs would exist regardless of whether the employer actually did anything wrong. In our system of “justice” where the defendant is required to pay its own attorneys fees whether it wins or loses, just being accused of discrimination costs an employer dearly. When the “protected classification” is something so changeable as being unemployed, this new cause of action will further burden American employers, and, inevitably, those who want to work for them.
Including this “feel good” provision, which has no bipartisan backing, in the proposed American Jobs Act damages the credibility of the Administration and will provide a good reason for legislators to oppose the entire Act. It does not belong in the package and should be removed if the Adminstration really wants its proposal passed.