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Posted: August 29, 2013

Controversy over criminal background checks

Employers should reveiw their policies now

Mark Wiletsky

If your organization uses criminal background checks to screen potential employees, you might want to revisit those practices.  The Equal Employment Opportunity Commission (EEOC), which enforces federal nondiscrimination laws such as Title VII, has filed high-profile lawsuits alleging that such policies—while neutral on their face—have a disparate impact on African Americans.   Although the EEOC has not yet prevailed in any of its recent cases, the EEOC’s decision to target such policies should put all employers on alert with respect to how and when they use background checks. 

Courts Slam EEOC in its Background Check Class Actions 

On Aug. 9, a federal court in Maryland dismissed the EEOC’s discrimination case against Freeman, in which the EEOC alleged that the employer’s use of credit and criminal background checks had a discriminatory impact on African Americans, Hispanics and male applicants.  Earlier rulings dismissed the claims on behalf of Hispanics and male applicants, leaving the EEOC to prove that Freeman disparately impacted blacks through its use of criminal and credit checks in hiring decisions.  Rejecting the opinions of the EEOC’s experts, the judge scathingly wrote that the EEOC was pursuing a “theory in search of facts to support it.”

Other courts have similarly rejected the EEOC’s claims in this area.  In 2011, a federal court in Michigan ordered the EEOC to pay over $750,000 in attorney’s fees and costs, including expert witness fees, after the EEOC was forced to dismiss its disparate impact discrimination lawsuit against Peoplemark, Inc.   After pursuing the case for over two years, the EEOC could not provide an expert to prove that Peoplemark’s criminal screening policies disparately impacted black applicants.  The judge wrote that “the complaint turned out to be without foundation from the beginning.” 

Similarly, in January 2013, an Ohio federal judge dismissed the EEOC’s disparate impact lawsuit against for-profit education provider Kaplan, Inc., ruling that the EEOC’s expert did not produce scientifically sound evidence that Kaplan’s use of credit checks caused the exclusion of black applicants because of their membership in a protected class.  The EEOC is appealing the dismissal of the Kaplan case as well as the fee award in the Peoplemark case.

EEOC Files Two New Criminal Background Check Lawsuits

Despite its inability to prove disparate impact in its previous background check cases, in June 2013, the EEOC filed two new class actions alleging Title VII violations based on employers’ use of criminal background checks.  The EEOC sued BMW Manufacturing Company in South Carolina, alleging that the car manufacturer disproportionately screened out blacks through its use of a criminal conviction background check policy that excludes individuals with convictions of murder, assault and battery, rape, child or spousal abuse, manufacturing or distribution of drugs and weapons violations.

The same day, the EEOC filed a similar lawsuit in Illinois against Dolgencorp, LLC (doing business as Dollar General) alleging that Dollar General discriminated against black applicants by using a matrix of specific felonies and misdemeanors to screen out applicants.

Perhaps as a result of these lawsuits, nine state Attorneys’ General (AGs), including Colorado’s AG John Suthers, chastised the EEOC in a July 24, 2013 letter , stating that the EEOC’s position on background checks incorrectly applies the law and constitutes an unlawful expansion of Title VII.  The AGs state that if Congress wishes to protect former criminals from employment discrimination, it can amend the law, but it is not the EEOC’s role to expand the protections of Title VII under the guise of preventing racial discrimination.

In the midst of the turmoil surrounding the EEOC’s pursuit of criminal history disparate impact lawsuits, on Aug. 16, the U.S. Commission on Civil Rights voted unanimously to approve sections of a final draft report on the EEOC’s Enforcement Guidance.  Although the contents of the draft report by the independent bipartisan commission is currently unknown, the commission plans to hold a public hearing on Sept. 27 to address findings and recommendations that ultimately will go to the White House and Congress.

Employers Should Review Background Check Policies Now

Employers should not wait to see how the controversy over the use of criminal and credit checks plays out.  Instead, employers should review their background check policies and examine how they are using criminal history and credit information in their hiring decisions.  Employers need to be able to articulate a legitimate business reason for both conducting the checks and rejecting candidates based on the results of the checks. 

Policies that exclude applicants based on arrests (as opposed to convictions) are improper, and policies that make no distinction between different types of convictions or how long ago such convictions may have occurred are more likely to be viewed as overreaching by the EEOC.  While the courts and others disagree with the EEOC’s overly restrictive view on the use of background checks, the bottom line is that employers should have a business justification for using such tools to appropriately screen out candidates, and now is a good time to review those policies.

As a member of Holland & Hart’s Labor and Employment practice, Mark Wiletsky provides quick, practical solutions to difficult employment-related problems so that clients can stay focused on achieving their business objectives. He can be reached at 303-473-2864 or mbwiletsky@hollandhart.com.

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Readers Respond

Yes, the screening process should continue. I work at a federal prison and trained staff have been certified to screen anyone entering our facilities. If there is a question about a recent "hit" or "crime from the past" based on the wardens' discretions, the persons may or may not enter our prisons: former inmates, violent crimes, length of time since crime occurred, etc. The process does not discriminate. We must scrutinize anyone who could be a danger to those inside as well as the general public. By ML on 2013 09 09
Well written, Mark - but I fear that the tone of the article could scare businesses away from screening in the first place. Business owners need to know that their workforce, workplace and clients are protected from thieves, addicts, sexual predators and violent people. A strong screening policy is lawful and neccessary. I have watched Congress make it harder for businesses to protect their interests. Hiring a sexual predator without knowing it exposes your company to ten times the danger of litigation than if you denied employment based on that applicant's history (if, as you point out, your business deals with areas where that applicant's history is relevant). Keep up the good work at H&H. That's a top notch firm. Chris Bray Employment Background Screening By Chris Bray on 2013 08 29
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