Use Of Criminal Background Checks – The EEOC’S “Guidance” And Attempts To Regulate A Court’s Decision That The EEOC Statistics Are “Scientific Dishonesty”

A federal judge cast doubt on government efforts to restrict employers’ use of criminal background checks when it dismissed a lawsuit by the EEOC against a Dallas event-marketing company. The case, EEOC v. Freeman, 2013 U.S. Dist. LEXIS 112368, 53-54 (D. Md. Aug. 9, 2013) was filed in 2009 and was one of the earlier salvos by the EEOC in its attempts to regulate employers’ use of criminal background checks.

The Court found that the data relied upon by the EEOC was riddled with “errors and analytical fallacies” that made the EEOC’s conclusion that criminal background checks resulted in discriminatory exclusion of African-Americans and Hispanics from jobs “completely unreliable.” The Court found that the statistician used by the EEOC “cherry-picked” data and that the EEOC’s litigation was “a theory in search of facts to support it.”

Employers should continue to tread carefully in this arena, however, because the Freeman decision was issued by the United States District Court in Maryland, and it is not controlling as to any other pending action.

Since 2009, but more emphatically since 2012, the EEOC has been taking a hard-line enforcing its position (and 2012 “Guidance”) on use of criminal background screening processes and policies. Whether the decision in Freeman will cause the EEOC to curb its assault on policies of this nature is, at best, an unknown, and other cases in which the EEOC is challenging background check policies and practices remain pending before other courts.

In June 2013, the EEOC brought actions against BMW and Dollar General, a clear message to all employers that it is very serious about its guidelines and intends to enforce them.

The actions against BMW and Dollar General were the first major background checking cases brought by the EEOC since it issued a revised Guidance on the subject in April of 2012. The thrust of the Guidance is that employers cannot fire employees or deny hiring applicants because of criminal arrests or convictions on an across-the-board basis (i.e. to all applicants and/or classifications). Instead, employers must limit use of background checks to jobs where the candidate’s criminal or financial history is clearly relevant to the job. Employers must also take into account the nature and seriousness of the offense and the time elapsed since it occurred.

Under the Guidance, the legality of an employer’s “criminal conduct exclusion” is judged on the basis of whether it is job related and consistent with business necessity. This is a difficult level of proof, and the burden is on the employer to establish both factors.

Like the action against Freeman, the actions against BMW and Dollar General were brought under Title VII of the Civil Rights Act of 1964 and allege the policies have a “disparate impact” on (disproportionately screened-out) African-Americans from jobs. In the complaints, the EEOC alleges that that the employers used criminal background checks across the board, and that the background checks were not job related and not consistent with business necessity. Additionally, the EEOC complained that the policies did not provide for individual assessment for those applicants who were excluded to determine if the reason for their disqualification was job-related and consistent with business necessity.

There is no doubt of the EEOC’s commitment to making an example of employers who it decides have, even innocently, violated the law. And, while anti-discrimination advocates are applauding EEOC activism, for those managing their organizations’ hiring policies, and attempting to protect their consumers, clients, suppliers and employees, the proper role of background checks can be rife with confusion and potential litigation.

As stated by the Court in Freeman, “any rational employer in the United States should pause to consider the implications of actions [restricting use of criminal background checks] … the EEOC has placed many employers in the ‘Hobson’s choice’ of ignoring criminal history and credit background, thus exposing themselves to potential liability for criminal and fraudulent acts committed by employees, on the one hand, or incurring the wrath of the EEOC for having utilized information deemed fundamental by most employers.”

In light of the lingering specter of an EEOC attack, the following steps should be taken by employers to minimize their exposure to claims of discrimination arising out of criminal background checks:

1. Examine your current policies on the background screening of employees and applicants for hire or promotion. Revise the policy, if necessary, to comply with the EEOC’s guidelines.

2. Do not stop doing background checks. Avoid negligent hiring by screening potential new hires and current employees who are in positions that require them.

3. Scrutinize the job descriptions and legal mandates (i.e. licensing requirements, etc.) for each position.

4. For each job for which you will perform criminal background checks, assure that you can clearly enunciate job-relatedness for the criminal conduct exclusion.

5. Do not use a “blanket” criminal conduct exclusion unless you fall under strict licensing guidelines.

6. Consider each background check “hit” you get for its relevance to the job. For each individual who is initially disqualified due to the criminal conduct exclusion, perform an individual assessment to determine if the reason for the disqualification is job-related and consistent with business necessity. Consider each applicant’s history with consideration of:

a. The facts or circumstances surrounding the offense or conduct,
b. The number of offenses for which the individual was convicted,
c. The applicant’s current level of maturity versus likely level of maturity at the time of the crime,
d. Post-conviction job-performance without incidents of criminal conduct,
e. Rehabilitation, education, and training since conviction,
f. Employment or character references and any other information regarding fitness for the particular position, and
g. Whether the individual is bonded under a federal, state, or local bonding program.

Taking preventative measures helps to protect employers from the expense and distraction of employment litigation. Feel free to contact Sheryl Laughren, or any other member of Berry Moorman’s Labor & Employment Law Group, with questions or for assistance in review of your policies. Sheryl’s direct dial is (313) 223-1603.