Use of Criminal Background Checks May Violate Discrimination Laws

In an effort to avoid hiring problem employees, employers frequently include criminal background checks as part of the application process. Employers who rely on such information must be careful to avoid practices that might subject them to discrimination lawsuits.

The anti-discrimination laws prohibit employment practices that have an unjustified disparate impact on a protected group, even if the employer did not intend to discriminate. For example, the use of height and weight requirements in law enforcement and firefighting organizations excluded large percentages of women from consideration. Therefore, such requirements are illegal if they are not sufficiently job-related, as the Supreme Court explained in Dothard v. Rawlinson.

Similar considerations apply to blanket exclusions based on criminal history. For example, the Eighth Circuit Court of Appeals found that the Missouri Pacific Railroad's policy of disqualifying any applicant with a criminal conviction other than a minor traffic offense had a disparate impact on Black applicants. The evidence established that in urban areas from 36.9 percent to 78.1 percent of all Blacks would incur a conviction during their lifetimes, while only 11.6 percent to 16.8 percent of all white persons would acquire a conviction. See Green v. Missouri Pacific Railroad Co.

Publications from the EEOC explain its enforcement philosophy in this area. An EEOC fact sheet explains how selection procedures may violate Title VII by having a disparate impact on applicants with protected characteristics. In an informal discussion letter, the EEOC explained that, although Title VII does not override federal background check requirements, it does preempt state or local requirements that have a discriminatory impact. In a policy guidance, the EEOC concluded that a business justification can rarely be demonstrated for blanket exclusions based on arrest records. In a policy statement on use of conviction records, the EEOC states that, where a disparate impact is shown, the employer must show that it considered these three factors: (1) the nature and gravity of the offense or offenses, (2) the time that has passed since the conviction and/or completion of the sentence; and (3) the nature of the job held or sought.

A 2009 study confirms that reliance on old convictions is unjustified. As the authors of the study explain on the National Institute of Justice website in 'Redemption' in an Era of Widespread Criminal Background Checks, after eight years the "hazard rate" (the chance that someone will be arrested) for ex-cons declines to the rate for the general population.

Sometimes, the EEOC overreaches in this area. In EEOC v. Peoplemark, Inc., a federal district court in Michigan awarded the defendant its costs (including attorney's fees) after the EEOC continued to pursue a disparate impact claim based on use of criminal background checks long after it should have realized that it had no case. The company did not in fact a blanket exclusion policy. It had in fact hired several of those with criminal records whom the EEOC purported to be representing in the lawsuit.

California employers should also be aware that state law imposes restrictions on the use of certain convictions. For example, employers are prohibited by Labor Code section 432.7 and 432.8 from making employment decisions based on arrests that did not result in convictions and marijuana convictions that are more than two years old. Civil Code section 1786.18 prohibits investigative reporting agencies from reporting arrests and convictions that are more than seven years old.

UPDATE [1/26/2012]

On January 12, 2012, the EEOC announced a $3.1 million settlement with Pepsi Beverages of a claim that its criminal background check policy had a disparate impact on African American employees. Under Pepsi’s former policy, job applicants who had been arrested pending prosecution were not hired for a permanent job even if they had never been convicted of any offense. The former policy also denied employment to applicants from employment who had been arrested or convicted of certain minor offenses. Pepsi adopted a new background check policy and will offer jobs to those improperly excluded under its former policy.