They Warned Us It Was Coming: EEOC Files Two Lawsuits Based on Employers’ Uses of Criminal Background Checks

Governmental agencies regularly issue regulations or guidance accompanied with a warning for employers of the consequences of not following along. When that happens, employment lawyers and HR consultants often do the equivalent of flapping our wings and running in circles yelling “the sky is falling”: We issue legal alerts, speak at seminars, offer new products or services, and tell our clients how they need to change their practices immediately. When the EEOC issued guidance on the use of criminal background checks last year, many who advise employers went into “Chicken Little” mode because so many employers conduct criminal background checks on applicants. According to a 2010 survey by the Society of Human Resource Management, 92% of employers use criminal-background checks for some or all job openings. The reasons employers give for conducting background checks are many: some employers simply do not want to hire individuals with criminal convictions; but for some, not conducting a criminal records check could also lead to liability. In fact, in North Carolina and many other states, employers can be held liable for “negligent hiring” if they hire someone that they knew or should have known posed a threat to their customers, patients, or residents and that person indeed causes harm. The classic example used for negligent hiring is an apartment complex who hires a maintenance worker with a history of sexual assault convictions, who then uses his employer-issued keys to enter an apartment and sexually assault a resident. The employer, the law provides, should have conducted a criminal background check on someone who would be receiving keys to residences as part of his job.

Employers thus can’t just poke their heads in the sand and do no background checks at all, and the EEOC’s guidance does not require that. Instead, it cautions against blanket prohibitions on hiring for applicants with certain types of criminal records. The EEOC urges employers to do a case by case analysis of background check results and consider: the job at issue; the crime; its relation, if any, to the potential job; and the amount of time that has passed since the conviction. All of that is well and good, some employers have said, but “I’m still not hiring a felon.” And for the last year, the EEOC has not given employers with that attitude any reason to change their minds. That is, until yesterday. Yesterday the EEOC filed two lawsuits both on the grounds that the employer’s use of criminal background checks to deny employment to applicants had a disparate impact on black applicants and conditional hires. One of the cases was filed in South Carolina, the other in Illinois.

In EEOC v. BMW Manufacturing Co., Inc., Case No. 7:13-cv-01583, filed in the U.S. District Court for the District of South Carolina, Spartanburg Division, by the EEOC’s Charlotte District Office, the EEOC alleges that BMW’s criminal conviction background check policy has a “disparate impact on black employees and applicants.” According to the EEOC’s Complaint, BMW’s policy at issue is alleged to exclude individuals with convictions of the following categories of crimes, regardless of whether the crime is a felony or misdemeanor or how long ago it occurred: murder, assault & battery, rape, child abuse, special abuse (domestic violence), manufacturing of drugs, distribution of drugs, weapon violations, convictions of a “violent nature,” theft, dishonesty, and moral turpitude. The Complaint alleges that BMW required a new logistics contractor who provided workers in the BMW warehouse to follow this policy when screening its applicants to work at the BMW warehouse. Most of the applicants had already worked at the BMW warehouse for another logistics contractor who was not required to follow the policy. The EEOC alleges that after the criminal background check policy was applied, 88 employees were denied hire at the BWM warehouse, 69 of whom were black and had already worked at the BMW warehouse, some for many years, for the previous contractor who did not perform criminal background checks.

In EEOC v. Dolgencorp LLC d/b/a Dollar General, Case No. 1:13-cv-04307, filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, the EEOC alleges that the employer has “engaged in on-going, nationwide race discrimination against Black Applicants” through its use of criminal history information in the hiring process. Dollar General’s procedure at issue, as alleged by the EEOC, is as follows: once an applicant is given a job offer, the store manager submits information on the applicant to a third party vendor to conduct a criminal background check. Dollar General has created a matrix of specific felonies and misdemeanors that specifies how recent the conviction must be to disqualify the applicant. The EEOC alleges that the policy “has not been demonstrated to be and is not job-related and consistent with business necessity.” The EEOC alleges in part that the policy does not provide for an individualized assessment when an applicant fails the check and that Dollar General does not consider on a case-by-case basis the following: “the age of the offender, any actual nexus between the crime and the specified job duties, employee safety, or other matters necessary to the operation of defendant’s business; or to the time or events that transpired since the offense.” The Complaint alleges as examples that the following convictions within the specified time frames act as automatic disqualifiers pursuant to Dollar General’s policy: flagrant non-support (10 years); possession of drug paraphernalia (10 years); illegal dumping (3 years); misdemeanor improper supervision of a child (3 years); misdemeanor reckless driving (no more than 1 conviction in 5 years); misdemeanor failure to file income tax return (no more than 1 conviction in 5 years). According to the EEOC, this procedure resulted in “7% of non-blacks” failing the background check and “10% of blacks” failing the check.

Each of these cases was brought based upon charges that were filed with the EEOC against the employers. The background check exclusion policies at issue here, at least based upon the Complaints, would not appear to be flagrantly unreasonable to many employers – do you really want someone convicted of child abuse as an employee? But the EEOC makes the point in each Complaint that the policies do not allow for an individualized assessment. As the EEOC warned in its guidance, without such an individualized assessment process, employers are vulnerable.

Instead, however, of viewing these lawsuits as further evidence of imminent sky fall, employers should blow away the feathers and check their background check policies and procedures to insure they allow for reasonable, individualized assessment of a negative result based on the job at issue, and then consult their friendly neighborhood employment lawyer on the tough calls to make sure they are appropriately assessing the risk of hiring and/or not hiring the individual in question.

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