You decide: Could referral program have been biased?

Referral programs are a great way to attract top-notch new hires. But can relying too heavily on the contacts of current employees exclude some protected groups of applicants?
The facts:
The company had a referral program in place, which was the source of many of its new hires. The problem: Nearly all the candidates referred were white, and minority applicants were rarely hired. A group of unsuccessful applicants sued for discrimination.
The employer said:
It was just choosing hires from the pool of candidates given by current employees. There was no intentional discrimination.
Who won the case?
Answer: The applicants.
Why: The company failed to get the case thrown out and ended up settling for $2.5 million. According to the EEOC, referral programs can be a source of discrimination, either intentionally or unintentionally.
In this case, relying too heavily on referrals had an unintentional “disparate impact” on minority applicants. The company should have realized the impact of the program and used other candidate sources to balance the pool accordingly.
Cite: E.E.O.C. v. Carl Buddig & Co.