University of Miami Accused of Racial Discrimination for Rejecting Job Applicants Based on Employment Credit Checks

A lawsuit filed in Miami federal court on November 22, 2010 alleges that the use of employment credit checks by the University of Miami constitutes discriminatory hiring practices, as defined by Title VII of the Civil Rights Act.

In this potentially ground-breaking class-action lawsuit, Plaintiff Loudy Appolon asserts that employers who use credit history to screen applicants engage in racial discrimination and violate Title VII of the Civil Rights Act. The Act prohibits discrimination by covered employers on the basis of race, color, religion, sex or national origin.

The Plantiff in this case was allegedly offered employment by the University of Miami for a senior medical collector position with the University’s Miller School of Medicine in June 2009. She was offered the position and had resigned from her previous job before receiving word from the University that she would not be hired because of her credit history.

“The lawsuit seeks to require that the University stop using credit history as a screen for employment, that it make Ms. Appolon and other class members eligible for hire, and that the University pay lost wages,” according to a press release issued by Outten & Golden LLP, a law firm representing the Plantiff.

Employment Credit Reports Have Disparate Impact.

The use of employment background checks has come under fire recently as lawmakers and others express concerns that the recession, high unemployment, and recent “predatory lending practices” have negatively impacted credit reports. Moreover, credit histories are known for their disparate impact on younger, poorer, and racial minority populations.

On the other side of the debate, employers argue that credit checks are a valid indicator of a person’s judgment, are a solid measurement of potential risk to the company, and provide useful information that could not otherwise be confirmed by an employer. Just because a practice has disparate impact doesn’t mean it should not be used, many would argue.

The Big Questions Surrounding Employment Credit Checks

This case brings up several important issues related to employment screening and background checks. We see the “big questions” that should be answered by the Miami federal court in this case as the following:

  • Does the University have well-defined screening protocols and decision making criteria and are those protocols and criteria applied consistently across applicants?
  • Does the University use credit checks only for those positions where the check is clearly related to the role?
  • Does the University consider the totality of the individual’s background, rather than basing the employment decision on credit alone?
  • Does the University have a brightline policy toward banning all applicants with any type of credit blemish, or do they consider the type and degree of problem before making a decision?
  • Does the University offer applicants an opportunity to explain any credit blemishes before making a final decision?

The answers to these and other questions will play a critical role in how the court ultimately decides. We will watch with interest as this case unfolds.

In the meantime, if your organization uses credit checks, the lesson in all of this is to be sure that you can answer the questions posed above. If you can, and if you answer them in the right way, you’re likely justified in your use of credit checks. If you cannot, you would be wise to seek legal counsel and to enlist the help of a professional background screening company.

Learn more about our view of credit checks in our recent blog post, “Where Do You Stand on Employment Background Checks.”

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About MichaelGaul

Michael is a results-oriented marketing executive with over two decades of experience in employment screening, physical security, and business process management. Michael has deep experience in human capital risk management and a passion for educating business leaders and HR professionals on strategies that tangibly protect their interests. Michael serves on the Board of the Secure Cash and Transport Association (SCTA) and is a member of the Professional Background Screening Association (PBSA), and the American Society of Industrial Security (ASIS).
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