EEOC background check wake-up call for employers

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The U.S. Equal Employment Opportunity Commission’s lawsuits against two companies alleging unlawful and discriminatory use of criminal background checks in their hiring policies should serve as a reminder to employers to tread carefully.

“Under the new, more aggressive stance the EEOC is taking, employers are going to have to be more careful about how they use information gleaned from criminal background checks,” said Cole Dowsley, a partner in the Franklin, Tenn., office of Thompson Burton PLLC. “If a report comes back positive (for criminal activity), an employer is going to have to give specific thought as to how that conviction or arrest relates to the job.”

In a lawsuit filed June 11, the EEOC claimed that BMW Manufacturing Co. LLC’s use of criminal background check information disproportionately screened out black contractors at the auto manufacturer’s South Carolina facility.

For seven years, the company has had a policy of denying facility access to employees and contractors with certain criminal convictions, regardless of the age of the convictions or nature of workers’ duties. That policy, the agency’s complaint claimed, served neither a justifiable job-related purpose nor a business necessity. The suit stemmed from complaints from contract employees who had previously worked at the facility, but were subsequently denied access after new criminal background checks uncovered criminal convictions.

In another suit filed the same day, the agency claimed that retailer Dollar General’s background check policy resulted in nationwide disparate impact discrimination against black job applicants. The lawsuit stems from EEOC complaints brought by applicants who claimed that they were denied jobs due to background check results that were either incorrect or that reflected past charges that had no relation to the store clerk positions for which they applied.

The lawsuits are the first from the EEOC since the agency issued guidance last year on employers’ use of criminal background check information. That guidance underscored the fact that, while Title VII does not prohibit employers’ use of criminal background checks, employers can run afoul of the law if the use of such checks leads to systemic discrimination based on race, color, national origin, religion or sex.

EEOC Chair Jacqueline A. Berrien said that employers have long been on notice that discriminatory use of criminal background checks could run afoul of Title VII.

“Since issuing its first written policy guidance in the 1980s regarding the use of arrest and conviction records in employment decisions, the EEOC has advised employers that under certain circumstances, their use of that information to deny employment opportunities could be at odds with Title VII,” Berrien said in a statement announcing the lawsuits.

Even before the guidance was issued, employment attorneys expressed concern that the agency’s E-RACE initiative — launched in 2008 to increase the agency’s ability to identify, track, investigate and prosecute allegations of discrimination — could lead to an uptick in EEOC systemic discrimination investigations and more disparate impact employment bias suits based on the use of criminal background information.

Dowsley said that the although the agency’s guidance stresses the fact that any use of criminal background check information must have a job-related purpose, it is still unclear what employers will have to prove for their hiring policies to pass muster with the agency if they do screen applicants’ and employees’ criminal backgrounds.

“It will be interesting to see how these cases play out because right now there is a lot of uncertainty and risk involved in using background checks,” Dowsley said.

Employment attorney and their clients are closely watching the issue, particularly given the fact that many employers — such as certain government contractors, vendors and employers in certain fields, including child care — are required by law to conduct criminal background checks of current and potential employees.

The BMW and Dollar General suits “will be the test cases,” Dowsley said.