Attack of the Clones: Could Your Referral Program be Racist?

Look, I know everyone loves a great employee referral program and I get why. Candidates that are referred by current employees are hired quickly, already know something about the organization, stay longer, and can be better overall candidates. What’s not to like about that? As an employment attorney and “Nervous Nelly”, referrals can cause some trouble too.

Managing an amazing referral program is not always going to be so easy. A referral program can get employers into trouble simply because it is human behavior to hang out with people like ourselves. As a broad generalization, if we’re white, we have mostly white friends. If we’re Asian, we hang out with other Asians. The logic follows that when we refer candidates to a new position, we refer people like us as a result. This can result in homogeneous workplaces – something the OFCCP and the EEOC want to avoid. The EEOC is so interested in hiring it included eliminating barriers to employment as a strategic initiative of the agency.

When agencies care, employers can garner some unwanted attention. Just in the last few months, tech titans Palantir and Oracle have received a lot of press after the Department of Labor sued them. In each case, the DOL’s Office of Contract Compliance Programs (OFCCP) alleges that because the organizations relied heavily on their referral program, their hiring practices are discriminatory.

Here’s a glimpse of each case:

Palantir:

According to the Complaint, Palantir “discriminated systematically against Asian job applicants in its hiring process and selection procedures.” Specifically, the DOL alleged that Palantir “hired 14 non-Asian applicants and 11 Asian Applicants from a pool of more than 1,160 qualified people, 85 percent of whom where Asian.” Those are some startling statistics.

Oracle:

Unlike Palantir, the DOL’s Oracle suit alleges the tech giant favored Asian applicants over another ethnicity due to “referral bonuses that targeted its heavily Asian workforce to recruit other Asians…” The suit includes other allegations of pay disparities as well.

So what does all this mean for employers? Simply put, you can’t rely solely on your current employees to find your next employees. Employment lawyers have been urging our clients to find applicants from lots of different sources for a long time. The more diverse your applicant pools, the more potential your applicants will be diverse as well.

Five Referral Program Do’s:

Use your data

If referrals represent between 30-40% of your hires, what are your diversity stats? If you have over 100 employees, you are already tracking ethnicity and gender for the EEO-1. Look at your data. Are your stats showing diversity? If so, great! If not, what can you do to increase diversity? Are certain departments or divisions more diverse than others? What job boards or affinity groups yield the most applicants? The most diverse candidates? Analyzing your current diversity stats can help target efforts. Knowing is half the battle.

Wade into in all sorts of applicant pools

Post positions publicly, spread the news far and wide, seek out community-based organizations focused on diversity, and develop talent pipelines with affinity groups. (For your lawyer friends, please track your efforts.) With diverse sources of hire, you might just get diverse candidates.

Train managers

Managers (and especially hiring managers) should be exposed to diversity, unconscious bias, and simply being a good manager trainings. Knowing their own biases so they can work against them can go a long way to prevent discrimination and foster diversity.

Don’t focus on specific ethnic minorities

Oracle is under the microscope for allegedly over-hiring Asians. Palantir allegedly did not hire enough. While it is important to seek out minority populations, focusing on one over another can cause just as much trouble. Cast the net as wide as your resources can support.

Recheck your data

Diversity initiatives may not yield results overnight, but we all know they are worthwhile. Periodically review your data. What parts of the initiative are working? What aren’t? Reevaluating means you can hone your recruitment efforts and do even better.

Referrals are great, and employers should cheer when their employees refer their friends. It means you’re doing something right. But an over-reliance on referrals could mean a federal agency’s sights are set on you. Even if the Oracle and Palantir suits are dismissed, they still got the media’s attention. In this case, not all press is good press. Be careful out there!

About our Author: Kate Bischoff is an enthusiastic management-side attorney and SHRM-SCP/SPHR-certified human resources professional, Kate Bischoff advises organizations in a wide range of industries on employment law and human resources issues, from recruitment and workplace culture to terminations.  Prior to founding tHRive Law & Consulting, Ms. Bischoff served as a human resources officer for the United States Department of State at the U.S. Embassy Lusaka, Zambia and for the U.S. Consulate General Jerusalem. We met Kate at #HRTX MN

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