• EEOC's Criminal Background Guidance After a Year and a Half in the Field: Results are Mixed
  • September 17, 2013 | Author: Olivia Z. Weisman
  • Law Firm: Phelps Dunbar LLP - Tampa Office
  • It has been over a year since the United States Equal Employment Opportunity Commission (“EEOC”) issued its revised enforcement guidance on the extent to which employers may rely on an individual’s criminal history in making hiring or other employment selection decisions. Although employers may continue to struggle to determine how to best comply with the guidance, as demonstrated by a recent U.S. District Court decision, they are also not defenseless to claims that their policies are discriminatory.

    On August 9, 2013, a District Court in Maryland granted summary judgment in favor of the defendant employer Freeman, dismissing the plaintiff EEOC’s claim that Freeman’s background check policies violated Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(k). EEOC v. Freeman, Case No. RWT 09cv2573 (D. Md. Aug. 9, 2013). In so doing, the District Court recognized an employer’s policy of conducting criminal history or credit record background checks on potential employees as “a rational and legitimate component of a reasonable hiring process.” The District Court chastised the EEOC for pursuing a disparate impact discrimination claim based on “a theory in search of facts to support it,” disregarding the EEOC’s expert’s report as “an egregious example of scientific dishonesty.”

    The EEOC’s expert’s report was pivotal to the success or failure of its claim. To prevail on a claim of disparate impact discrimination, a plaintiff must show that a certain class of applicants is disproportionately and adversely impacted by a particular employment practice on the basis of their race, color, religion, sex, or national origin. 42 U.S.C. § 2000e-2(k). In its revised guidance, the EEOC essentially presumes that, based on national statistics, the use of criminal records to exclude individuals from employment has a disparate impact on individuals of certain races and national origins. This presumption, however, may not be sufficient in court where the plaintiff bears the burden of proving disparate impact by showing statistical disparities between the number of protected class members in the qualified applicant group and those in the relevant segment of the workforce. More often, the plaintiff’s burden requires reliable and accurate statistical analysis performed by a qualified expert.

    Freeman challenged the EEOC’s use of an unreliable expert report to establish a prima facie case of disparate treatment discrimination and prevailed. The District Court, in excluding the EEOC’s expert’s report, found that the report was based upon an inaccurate database containing “cherry-picked” data and a “mind-boggling number of errors.” The District Court was also unpersuaded by the EEOC’s arguments that national statistics were sufficient to create an inference of disparate impact, noting that the national statistics relied upon by the EEOC were not representative of the relevant applicant pool.

    With neither national statistics nor expert analysis to support its allegations of disparate impact, the District Court concluded that the EEOC’s claim could not survive and granted summary judgment in favor of Freeman. This decision strikes at one of the pillars for the EEOC in pursuing disparate impact litigation based on the use of criminal background checks; namely, the ability to move easily past (or effectively skip) the plaintiff’s burden to prove that a particular policy has a disparate impact on a class of applicants based on their race or other protected characteristic. The EEOC cannot rest on its presumption that the mere existence of a background check policy creates a disparate impact; it must prove the existence of this disparate impact with reliable expert testimony and statistics.

    Despite the Freeman decision, employers should still expect the EEOC to rely upon its presumption of disparate impact during the investigation stage. What is less clear is what impact this decision may have on two currently pending lawsuits the EEOC has filed against employers who use criminal background and/or credit history checks in the hiring process.  It is clear, though, that despite some direction from the federal courts, employers still continue to struggle when determining how to comply with the EEOC’s revised guidance more than a year after its issuance.

    Notably, employers who operate in states that have their own requirements regarding the hiring of applicants with criminal backgrounds face a particularly arduous task. At least one federal court has recognized this dilemma but has concluded that “Title VII trumps state mandates.” See Waldon v. Cincinnati Public Schools, Case No. 1:12-CV-00677 (S.D. Ohio Apr. 24, 2013). In Waldon, the defendant employer Cincinnati Public Schools complied with a state law that required background checks of current school employees, even those whose duties did not involve the care, custody, or control of children. As a result, two long-term employees were fired, and they subsequently filed suit, alleging that their terminations were based on state legislation that had a racially discriminatory impact.

    The school system moved to dismiss, asserting that it was simply following Ohio law by terminating the plaintiffs’ employment, that it maintained no particular employment practice that caused a disparate impact, and that it was a business necessity to follow Ohio law. A District Court in Ohio disagreed, recognizing that although it was clear that the school system did not intend to discriminate, it implemented a policy that had a disparate impact on African-Americans. The District Court did not believe that the school system was “compelled to implement the policy” and stated that the school system “could have raised questions with the state board of education regarding the stark disparity it confronted.”

    The District Court’s suggested course of action for employers facing such a quandary is not particularly instructive, especially when multiple state leaders themselves have expressed to the EEOC the difficulty of complying with its guidance. On July 24, 2013, the attorneys general for nine states sent a letter to the EEOC expressing concerns about its revised guidance and the position the EEOC has taken in recent lawsuits regarding criminal background checks.  The letter described the EEOC’s claim that its revised guidance document supersedes state and local hiring laws as “particularly egregious” and expressed concern that many of the states’ laws could be affected.

    Thus, the propriety of criminal background check policies remains uncertain, and the EEOC’s pursuit of litigation has not added clarity. If anything, the EEOC has muddied the waters by pursuing cases with theories like it advanced in Freeman, which cause employers to wonder whether they should consider ignoring the EEOC, or expend resources trying to comply with guidance that has not been well received in federal court litigation, as well as a patchwork of competing state laws. Nevertheless, Freeman is but one case, state law continues to evolve, and the jury is still out on whether the states that have publicly criticized the EEOC’s guidance will do more than jawbone about it. In the meantime, employers seeking to navigate the various laws should continue to monitor the developments and revisit their policies and practices as the situation develops.