EEOC Sues for “Disparate Impact” Discrimination in Companies’ Use of Criminal Background Checks

disparate impact

In what may amount to test cases based on its revised guidelines for the use of criminal background checks in hiring, the EEOC has filed discrimination lawsuits against BMW and Dollar General for employment practices.  Employers who have not modified background screening and HR policies to reflect these revised guidelines are wise to pay attention.

The Washington Post’s June 11 article on the subject reports that BMW is being sued for discrimination in firing 70 black employees with criminal histories even though some of them had been with the company for many years.  In the second case, the retailer Dollar General is accused of discrimination in revoking job offers to two black women after background checks found criminal histories, even though one report is disputed and the other is for a 6-year-old drug conviction.

Did 2012 EEOC Guidance Foreshadow These Actions?

It is crucial for employers to understand that these lawsuits are based on “disparate impact” forms of discrimination, not the more straightforward “disparate treatment” discrimination.  We have written several times about this distinction (for examples, see here and here), and about the related EEOC revised guidance on the use of criminal records in hiring under Title VII of the 1964 Civil Rights Act, issued April 25, 2012.

Here are the important definitions from the EEOC guidance document:

Discrimination based on “disparate treatment” occurs “when the plaintiff demonstrates that [an employer] treated him differently because of his race, national origin, or another protected basis.”

Discrimination based on “disparate impact” occurs when “the employer’s neutral policy or practice has the effect of disproportionately screening out a Title VII-protected group and the employer fails to demonstrate that the policy or practice is job related for the position in question and consistent with business necessity.”

The most common example of “disparate impact” is based on the fact that blacks have significantly higher proportional arrest and conviction rates than whites.  Therefore, criminal background checks will almost certainly flag proportionally more black applicants than white.  If these results are used to deny job applicants, or to fire employees, without demonstrating that the actions are justified as “job related” and “consistent with business necessity,” charges of discrimination may follow.

The EEOC’s actions in the two cases at issue show very clearly that the agency means business.

Do BMW and Dollar General Actions Show “Disparate Impact?”

Obviously, a court will decide if either business did in fact unlawfully discriminate in hiring.  Based on news reports of the lawsuits, here is how the facts look in both cases.

BMW used a contractor to staff a warehouse in South Carolina. The previous contractor’s policy was to reject job applicants with criminal convictions within the past 7 years. When BMW hired a new contractor, it ordered a new round of background checks and fired any employee with a conviction, regardless of how long ago the conviction occurred.  Based on these checks, BMW fired 88 workers, 70 of whom were black, even though some of these employees had worked for the company as long as 10 years.

The EEOC claims that BMW did not establish that the exclusions were job related or based on business necessity, and that the impact falls disproportionately on BMW’s black employees.

In the Dollar General case, two black applicants sued for discrimination. One applicant had disclosed a 6-year-old controlled substance possession conviction, and was offered a job.  However, that job offer was later revoked due to a company policy to exclude applicants with convictions within 10 years. The second applicant produced evidence that the reported felony conviction was wrong, but the company rescinded the offer anyway.

The Dollar General case may illustrate how what the EEOC calls “individualized assessment” might be applied, in which criteria, the “Green Factors,” first proposed in case law in Green v Missouri Pacific Railroad, would be used to determine if an applicant could be excluded.  Read more about this in our post on individualized assessments.

Best Practices for Compliance with the EEOC Guidelines

Employers should review their policies and procedures on using criminal background checks in employment decisions.  Here are some best practices we have published previously that you should consider:

  • Perform an individualized assessment for individuals excluded by the results of the criminal records check;
  • Develop a narrowly tailored written policy and procedures for screening for criminal records;
  • Define essential job requirements and the actual circumstances under which the jobs are performed;
  • Determine the specific offenses that may demonstrate unfitness for performing specific jobs, and make these part of your explicit policy;
  • Refrain from inquiring about convictions on job applications (as in “ban the box” legislation: maybe do background checks later in the hiring process);
  • Keep information about the criminal records of applicants and employees confidential (only using it for the purposes for which it was intended);
  • Train managers, hiring officials, and decision-makers on how to implement the policy and procedures consistent with Title VII.

You DO have the right and a need to perform employment background checks. The EEOC has not banned employment background checks and, it is feasible to do these checks in compliance with anti-discrimination regulations.


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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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