In a 2009 action brought as a precursor to the EEOC's 2012 Guidance on criminal background checks, the agency challenged the practices of an employer that selectively utilized criminal and credit background checks in the hiring process. This "pattern and practice" case, brought in the District of Maryland against Freeman, a family-owned employer of 3,500 full-time and 25,000 other workers that provides corporate event services, alleged that the use of these background checks as screening devices had a disparate impact on Black job applicants. On August 9, in a memorandum opinion that was alternatively scathing and thoughtful, U.S. District Judge Roger W. Titus granted Freeman's motion for summary judgment and dismissed the case in its entirety. A copy of the opinion can be found here.
Judge Titus's ruling on Freeman's summary judgment motion turned on the EEOC's inability, on several grounds, to establish a prima facie case of disparate impact discrimination based on Freeman's use of these screening devices. The primary ground for the decision was the court's conclusion that the EEOC's statistical expert's reports and conclusions were unreliable and, therefore, inadmissible under Federal Rule of Evidence 702. In support of this conclusion the court cited a litany of significant deficiencies in the EEOC's statistical report, including glaring uncorrected errors that undermined its reliability and led it to characterize the conclusions as "completely unreliable," the database used as containing "cherry-picked individuals ... in an attempt to pump up [the adverse impact on same Blacks]", and the expert's purported efforts to correct certain obvious deficiencies as "laughable." While the EEOC argued that flawed data provided to it by Freeman was to blame, the court's opinion gave that contention short shrift. Without an admissible statistical expert report to support the existence of the disparate impact claimed by the agency, no prima facie case could be stated and dismissal was required.
This represents the second time this year that a district court threw out an EEOC pattern and practice action challenging an employer's use of credit and criminal background checks as screening devices after finding the expert report on which it relied inadmissible. In fact, the agency retained the same expert in both cases. See, EEOC v. Kaplan Higher Learning Education Corp., 2013 WL 322116 (N.D. Ohio Jan. 28, 2013) (also available here.) Judge Titus was well aware of the Kaplan decision, and cited one of the grounds for excluding the expert report in that case as applicable in Freeman as well.
Perhaps as significant as the court's analysis of the statistical issues that determined the outcome are its comments that pertain to the EEOC's attack on the use of criminal and credit history screening in employers' hiring processes. The court opened its opinion with the following statement: "For many employers, conducting a criminal history or credit record background check on a potential employee is a rational and legitimate component of a reasonable hiring process." While it acknowledged the EEOC's premise that due to wide disparities in incarceration rates, "indiscriminate use of criminal history information might have a predictable result of excluding African-Americans at a higher rate than Caucasians", it took issue with the suggestion that this higher incarceration rate meant that any use of criminal history information would violate Title VII. To the contrary, it concluded, "careful and appropriate use of criminal history information is an important, and in many cases essential, part of the employment process of employers throughout the United States."
Employing irony to support its point, the court noted that "even the EEOC conducts criminal background investigations as a condition of employment for all employees, and conducts credit background checks on approximately 90% of its positions." It later concluded, "by bringing actions of this nature, the EEOC has placed many employers in the 'Hobson's choice' of ignoring criminal history and credit background but exposing themselves to potential liability criminal and fraudulent acts committed by employees, on the one hand, or incurring the wrath of the EEOC for having utilized information deemed fundamental to most employers."
The central messages of this can be wrapped up in two sets of quotations: (i) "careful and appropriate use" of criminal history and credit information is not inconsistent with Title VII, while "indiscriminate use" may be another story; and (ii) "[s]omething more, far more, then what is relied upon by the EEOC in this case must be utilized to justify a disparate impact claim based upon criminal history and credit checks. To require less, would be to condemn the use of common sense, and this is simply not with the discrimination laws of this country require."
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