Discrimination Lawsuit Shows Importance of Employer Policy on the Use of Criminal Records During Background Checks

By Thomas Ahearn, ESR Staff Writer

A recently filed class action lawsuit “ which alleges that one of the largest management consulting firms in the world conducted background checks that discriminated against African-Americans and Latinos“ underscores the importance of employers understanding the U.S. Equal Employment Opportunity Commission (EEOC) policy regarding the use of criminal records during the pre-employment background check process.

According to a story on CNNMoney.com, the lawsuit accuses the firm of violating Title VII of the Civil Rights Act of 1964 by rejecting or firing qualified individuals who have criminal records even when the criminal history has no bearing on the individual’s fitness or ability to perform the job in question. CNNMoney.com reports that the lawsuit alleges the plaintiff had worked as a contract employee for more than a year when, in April 2007, the firm offered him permanent employment. This job offer was then withdrawn “ and the plaintiff’s employment as a contract worker terminated” after the results of a background check revealed that he had been convicted of vehicular homicide after driving while intoxicated a decade earlier.

The worker filed a Charge of Discrimination with the EEOC in November 2007 and the EEOC issued a “right to sue” letter to him on January 2010. The lawsuit, according to CNNMoney.com, seeks to force changes in the management consulting firm’s hiring and retention policies, practices, and programs, restore the worker and others like him to their positions at the company, front and/or back pay and benefits, and litigation costs.

Leading national online background check firm Employment Screening Resources (ESR) targeted the use of criminal reports in its recently released third annual Top Ten Trends in the Pre-Employment Background Screening Industry for 2010 that identifies new trends making a difference such as attorneys, including class action lawyers, focusing more on background checks and old trends evolving as the screening industry matures.

The first of the “Top 10 Trends” ESR will track closely in 2010 concerns the increased focus on whether both credit reports and criminal records promote discrimination. In October 2009, the EEOC filed a lawsuit against a national employer alleging that credit reports and criminal records were being used to discriminate against members of protected groups.

These recent actions should not come as much of a surprise to the background check industry, according to ESR, as there has been a steady drumbeat of concern about both credit reports and criminal records.  While the use of credit reports during background checks has been in the headlines recently due to the damage the economic downturn has done to the credit rating and finances of many job applicants, the use of criminal records during background checks is also coming under closer scrutiny. In 2009, New York passed new laws to ensure that employers were not automatically rejecting applicants with criminal records without considering the individual on their merits.

ESR believe this lawsuit clearly shows why employers should be familiar with discrimination and the critical “No Automatic Disqualification Rule”  when it comes to the use of criminal records during background checks. This rule states that employers cannot deny employment automatically but need a business justification not to hire based upon criminal records. 

The EEOC has made it clear the automatic use of a criminal record without showing a “business necessity” can have discriminatory impact by disqualifying a disproportionate number of members of minority groups. The EEOC’s position when it comes to the use of criminal records: an employer’s policy or practice of excluding from employment on the basis of their conviction records has an adverse impact on Blacks and Hispanics in light of statistics showing that they are convicted at a rate disproportionately greater than their representation in the population. Consequently, the Commission has held and continues to hold that such a policy or practice is unlawful under Title VII (the Equal Employment Opportunity law) in the absence of a justifying business necessity.

According to the EEOC, employers must show that it considered these three factors to determine whether its decision was justified by business necessity:

  • The nature and gravity of the offense or offenses;
  • The time that has passed since the conviction and/or completion of the sentence, and;
  • The nature of the job held or sought.

In other words, employers cannot simply follow a “No one with a criminal record need apply” strategy that statistically could end up having an unfair or discriminatory impact on certain groups of people. Instead, if an applicant has a criminal record, ESR suggests that the employer determine if there is a rational, job-related reason why that person is unfit for that job.  Employer must show that the consideration of the applicant’s criminal record is job-related and consistent with business necessity.

One area ESR think employers need to review their practices is with regards to using automated pass/fail scoring matrixes where job candidates are given a green (pass) light or red (fail) light.  That sort of automation where individuals are judged entirety by their membership in a particular category instead of their personal abilities is precisely the type of process that is likely to get some unwarranted attention in the courts as a discriminatory practice.  This practice presents dangers to employers  both large and small  and they should not be engaging in automated decision making based on background checks. The final say should be left in the hands of human beings.

As a general rule, ESR believes it is a best practice for employers to have written policies on important issues such as possible discrimination through the use of criminal records during background checks. Without such a policy, an employer’s actions in denying employment may become harder to defend, and having no policy also subjects an employer to claims of a discriminatory practice.