In recent months, the Equal Employment Opportunity Commission (“EEOC”) has taken action against a number of employers based on the theory that background checks are discriminatory as a result of disparate impact. In a win for employers, the EEOC’s attempt to eliminate employment background checks was rejected by the U.S. District Court for the District of Maryland on August 9, 2013. See EEOC v. Freeman, Case No.: RWT 09cv2573 (D. Maryland). The EEOC argued that all criminal and credit background checks create an unlawful disparate impact based on disproportionate conviction rates. The court dismissed the EEOC’s Title VII claims against employer Freeman, holding the EEOC’s expert testimony could not support a finding of disparate impact. While the court rejected the EEOC’s blanket unlawful disparate impact theory, it did not determine if the screening practices used by Freeman were lawful.
In light of the EEOC’s continued efforts to expand their authority into the realm of background checks, employers should take note of Freeman. Although the case was not decided on the merits, the judge provides some guidelines which can help employers avoid a potential lawsuit on the basis of a discriminatory screening process. In the opinion, the court acknowledged the legitimate “business necessity” of background checks to avoid potential liability for the criminal and fraudulent acts of employees, noting “[e]mployers have a clear incentive to avoid hiring employees who have a proven tendency to defraud or steal from their employers, engage in workplace violence, or who otherwise appear to be untrustworthy and unreliable.” Id. at 1. Without making a determination on the merits, the court suggests Freeman’s policy appeared to be “reasonable and suitably tailored to its purpose of ensuring an honest workforce.” Id. at 6-7, fn 3. The court reasoned that Freeman’s screening process considered several factors that could influence the employment decision, noting Freeman identified specific conditions which would exclude applicants from a credit-sensitive position, expressed concern over convictions related to specific crimes, and only considered convictions in the past seven years, while ignoring any arrests that did not result in a conviction or guilty plea. Id.
Although Freeman does not determine the lawfulness of background checks, the ruling provides employers with an opportunity to review their own screening process and avoid potential trouble with the EEOC. Keeping “business necessity” in mind, employers should avoid making decisions on the results of a criminal or credit background check alone. Rather, to avoid the appearance of a disparate impact, employers should tailor background check requirements to match specific job requirements, implement a multi-step screening process, and ensure the process is conducted in a fair, consistent and confidential manner.
Understanding new developments regarding criminal background checks is important for companies as they continue to search for clarity on using criminal background checks to make employment decisions. St. Louis employment law attorneys can be of assistance in explaining the significance of the Freeman decision and the latest news from the EEOC on the use of criminal background checks.
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