Thursday, August 15, 2013

EEOC and Guidance on Criminal Background Checks

State Attorneys General ask agency to rescind

Last year, the Equal Employment Opportunity Commission (EEOC) released "guidance" related to business’ use of criminal background checks in employment decisions. The guidance is based on data demonstrating disproportionate arrest and conviction records among Hispanic and black individuals. It does not prohibit employers from using criminal background reports when making hiring decisions. But it does expand what the EEOC would consider discriminatory use of such reports. Although the guidance is not legally binding, the EEOC can and will audit companies it believes are non-compliant. Only time will tell if the courts consider the guidance when ruling on Title VII cases.

While the EEOC concedes that a conviction record (as opposed to an arrest record) would suffice as evidence that a person engaged in criminal conduct, it maintains that there may be reasons an employer should not rely on a conviction record alone when making employment decisions. The guidance cautions that if employers automatically exclude all applicants with criminal records, black and Hispanic individuals will likely be disproportionately impacted. I have to wonder what the agency’s response would be to an employer who can show it applied the same criteria to any applicant?

The guidance states businesses may have to conduct an "individualized assessment" of those individuals identified as having a criminal record. It lists no less than eight specific factors for an employer to consider when making the individualized assessment:

  • The facts and circumstances surrounding the offense or conduct.
  • The number of offenses for which the individual was convicted.
  • Age at the time of conviction or release from prison.
  • Evidence that the individual performed the same type of work, post-conviction, with the same or a different employer, with no known incidents of criminal conduct.
  • The length and consistency of employment history before and after the offense or conduct.
  • Rehabilitation efforts (e.g., education/training).
  • Employment or character references and any other information regarding fitness for the particular position.
  • Whether the individual is bonded under a federal, state or local bonding program.

According to a recent SHRM article, the attorneys general for nine states (West Virginia, Alabama, Colorado, Georgia, Kansas, Montana, Nebraska, South Carolina and Utah) sent a letter to the EEOC urging it to withdraw two lawsuits it filed enforcing its stance against broad, blanket criminal-background checks and to rescind the guidance. The EEOC brought suit against Dollar General and BMW, alleging that the employers’ use of "bright-line" criminal-background checks in the hiring process violated Title VII of the Civil Rights Act of 1964. In part, the letter states:

"We believe that these lawsuits and your application of the law, as articulated through your enforcement guidance, are misguided and a quintessential example of gross federal overreach,"

Dollar General and BMW allegedly violated Title VII’s disparate-impact prohibition by using criminal-background checks as bright-line screening tools. They focused on past convictions in certain categories of crime: murder, assault, reckless driving and possession of drug paraphernalia. Anyone who failed the background check was refused employment without an individualized assessment. Sorry, not every business can justify hiring a convicted murderer or rapist. Their letter continued:

"An employer may have any number of business-driven reasons for not wanting to hire individuals who have been convicted of rape, assault, child abuse, weapons violations or murder—all crimes specifically mentioned in the complaints," they continued. "It might have concerns about the safety of other employees and customers or a desire to minimize the risk of liability. A criminal background may also be indicative of a lack of dependability, reliability or trustworthiness."

The attorneys general questioned the legitimacy of the case on which the EEOC’s guidance is partly based; a 1975 appeals court decision (Green v. Missouri Pacific Railroad Co. that rejected a broad criminal-conviction screen. The attorneys general questioned whether this decision was correct and said that even if it was, it "does not support your agency’s sweeping condemnation of nearly all bright-line criminal conviction screens."

They further accused the agency of engaging in "the illegitimate expansion of Title VII protection to former criminals," noting that "this gross federal overreach is further exacerbated by your agency’s claimed preemption of state and local laws" that prohibit the hiring of those with criminal records. In fact, the guidance does say that an employer relying on state or local regulations concerning criminal backgrounds will not save the employer from a charge of discrimination.

Let me repeat that "…’s claimed preemption of state and local laws" that prohibit the hiring of those with criminal records." So, the EEOC is putting employers in an untenable position of choosing whether to violate their state’s regulations (that may include licensing regulations) and being sued by the EEOC. Awesome; just awesome.

Certainly the practical aspect of this "guidance" is troublesome as well. As these attorneys general note, forcing employers to perform more individualized assessments will add significant time and costs to the selection and hiring process, and in many cases are not likely to hire such an individual anyway even after a more thorough vetting process. They also note that this process is likely to increase the number of discrimination suits by rejected applicants which in turn will increase costs through increased litigation.

As the SHRM article notes, employers simply cannot stop performing background checks altogether. While doing so will minimize the threat of an EEOC lawsuit, it will expose employers to near certain liability for negligent hiring.

Consider any number of cases where an employee with a past conviction for a violent crime then assaults and injures another employee or customer, or a maintenance employee with a burglary record who steals. In such instances, the employers faced negligent hiring or retention charges. Employers facing negligent hiring complaints have a losing track record, as plaintiffs prevail in the majority of cases. Simply put, employers can no more ignore employee criminal backgrounds than they can ignore the EEOC guidance. The only solution to this dilemma (and it’s not a good one) is to review hiring and retention practices and determine the most efficient process to minimize liabilities.

I certainly applaud the efforts of these attorneys general and sincerely hope their challenge of the EEOC’s "guidelines" will effect a change.

At this point the finality, and even legality, of the EEOC's new guidance is also questionable as many, including Congress, feel the EEOC has overstepped its bounds. Even though the EEOC does not create laws, they can and will go after businesses they feel are not adhering to the new guidelines. So, stay tuned. And, here we go again with another government entity unreasonably interfering with employers’ ability to manage their own business.

***As I was writing this post, I note that a significant legal challenge to the EEOC’s war against the use of criminal background checks has been won. In 2009, the EEOC filed against The Freeman Companies. Last Friday, a Maryland federal court dismissed the EEOC's action against Freeman. In its opinion, the court stated that the EEOC could not meet its burden of "supplying reliable expert testimony and statistical analysis that demonstrates disparate impact stemming from a specific employment practice." Additionally, the judge noted what "appear to be such a plethora of errors and analytical fallacies" in an EEOC expert's conclusions to render them "completely unreliable, and insufficient to support a finding of disparate impact." You can read more at The Employer Handbook Blog

As Eric Meyer notes in his blog, this could carry over to other actions, like the Dollar General and BMW suits I cite above. This is great news!

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