There has been a growing legal trend that makes it more and more risky for employers to utilize criminal background checks for screening job applicants. This article focuses on recent litigation challenging the use of criminal background checks in the employment process, as well as the growing legislative trend prohibiting employers from asking about criminal convictions early in the employment process. It also covers the Equal Employment Opportunity Commission’s (EEOC) recently issued restrictive guidance on the use of such checks.
On January 11, 2012, the EEOC issued a press release that Pepsi Beverages had agreed to pay $3.13 million and provide job offers and training to resolve a charge of race discrimination filed with the agency. The racial discrimination complaint stemmed from Pepsi’s use of criminal background checks to screen job applicants. According to the EEOC, more than 300 African Americans were adversely affected when Pepsi applied a criminal background check policy that disproportionately excluded black applicants from employment.
The use of conviction records to deny employment can be illegal under Title VII of the Civil Rights Act of 1964 when such records are not relevant to the job, because employment opportunities may be limited based on race. The EEOC’s premise is that members of certain racial groups are arrested and convicted more frequently than whites; thus, employers using such information in hiring decisions may cause a disparate impact on those protected subgroups. When disparate impact is shown to exist, the employer must be able to show that its employment practices are job-related and consistent with business necessity.
Prior to the Pepsi settlement, in 2008, the EEOC filed a suit against PeopleMark, a temporary staffing company that hires people to work in light industrial, clerical and receptionist positions. This class action suit against PeopleMark alleged that it maintained a blanket policy that prohibited the hiring of any person with a criminal record. According to the EEOC, this policy against hiring anyone with a criminal record was unlawful because it had a disparate impact on African Americans.
As a result of this litigation, PeopleMark was required to produce more than 18,000 pages of documentation relating to its criminal background checking process. The company was finally able to show that 22 percent of individuals with felony convictions had ultimately been hired by PeopleMark. As a result, on March 31, 2011, the court held in favor of the company.
Also, in 2009, the EEOC sued Freeman Companies, a convention, exhibition and corporate events marketing company. According to the EEOC, Freeman had a history of rejecting job applicants based on whether they have had one or more of various types of criminal charges or convictions. Also, this practice has an unlawful discriminatory impact because of race and national origin and is neither job-related nor justified by business necessity. The outcome of this lawsuit is currently pending.
Finally, according to a 2012 SEC filing by Dollar General, the company could be the target of an EEOC complaint due to its use of criminal background checks. The EEOC recently told the company that its use of criminal background checks may have an unfair effect on African Americans. Apparently meetings with the agency did not allay its concerns about Dollar General’s practices.
David W. Arnold is general counsel for Wonderlic Inc., where he is involved with legal issues concerning privacy, negligent hiring, employment testing and equal employment matters. He also serves as General Counsel for the Association of Test Publishers. Dr. Arnold holds a J.D. from Loyola University Law School and a Ph.D. in industrial psychology from the University of Nebraska.