United States: Using Criminal Background Checks In Hiring Process Is Risky Business For Employers

Q: In the 1990s, Acme Corporation used criminal background checks as part of its job applicant screening process. If an applicant had any criminal convictions within the prior eight years, Acme would not hire that individual. Mary, the Human Resources Director at Acme would like to know if such a policy could be used today.

In today's increasingly-competitive job market, employers have turned to a variety of screening tactics to find the right employees for their businesses. One popular - but controversial - tactic is criminal background checks. Although criminal background checks have been used by employers for a long time, the practice is receiving heightened scrutiny following enforcement guidance issued by the Federal Equal Employment Opportunity Commission (EEOC) in April 2012 and two recent lawsuits filed by the EEOC relating to background checks.

The EEOC's enforcement tool against criminal background checks is Title VII of the Civil Rights Act of 1964, which protects employees from discrimination on the basis of race, color, religion, sex or national origin. Relevant to criminal background checks is something called disparate (i.e. different or discriminatory) impact discrimination, which bans employment practices that have a disparate effect on a protected class of individuals, such as minorities or women. A seemingly neutral policy, such as not hiring any applicants with felony convictions, can disproportionately affect Hispanic men if, for example, the policy results in 85% of white applicants receiving job offers and only 5% of Hispanic applicants receiving offers. The employer can rebut this finding of disparate impact by demonstrating that the policy is "job related for the position in question and consistent with business necessity."

On April 25, 2012, the EEOC issued written guidance on how it interprets the phrase "job related and consistent with business necessity." That guidance strongly advocated for an individualized assessment of criminal background information, rather than a blanket policy prohibiting hiring of individuals with felony convictions for example. The EEOC emphasized that for an employer to establish that a criminal conduct screen is job-related and consistent with business necessity, "the employer needs to show that the policy operates to effectively link specific criminal conduct, and its dangers, with the risks inherent in the duties of a particular position." Employers were encouraged to consider factors such as the facts and circumstances surrounding the offense, the nature and gravity of the offense, the individual's age at the time of conviction, the time that has passed since the offense and completion of sentence, and any rehabilitation efforts. Moreover, the EEOC distinguished between arrest records and criminal conviction records, noting that employment decisions relating to the existence of a prior arrest alone cannot be used to deny an employment opportunity.

Many predicted that the April 2012 enforcement guidance – coupled with the EEOC's goal in its 2013 Strategic Enforcement Plan to remove "systemic barriers" in recruitment and hiring – would result in greater oversight by the EEOC on employer screening policies. That concern appears to be manifesting itself in two class action lawsuits filed in June by the EEOC over the alleged discriminatory use of criminal background checks. Both suits were filed in federal court on behalf of purported classes of African American workers. In one suit, the EEOC alleges that the employer disproportionately screened out workers from jobs using a hiring policy that denied employment to workers with certain convictions dating back any number of years. The EEOC panned the policy as a blanket exclusion without any individualized assessment of the nature and gravity of the crimes, the ages of the convictions, or the nature of the claimants' respective positions. In the second suit, the EEOC alleges that the employer conditions all of its job offers on the applicant passing a criminal background check dating back ten years. The EEOC described the lawsuits as "the latest in a series of systemic cases that the Commission has filed to challenge unlawful hiring practices."

Though the 2012 enforcement guidance is not "the law" and does not have to be followed by courts, the EEOC appears poised to use the key points from that guidance as the basis for more investigations, audits, and lawsuits targeting employers' use of background screenings. This aggressive enforcement policy poses serious risks for employers, both from a financial standpoint and a public relations perspective. In light of these developments, employers that utilize criminal background checks should carefully review their policies and analyze the impact of such policies on the demographics of their workforces. Employers should also consider discontinuing blanket or bright-line policies, under which any applicant with a criminal conviction is prohibited from employment, and the policy described in the question posed above would likely not pass the EEOC's scrutiny. While more costly and time-consuming for employers, the benefits of keeping the federal government at bay outweigh the costs of conducting individualized assessments of job applicants' criminal background screenings. Lastly, employers would benefit from training their recruiters or those making hiring decisions to consider the factors enumerated in the EEOC's enforcement guidance when reviewing the results of criminal background checks.

Interestingly, businesses have found an unexpected bedfellow in their efforts to combat the EEOC's intensifying enforcement policy against criminal background checks: state Attorneys General. On July 24, 2013, Attorney Generals from nine states (Alabama, Colorado, Georgia, Kansas, Montana, Nebraska, South Carolina, Utah, and West Virginia) sent a scathing letter to the EEOC Chair and several EEOC Commissioners describing the recent lawsuits as "quintessential example[s] of gross federal overreach" and asking the EEOC to dismiss the suits and take back its 2012 enforcement guidance. The letter is unquestionably driven by political motives and advocacy for states' rights, however, it provides a potentially helpful roadmap for an employer looking to mount a defense against an EEOC lawsuit over background screening procedures or policies.

Nicholas Casolaro is an associate in the Litigation Department of the McLane Law Firm.

Published in New Hampshire Business Review

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