Tuesday, February 21, 2017
My colleague Dallan Flake (ONU) has just posted on SSRN his article When Should Employers Be Liable for Factoring Biased Customer Feedback into Employment Decisions? Here's the abstract:
In today’s customer-centric business environment, firms seek feedback from consumers seemingly at every turn. Firms factor such feedback into a host of decisions, including employment-related decisions such as whom to hire, promote, and fire; how much to pay employees; and what tasks to assign them. Increasingly, researchers are discovering that customer feedback is biased against certain populations, such as women and racial minorities. Sometimes customers explicitly declare their biases, but more often their prejudices are harder to detect — either because they intentionally hide their biases in their ratings or because the customers do not realize their implicit biases have skewed their perceptions, and consequently their ratings, of service exchanges.
When firms rely on tainted customer feedback to make employment decisions, they indirectly discriminate against employees. Although the law makes clear that employers cannot discriminate against employees based on customers’ discriminatory preferences, it has yet to address whether and to what extent employers are liable for factoring biased customer feedback into employment decisions. I argue that employers should not get a free pass to discriminate simply because it is the customers rather than themselves who bear the discriminatory animus; but nor should employers be liable in every instance where customer feedback is shown to be biased.
To strike an appropriate balance, employers should be held to a negligence standard whereby their liability for using tainted feedback depends on whether they knew or reasonably should have known the data was compromised and if so, whether they acted reasonably in response by taking appropriate preventive or corrective measures. A major advantage of this framework is that it works in both the easy and the hard cases by tying employer liability to the ease with which customer bias can be detected. If bias is explicit, the law would hold employers to a heightened duty in terms of both knowledge and response, whereas if bias is implicit, and thus harder to detect, employers would be held to a lower standard.