The relationship between social segregation and workplace segregation has been traditionally studied as a one-way causal relationship mediated by referral hiring. In this paper we introduce an alternative framework which describes the dynamic relationships between social segregation, workplace segregation, individuals’ homophily levels, and referral hiring. An agent-based simulation model was developed based on this framework. The model describes the process of continuous change in composition of workplaces and social networks of agents, and how this process affects levels of workplace segregation and the segregation of social networks of the agents (people). It is concluded that: (1) social segregation and workplace segregation may co- evolve even when hiring of workers occurs mainly through formal channels and the population is initially integrated (2) majority groups tend to be more homophilous than minority groups, and (3) referral hiring may be beneficial for minority groups when the population is highly segregated.