It's sadly safer to just not reject candidates at all. Don't hate the player, hate the game.
When I applied to a local company the hiring manager kept emailing me about how he was "swamped" or some other variation of the word busy and would get back to me in the next few days. He did that for about two weeks before calling me and finding out I had accepted an offer somewhere else.
Heck when I applied to Google the recruiter (who contacted me first) took 5 months to get back to me after I sent in my CV and transcript, apologized profusely, and told me that the reason it took so long was because who ever was handling my case left abruptly without handing off the cases she was working on.
I know these are anecdotal but I have an extremely hard time believing that HR managers in the US are so worried about triggering a discrimination lawsuit that they choose inaction.
Very little, if anything, supports your claim. A quick search on the topic of why recruiters don't follow up with candidates reveals that the vast majority of people in the industry just have a really hard time with the hiring process. Its just plain broken.
Does your company not get back to candidates because they fear a discrimination lawsuit? Someone else's? I would love to know which companies' HR teams or recruiters have discrimination lawsuits at the top of their "things I'm really scared could happen if I reply to a job seeker" list.
If a company has: a mature HR process, people who know wtf they are doing, and give a crap, they'll do rejection letters. Most lack at least one of those things.
The guy at your SMB example is some jack of all trades, and dealing your resume is a priority-2 in a sea of P1's. He doesn't have a recruiting process. Google does, but even there it's still dependent on a human making a judgement call about what to write.
Also, you don't need to sue. You can file an EEOC or similar complaint to your state/local Human Rights Commission. The process is designed so that you do not need an attorney. You get assigned a hearing officer, they perform some sort of investigation and issues a finding, which can include a variety of remedies.
It's not something to be paranoid about, but when you're a bigger company interviewing alot of people, you want to tie up the loose ends.
Are you able to provide any kind of data backing up that claim?
I am strongly in the "don't hate the player, hate the game" camp on this issue.
This is NOT a basic courtesy but a business process that requires a lot of resources to be at least somewhat meaningful. How long do you think it takes to write a rejection letter that provides useful, actionable data for the potential candidate? Multiply that by 10-100 for every position.
Oh, and I've seen much more nasty replies and general insults than thank yous in response to rejection letters.
I would be in support of rejection letters if the process would be mandated by the hiring platform / shared culture / etc.
[0] At Google's scale, some candidates fall through the cracks. But their recruiting process does mandate rejection notifications. It'd be great if a Google recruiter would back me up here :)
Maybe some companies do more personalized responses but I've never seen it and I would think it would often be difficult. As with many other things, say picking talks for conferences, you're usually not so much rejecting as you're picking some other person or thing. And, yes, there are a lot of reasons the typical HR department would have issues with brutal honesty even aside from the effort it would take.
[Edit] Holy shit, I'm old.
I see nothing in the post nor this thread that indicates that's what people are looking for. An obvious form letter would be just fine. The point is that a candidate wants to know that the process is over, instead of being left hanging.
I am strongly in the "that is a shitty excuse perpetuated by people to excuse their crappy behavior on a wide number of things" camp.
(LEGO even sent me a nicely formatted, well-branded letter within 7 business days despite not even making it to the phone screen stage.)
I noticed though that my current company sometimes does it. It typically is when you did not do too well on an interview and effectively failed (or passed with flying colors but you are an international student, and they don't want to sponsor ), but they still won't notify in case they can't find anyone better. From my observation they generally never come back to those candidates.