When a plant manager job opened up at a dry-ice producer, the boss hand-picked a replacement — a white male employee — from within the company. The vacancy wasn’t posted, and no applications from other interested employees were taken.

When an African-American employee found out about his co-worker’s promotion, he complained. The promoted employee had only been with the company for three years, while the African-American worker had 15 years of experience in the plant. He said he was more qualified than the new plant manager.

When the complaints were ignored, he took them to the Equal Employment Opportunity Commission, who filed a lawsuit on his behalf. Failing to have the case tossed, the company agreed to pay $40,000 to settle.

Cite: EEOC v. Airgas Carbonic, Inc.

In one case, an applicant was turned down for a job he thought should have been his. He was African American, and the hired applicant was Caucasian.

He claimed he was more qualified and “mature” than the guy who got the job. The company said both were qualified, but the other applicant was a better fit.

The rejected applicant sued for bias. In court, he gave no specific reason why his qualifications were better — his experience and education weren’t any more impressive than the successful applicant.

So the judge threw out the case. He said it isn’t a court’s job to second guess employers’ hiring decisions. Companies are free to decide who’s the best candidate for a job, as long as the decision doesn’t include discriminatory factors.

The lesson: When two or more applicants appear equally qualified, a manager will often have to use some subjective reason for choosing one over the others. That’s OK, as long as there’s no appearance of bias.

Cite: Spell v. Connecticut, Office of Chief State’s Attorney

Hiring managers have a lot to think about when deciding if candidates are the right fit, such as how they’ll get along with customers, clients or co-workers. But taking those considerations too far can lead to trouble.

In one recent court case, a company was sued for making a promotion decision based on its customer base’s racial preferences:

Eric Simple, an African-American Walgreen’s employee, sought a promotion from assistant manager to store manager. He had one store in mind, but wasn’t chosen for that position.

The store was located in an affluent, mostly white area. The woman promoted to manage that store was a white woman who’d been an assistant manager for half as long as Simple.

Instead of that job, Simple was offered two different store manager positions, both in low income, mostly minority neighborhoods. Both stores were less profitable than the “white” store — which would’ve meant lower pay, because managers’ bonuses are based on their stores’ profits.

Simple turned down the offers and sued, claiming Walgreen’s didn’t give him his desired promotion because of his race.

As if the big gap in experience between the two candidates didn’t look bad enough, the hiring manager clarified her reasons for choosing the white woman: “In this area, some of the towns have some very racist tendencies,” she said, and Simple “may not have been very happy” working at his preferred store.

And the store, she added, was “not ready to have a black manager.”

That wasn’t a good enough excuse for the court. Companies can’t make hiring or promotion decisions based on a candidate’s race — and that includes using customers’ supposed biases as a factor. The judge let the case move forward.

Managers need to be trained to keep race out of hiring decisions, even when they think they have a good reason for considering it. Trying to protect a candidate from racial tension caused by customers, clients or other employees will only result in a big legal headache like this one.

Cite: Simple v. Walgreen Co.

In one recent case, a female candidate sued after she didn’t get a job offer. She claimed the company’s interview process was biased.

Each applicant was asked the same questions by the same four-member panel. The interviewers scored each response. The scores were totaled, and the top candidates were offered jobs.

The woman’s complaints: All the interviewers were male, and the questions, in her opinion, weren’t job-related. The company decided “soft” skills were more important than technical experience, so focused most of the interview on those.

The applicant sued, claiming she was most qualified but rejected because of her gender.

The judge threw her case out. Why?

It wasn’t up to the applicants to decide how they were going to be evaluated. That’s the employer’s job.

What mattered most was that all the candidates were treated the same. There was no evidence that the male panel treated female candidates any differently than men.

Cite: Turner v. Public Service Co. of Colorado

Requiring all employees to be fluent English speakers.

In 2008, the EEOC received 204 complaints of national origin discrimination based on English-only policies. That’s up from 125 in 2006 — a 63% increase. Comparatively, national origin discrimination claims in general increased just 27% in that time.

More claims are being filed, but does that mean language policies are always discriminatory? No, it doesn’t. According to the EEOC, English-speaking requirements are fine if they’re based on a business necessity.

For example, a policy would be OK if:

1. the employee frequently communicates with customers or co-workers who speak English
2. the policy is needed so employees can work together safely, or
3. it’s necessary to facilitate communication between managers and employees.

On the other hand, requiring employees to speak English during breaks or requiring English proficiency for employees without much need to communicate could get a company in trouble.

As HR pros know, using pre-employment tests that have an adverse impact on a protected class can get companies dragged into court. But here’s some news: Trying to avoid a disparate impact can get you in trouble, too.

That’s what happened to the fire department in New Haven, Connecticut, which argued its case before the Supreme Court yesterday.

The department used a test to choose candidates for promotions to captain and lieutenant. The employees with the highest scores — and therefore those who would’ve been promoted — were all Caucasian.

But those employees weren’t selected. The scores excluded several African-American and Hispanic employees who applied for promotions. Believing the test was biased, management decided to throw out the results and base the decisions on other factors.

However, in trying to avoid one legal problem, the fire department got hit with another: 20 white applicants sued, claiming they would have been promoted if the test counted. By tossing the results, they said, the department was discriminating against them because of their race.

Two courts disagreed and threw the case out. Companies are obligated to make sure tests are unbiased, the courts ruled, so the fire department couldn’t be held liable ignore a selection procedure it believed was against the law.

The story didn’t end there. The employees appealed and the case is now being heard by the Supreme Court.

The early word after arguments were heard yesterday: Opinion is split between the Court’s liberal and conservative blocs, the Hartford Courant reports.

Justice Antonin Scalia remarked that “setting aside a test because one race prevails” is essentially making a race-based decision. On the other side, Justice David Souter said the fire department faced a “damned if you do, damned if you don’t situation.”

The result of the case could have a big impact on how companies need to evaluate pre-employment tests. We’ll keep you posted.

What do you think? Should the fire department have used the test results in its decisions on who to promote? Tell us what you think in the comments section below.

In one recent case, the fire department of Portsmouth, Virginia, was sued by a group of unsuccessful job applicants. They claimed the employer’s selection procedure unfairly weeded out African-American candidates.

The focus of the dispute was a written examination. About 86% of Caucasian applicants passed the test, while African-Americans passed at a rate of just 42%.

Also, the applicants claimed the test wasn’t necessary or job-related.

Who won? Unable to get the case thrown out by a judge, the fire department ended up settling for $145,000.

The bottom line: Companies can get in trouble when pre-employment tests adversely impact a protected class, even when there’s no intentional bias. That’s why employers should be aware of how different groups perform during the selection process.

Note: Even if a particular test has an adverse impact, companies can still use it if it’s job-related, consistent with business necessity and there is no non-discriminatory alternative available.

Referrals from current employees are the most common way companies find new hires, according to several surveys. But that doesn’t mean they always provide the most qualified candidates.

Companies trust their referral programs for good reasons — they’re cost effective and generally produce successful employees who stick around. But relying too heavily on referrals can lead to several problems, such as:

1. Discrimination charges — When employers over-rely on referrals, the pool of applicants can get very homogeneous, excluding members of some protected classes. In one recent case, Wal-Mart lost a court fight based on allegations that its referral process screened out African-American truck drivers.
2. No variety — Beyond just avoiding lawsuits, companies benefit when workers come from different backgrounds and experiences. Current employees are most likely to refer applicants who are just like them — which is not always the best thing.
3. Cliques — When referrals are frequently used, companies get big groups of employees who already know each other or have something else in common — for example, they may all have come from the same previous employer or graduated from the same college. That can make it easier for employees to form cliques, which might create friction with other co-workers.
4. Flood of low-quality applicants — Of course, employees aren’t always going to make a referral just because they know someone who’s a perfect fit. It could be to do a friend a favor, or for the bonus if one is offered. Problems can arise when managers give referrals too much weight in the decision-making process.

What HR can do

Does that mean employers should eliminate their referral programs? Of course not. But HR should take some steps to make sure referrals are really bringing in the best hires:

• Make sure managers understand this simple rule: Referrals help bring candidates into the applicant pool — they shouldn’t replace interviews and other tools used to pick the best candidate.
• Let employees know their reputations will be affected (positively or negatively) by the candidates they refer. That’ll help them screen their referrals even more closely.
• Don’t treat every job the same — some are easier to find applicants for than others. A targeted approach is better — the reward should be higher when finding a candidate for a tough-to-fill position.

And, of course, referrals should be used in conjunction with other recruiting strategies — not as a replacement.

Does your company use referrals to find new hires? How do you make sure the program is successful? Let us know in the comments section below.

In one recent case, a supervisor called one of his employees by the nickname “Rain Man,” because he reminded the boss of the autistic in the movie “Rain Man.”

The problem: While he was employed by the company, the employee was diagnosed with Asperger’s Syndrome, a form of autism. After that, he told his manager he didn’t like the nickname. The supervisor apologized and stopped using it.

The employee sued, claiming he was harassed because of a disability. Also, he was denied a promotion a few months before his diagnosis, which he claimed was because of his autism.

His case was thrown out. Why?

First, since the promotion took place months before his diagnosis, the court thought it was a stretch to argue his disability had anything to do with it.

Second, the manager apologized and stopped calling the employee “Rain Man” as soon as he complained. Therefore, the judge didn’t believe there was any ill will. In fact, the manager said he used the nickname because of the employee’s “quirky manner” and “moments of brilliance,” which reminded him of the film character.

Cite: Mangano v. Verity, Inc.

Managers often aren’t too careful about the notes they take while interviewing job candidates — after all, no one else needs to read them, right? Wrong — they might be seen by a rejected applicant’s attorney.

Interview notes got a company in big trouble in this recent court case:

A hiring manager had a practice of jotting down the race and gender of each candidate he interviewed.

The reason: to keep track of who’s hired and who’s rejected and make sure none of the employer’s hiring practices accidentally weeded out members of certain groups.

The intention was good, but, as they say, no good deed goes unpunished. An African-American employee sued the company after he was turned down for a job.

Once the court saw “African-American” written on his application, that was enough evidence to allow him and other minority applicants to file a class action suit against the company. You know what that means: It’ll have to fork over a hefty settlement or spend a fortune defending the claims in front of a jury.

Keep documentation clean

The lesson for hiring managers: You never know how the notes you keep for yourself will be interpreted by an outsider.

That’s why protected classes, such as race, sex, religion and disabilities, are off limits when it comes to interview notes. Even if it’s meant to prevent discrimination, a court may not see it that way.

Cite: Modtland v. Mills Fleet Farm