This is a despicable practice, but totally legal and will within the rights of any company trying to fill a job. As the linked article mentions, automatically excluding the currently unemployed from consideration in this economic climate is more than shortsighted — it’s just stupid.
From the link:
The last thing someone who is unemployed needs to be told is that they shouldn’t even apply for the limited number of job openings that are available. But some companies and recruiters are doing just that.
Employment experts say they believe companies are increasingly interested only in applicants who already have a job.
“I think it is more prevalent than it used to be,” said Rich Thompson, vice president of learning and performance for Adecco Group North America, the world’s largest staffing firm. “I don’t have hard numbers, but three out of the last four conversations I’ve had about openings, this requirement was brought up.”
Some job postings include restrictions such as “unemployed candidates will not be considered” or “must be currently employed.” Those explicit limitations have occasionally been removed from listings when an employer or recruiter is questioned by the media though.