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Recent EEOC cases and the importance of employee background checks

backgroundcheckIt’s a good time for employers to review hiring protocols and their use of background checks. Last summer, the Equal Employment Opportunity Commission (“EEOC”) filed a series of class action lawsuits against large employers for violating Title VII of the Civil Rights Act based on unlawful use of background checks. Among the EEOC’s chief complaints in two of the cases were allegations that employers’ background check policies had an adverse impact on the basis of race.

According to the EEOC’s April 2012 revised Guidance, employers must perform an individualized assessment and engage in dialogue with an individual with a criminal background before disqualifying him or her from employment. In addition, employers must rely on federal, not state restrictions to defend a decision to disqualify an applicant based on his or her criminal records. Older versions of the Guidance cited statistics showing that minority groups are convicted at a disproportionate rate than their representation in the population, and that excluding individuals from employment based on their criminal background had a disparate impact on these groups. This data influenced the EEOC’s requirement that employers may justify a practice that results in a disparate impact by demonstrating a “business necessity” for that practice. Under Title VII, employers must consider three factors (also known as the “Green Factors” in order to prove “business necessity” when making its decision:

  1. The nature and gravity of the criminal offense(s);
  2. The length of time that has passed since the conviction and/or completion of the sentence;
  3. The nature of the job held or sought.

Furthermore, where an applicant was previously arrested but not convicted, the EEOC requires employers to evaluate whether or not the arrest record reflects the applicant’s conduct.

The new guidance extends the law by offering employers examples of evaluation procedures to use for applicants with a criminal record. Some of the suggested practices include:

    1. Targeted Screens to Satisfy Business Necessity: Employers may use a tailored internal policy which outlines the types of convictions that will disqualify an individual from employment.
    2. Targeted Screens Accompanied by Individual Assessment: Employers may include an individualized assessment of the individual and the crime in question. An Individual assessment would allow the employee to explain the circumstances surrounding their conviction and why it should not prevent them from employment. If the individual does not respond to the employers inquiries, the employer can makes its decision without the information.
    3. Arrest Record Requires Inquiry into Conduct Alleged: Employers should assume an individual is innocent until proven guilty; therefore the applicant’s arrest record alone may not be used as a basis for disqualification from employment. However, employers may base their decision on the conduct that underlies the arrest and whether or not that behavior would negatively influence the individual’s performance.
    4. State and Local Restrictions: As stated earlier, the EEOC strictly forbids employers from establishing” business necessity” based on compliance with state and local laws that prohibit hiring employees with a criminal background. The new Guidance requires that employers must use the Green Factors to demonstrate “business necessity” when disqualifying candidates from employment.

Employers who conduct background checks, (especially those with multiple hiring locations and that have a large pool of applicants) should review the Guidance’s best practices to ensure they are in compliance with Title VII. They should also work with HR and training managers to develop individualized policies that can assess the relevancy of an applicant’s prior experience and conduct on a specific position.

About the Author

Mark Stiles is an Assistant Vice President at William Gallagher Associates and a member of the ExecutiveRisk Practice. He works with private and nonprofit organizations to assist them and their executives with protection for their exposures to Directors’ & Officers’ Liability, Employment Practices Liability, Fiduciary Liability, Crime, Kidnap & Ransom and Extortion.

617.646.6743 | Mstiles@wgains.com | Connect with Mark on LinkedIn |

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