United States: Federal Contractors Should Rethink Criminal Background Checks

Last Updated: April 20 2016
Article by Kenneth Rosenberg and Asad Rizvi

Originally published by Law360

Federal contractors that employ blanket criminal background check policies that discriminate against or disproportionately impact a protected class are facing heat from the U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP). Under Executive Order 11246, federal contractors and subcontractors are prohibited from engaging in discrimination on the basis of race or national origin, among other protected categories.

As explained in our firm's prior labor and employment alert, the OFCCP issued Directive 306[2] to provide contractors with guidelines on criminal record restrictions and discrimination based on race and national origin. The OFCCP noted in its directive that "[p]olicies that exclude people from employment based on the mere existence of a criminal history record and that do not take into account the age and nature of an offense, for example, are likely to unjustifiably restrict the employment opportunities of individuals with conviction histories." Due to the disproportionate rates of incarceration of African-Americans and Hispanics, the OFCCP has concluded that blanket policies are "likely to violate federal anti-discrimination laws."

In investigating contractors' criminal background check policies, the OFCCP noted in Directive 306 that it would rely on the April 25, 2012, U.S. Equal Employment Opportunity Commission enforcement guidance on the consideration of arrest and conviction records in employment decisions under Title VII of the Civil Rights Act of 1964. Based on the EEOC guidance, Directive 306 warned that employers' criminal background check policies may be discriminatory if they cause: (1) disparate treatment (i.e., treating job applicants or employees with a criminal history differently on the basis of a protected status); or (2) disparate impact (i.e., applying a neutral policy of excluding job applicants with criminal backgrounds that has a disproportionate impact on a protected class).

Recent OFCCP enforcement actions have shown that the agency has upheld its promise to target contractors utilizing blanket criminal background check policies under both of these theories of liability.

In August 2015, the OFCCP entered into a conciliation agreement with United Mailing Services Inc. after an investigation found that the company rejected African-American applicants to entry-level mail-processing jobs with criminal records while simultaneously hiring white applicants with criminal records. As a result, 251 similarly qualified African-American applicants were denied employment by the contractor. To settle this disparate treatment action, the company agreed to pay $120,000 in back wages, with interest, to the 251 African-American applicants, hire three class members, and commit to the additional hiring of 20 class members during the agreement's monitoring period.

In another recent enforcement action, the OFCCP alleged that a Reynolds Consumer Products LLC's predecessor had a criminal background check policy that had a disparate impact on 74 black applicants with criminal histories. According to the agreement, "Reynolds used 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 production worker position." The OFCCP noted that Reynolds failed to show that the policy was "job-related and consistent with business necessity" or that it was validated under the Uniform Guidelines on Employee Selection Procedures (UGESP).

Reynolds agreed to pay $86,000 consisting of back pay, interest and $6,000 in seniority to the affected class members in a conciliation agreement with the OFCCP. The company also stipulated to several equitable measures, including that Reynolds shall agree to "be proactive in their outreach to avoid any chilling effect of the past policy" and "develop relationships with and contact" two local ex-offender programs to "solicit, on an ongoing basis, referrals of black applicants for open positions in all job groups." Finally, Reynolds agreed to assess the factors set forth in Directive 306 if it continues to consider applicants on the basis of criminal history (e.g., the nature and seriousness of the crime, the time elapsed since the conduct or sentence, and the nature and requirements of the job sought).

The foregoing cases highlight why contractors should comply with Directive 306 in applying criminal background checks. OFCCP's recent scrutiny of such policies should give contractors fair warning about the risks of blanket exclusions in the screening of job applicants and employees. Fortunately, the OFCCP has suggested best practices that could mitigate the risks of using these policies, which include the following:

  • Ensure that criminal background check policies are applied with an individualized assessment of every applicant;
  • Narrowly tailor these policies to the essential job requirements and actual circumstances under which the jobs are performed through an evaluation of (1) the nature and gravity of the offense or conduct; (2) the time that has passed since the offense, conduct and/or completion of the sentence; and (3) the nature of the job held or sought; and
  • Limit inquiries to convictions for which exclusion would be job-related and consistent with business necessity.

In light of the OFCCP's crackdown on blanket criminal background check policies, federal contractors should discontinue the practice of screening for criminal histories in the initial application, or "ban the box," altogether and review and revise their hiring policies to ensure compliance with Directive 306. Where federal contractors have questions regarding their obligations, they should seek guidance with counsel experienced in affirmative action program/OFCCP matters.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Kenneth Rosenberg
Asad Rizvi
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