The issues of whether businesses can — or should — use background checks to screen job candidates is back in the news this month, with two high-profile companies facing lawsuits over their hiring practices.
The U.S. Equal Employment Opportunity Commission (“EEOC”) has filed separate suits against Dollar General and BMW Manufacturing Co. LLC, claiming that the companies’ use of pre-employment criminal background checks has disproportionately screened out black job applicants.
EEOC Background-Check Lawsuits
The EEOC alleges in both lawsuits that the companies’ use of background checks has resulted in a gross disparity in the rates at which black and non-black employees have lost employment opportunities. According to the EEOC, the hiring policies have had a “statistically significant” impact on black applicants because black individuals have criminal convictions at a rate disproportionately greater than their representation in the general population.
In both lawsuits, filed on June 11, 2013, the EEOC contends that the companies’ criminal background checks are unlawful employment practices in violation of Title VII of the Civil Rights Act of 1964 because the background check policies are not job-related or consistent with business necessity. It has long been recognized that a blanket policy of denying employment to any person having a criminal conviction violates Title VII because such policies have an adverse impact on minorities.
In its complaint against BMW, the EEOC alleges that the company makes no distinction between felony and misdemeanor convictions. The exclusionary hiring policy applies to violent felonies, but also to any crime involving “theft, dishonesty, and moral turpitude.” The EEOC further asserts that the claimants were denied access to a BMW facility “without any individualized assessment of the nature and gravity of their criminal offenses, the ages of the convictions or the nature of their respective positions.”
The allegations levied against Dollar General are similar. A third party conducts background checks for the company, using a matrix that identifies specific felonies and misdemeanors and how long ago they occurred. The company does not provide individual assessments for those who fail the screen and does not take into consideration issues such as the “nexis between the crime and specific job duties” or how much time has lapsed since the conviction, according to the EEOC.
The EEOC’s Focus on Disparate Impact and Background Checks
The EEOC has made it clear that it is focused on the disparate impact that hiring practices can have on applicants of color. The agency’s strategic plan explicitly states that it will “target class-based recruitment and hiring practices that discriminate against racial, ethnic and religious groups, older workers, women, and people with disabilities.”
In addition, as part of its E-RACE Initiative (Eradicating Racism and Colorism from Employment), the EEOC is more carefully scrutinizing employers’ use of criminal background checks and credit checks.
These latest lawsuits are not the first time the EEOC has gone after large corporations. As we previously reported, in 2012, Pepsi Beverages agreed to pay $3.13 million and provide job offers and training in order to resolve a charge of race discrimination filed in the Minneapolis Area Office of the EEOC.
Under Pepsi’s former policy, job applicants who had been arrested pending prosecution were not hired for a permanent job even if they had never been convicted of any offense. Pepsi’s former policy also denied employment to applicants who had been arrested or convicted of certain offenses that were relatively minor.
To prove an employment discrimination claim based on disparate impact, an employee must show that while the employer’s actions appeared fair or neutral, it nevertheless negatively impacted a protected class of employees. Under the theory of disparate impact, it is not necessary to prove that the employer intended to discriminate.
Bottom Line
Employers should remember that neither Title VII nor the EEOC enforcement guidelines implement a complete ban on the use of pre-employment background checks. However, utilizing a blanket policy that excludes candidates on the basis of a conviction record is illegal.
Thus, an essential practice for employers is to ensure that any screening procedure is consistent with a legitimate business necessity and job-related. For instance, if a position requires an employee to handle money, a candidate convicted of theft or embezzlement could be excluded.