Pepsi Pays 3 Million after EEOC Finds Hiring Discrimination against African Americans with Background Check Policy

Following an investigation by the U.S. Equal Employment Opportunity Commission (EEOC), Pepsi Beverages has agreed to pay $3.13 million and make major policy changes by providing job offers and training to resolve a charge of nationwide hiring discrimination against African Americans with criminal background checks, according to a press release from the EEOC website. The Commission found that the criminal background check policy formerly used by Pepsi discriminated against African Americans in violation of Title VII of the Civil Rights Act of 1964, and most of the monetary settlement will primarily be divided among black applicants for positions at Pepsi.

The investigation by the EEOC – the agency of the U.S. Government that enforces federal laws prohibiting employment discrimination – revealed that more than 300 African Americans were adversely affected when Pepsi applied a criminal background check policy that disproportionately excluded black applicants from permanent employment. Pepsi’s former criminal background check policy denied job applicants who had been arrested pending prosecution a chance to be hired for a permanent job even if they had never been convicted of any offense. Pepsi’s former policy also denied employment to applicants who had been arrested or convicted of certain minor offenses.

During the course of the EEOC’s investigation, Pepsi adopted a new criminal background check policy.  In addition to the $3.13 million in monetary relief, Pepsi will:

  • Offer employment opportunities to victims of the former criminal background check policy who still want jobs at Pepsi and are qualified for the jobs for which they apply.
  • Supply the EEOC with regular reports on its hiring practices under its new criminal background check policy.
  • Conduct Title VII training for its hiring personnel and all of its managers.

Under Title VII of the Civil Rights Act of 1964, the use of arrest and conviction records to deny employment can be illegal when it is not relevant for the job since it can limit the employment opportunities of applicants or workers based on their race or ethnicity. The EEOC has guidance and policy statements on the use of arrest and conviction records in employment that makes the use of a blanket “no hire” policy that excludes job applicants with criminal records unlawful under Title VII of the Civil Rights Act of 1964 since it discriminates against minority groups with higher rates of criminal convictions.

Employment Screening Resources (ESR) has long educated clients that when employers institute a criminal background check policy, the EEOC recommends that they consider the following three factors to determine whether a decision not to hire an applicant due to a criminal conviction is justified by business necessity:

  • The nature and gravity of the offense.
  • The time that has passed since the conviction and/or completion of the sentence.
  • The nature of the job sought in order to be sure that the exclusion is important for the particular position.

The EEOC continues to hold that, where there is evidence of adverse impact, an absolute bar to employment based on the mere fact that an individual has a conviction record is unlawful under Title VII. The EEOC guidance regarding the use of arrest and conviction records in employment is available at: http://www.eeoc.gov/policy/docs/convict1.html.

Criminal background checks of job applicants are becoming more commonplace. According to a 2010 survey by the Society for Human Resource Management (SHRM) –  ‘Background Checking: Conducting Criminal Background Checks’ – more than nine out of ten employer conduct criminal background checks on some or all job applicants, with approximately 73 percent of employers reporting that they always conduct criminal background checks while 19 percent do so for select job candidates. The SHRM Poll ‘Background Checking: Conducting Criminal Background Checks’ is available at: http://www.shrm.org/Research/SurveyFindings/Articles/Pages/BackgroundCheckCriminalChecks.aspx.

The EEOC press release ‘Pepsi to Pay $3.13 Million and Made Major Policy Changes to Resolve EEOC Finding of Nationwide Hiring Discrimination Against African Americans’ is available at: http://www.eeoc.gov/eeoc/newsroom/release/1-11-12a.cfm.

Employers need to ensure compliance with EEOC guidelines concerning the use of criminal records when performing employment screening background checks. Clients of Employment Screening Resources (ESR) have been receiving information for years on the EEOC approach to criminal records.  This decision underscores why it is so critical for employers to understand that backboard screening is a professional service, and not merely a data vending exercise.  Although a background firm cannot give legal advice, employers access the United States looks to Employment Screening Resources to receive training and educational material to assist in legal compliance.

The Pepsi settlement is proof that criminal background checks of job applicants by employers are coming under greater scrutiny by the EEOC, which is Trend Number 1 of the fifth annual Employment Screening Resources Top 10 Trends in Background Checks for 2012 list just released. To view the list of all ten trends, visit http://www.esrcheck.com/ESR-Top-10-Trends-in-Background-Checks-for-2012.php.

For more information, visit Employment Screening Resources® (ESR) – ‘The Background Check Authority®’ and nationwide background screening firm accredited by The National Association of Professional Background Screeners (NAPBS®) – at http://www.esrcheck.com/ or call ESR toll free at 888.999.4474.

Source:
http://www.eeoc.gov/eeoc/newsroom/release/1-11-12a.cfm

About Employment Screening Resources (ESR):
Employment Screening Resources® (ESR) provides accurate and actionable information, empowering employers to make informed safe hiring decisions for the benefit for our clients, their employees, and the public. ESR literally wrote the book on background screening with “The Safe Hiring Manual” by Founder and CEO Lester Rosen. ESR is accredited by The National Association of Professional Background Screeners (NAPBS), a distinction held by less than two percent of all screening firms. By choosing an accredited screening firm like ESR, employers know they have selected an agency that meets the highest industry standards. For more information about ESR – ‘The Background Check Authority(SM)’ – visit http://www.esrcheck.com/ or call 888.999.4474.

About ESR News:
The Employment Screening Resources (ESR) News blog – ESR News – provides employment screening information for employers, recruiters, and jobseekers on a variety of topics including credit reports, criminal records, data privacy, discrimination, E-Verify, jobs reports, legal updates, negligent hiring, workplace violence, and use of search engines and social network sites for background checks. For more information about ESR News or to send comments or questions, please email ESR News Editor Thomas Ahearn at tahearn@esrcheck.com.