As you try to cut costs in a tough economy, it may be tempting to outsource some HR functions to an independent contractor instead of continuing to do them in-house.
Before you make that move, consider this: Thanks to a new 2nd Circuit Court of Appeals decision, employers may be liable for discrimination practiced by the outsourced independent contractor.
By keeping the function in-house, you retain control over key processes and practices. That means you don’t have to worry whether the independent contractor is practicing discrimination.
Recent case: Michael Halpert applied for a job showing apartments. He responded to an ad and was interviewed by an independent contractor working on behalf of the apartment complex. The independent contractor was supposed to screen applicants, interview candidates and select the best qualified from those interviewed.
Halpert claimed that during his interview he was informed that he was “too old” to be showing apartments. He wasn’t hired. Halpert sued the apartment complex for age discrimination.
In court, the complex argued it wasn’t responsible for any problems with the hiring process since it had outsourced that role to the contractor. The court disagreed. It ruled that a company that hires an independent contractor to hire employees is responsible for any discrimination the independent contractor may commit. (Halpert v. Manhattan Apartments, No. 07-4074, 2nd Cir., 2009)
Final note: If you decide to outsource the hiring process, make sure you carefully check out the company that will be handling it. Has it been sued for discrimination? Are its employees trained in basic HR skills? Does it have a good reputation among other companies that have used the services?
Also check with your errors-and-omissions insurance agent to see whether you are covered, in case an applicant claims discrimination and sues.