BMW Settles with the EEOC for a Hefty $1.6M

Angela Preston


One of the high profile class action cases we’ve been tracking in the wake of the EEOC enforcement guidance on criminal background records in 2012 has just settled. BMW has agreed to pay out $1,600,000 to claimants and offer to rehire the 56 plaintiffs in the case brought by the EEOC. The claimants sued BMW in June of 2013, alleging race discrimination in its hiring practices—specifically its use of criminal background checks. Those individuals, if rehired, must be reinstated without any loss of seniority, and will be given credit for increases in rank, wages and benefits over the time period of the case.

The consent decree is a 3 year agreement, and it applies to hiring at Defendant’s Facility in Spartanburg County, South Carolina. It includes contractors hired by third parties referred in the decree as “Logistics Labor Providers.” You can read the full text of the decree here.

The case was contentious, and the battles over discovery and BMW’s fight to expose the EEOC’s own hiring practices were frequent topics of legal watchdogs and bloggers. The EEOC’s beef with BMW centered on its criminal background check policies, which the agency claimed were overly broad, contained blanket exclusions, and had a discriminatory impact on minorities. The complaint argues that BMW’s criteria violated Title VII of the Civil Rights Act of 1964 and failed to follow the Commission’s guidance: “BMW also excludes from employment individuals with criminal convictions, involving “theft, dishonesty, and moral turpitude” and “makes no distinction between felony and misdemeanor convictions.”

The case’s conclusion is noteworthy for its detail in describing the EEOC’s expectations for individualized assessment, a new concept introduced in its 2012 enforcement guidance.  Individualized assessment has become a new buzzword in EEOC compliance, notable in part because the Commission’s guidance is frustratingly vague on how employers are supposed to apply what I would argue has become a de facto requirement.  The process outlined in the decree is laborious, but at least it sheds some light on what the Commission has in mind.

Individualized Assessment

The decree describes a process that includes written notice of potential disqualification, a verbatim description of what criminal record is at issue, and a verbal or written invitation to discuss the merits. The applicant then has 21 days to respond. That’s right—21 days.

If the EEOC expects the 21 day response time to become the new “standard,” many employers are going to struggle. It’s too early to tell, but the EEOC may be holding BMW to an exceptionally high standard in the wake of the litigation. By comparison, the Fair Credit Reporting Act requires similar notice provisions for the accuracy of reported information, but courts have found that between five and ten business days is a reasonable wait. It seems unlikely that most employers will be able to hold jobs open for a 21 day waiting period.

Carve out for Pending Charges

One potential nugget of good news in the decree is the statement that “Defendant and Logistics Labor Provider may, however, postpone an offer of employment to any individual with a pending charge based on the conduct that is alleged in the underlying charge, pending final resolution of the charge”.  In other words, it appears that the EEOC is making an allowance for employers to hold back or potentially rescind conditional offers to candidates with pending charges as long as the questions about eligibility are based on the underlying conduct.

Look for a more detailed analysis, practice tips, and reaction to the decree in the coming weeks. Until then, some of the details spelled out in the decree follow.

Record Keeping:

The decree imposes extensive new record keeping responsibilities for BMW, including tracking practically every document or note going forward that pertains to hiring decisions made over the next four years. EEOC is demanding copies of any criminal record reports used to disqualify candidates going forward, as well as specific details surrounding hiring decisions. BMW and contractors have 30 days to make changes to its hiring policies and manuals, and create a database in Excel format identifying any candidates who are disqualified as a result of the new process.


BMW has to provide hiring managers 2 hours of compliance training on the use of criminal background records.

Individualized Assessment-the Details

The decree outlines a detailed procedure that BMW must adhere for review of criminal records and the individualized assessment process.  The following is excerpted directly from the decree.

  • Defendant and Logistics Labor Provider shall not decline to hire any job applicant or otherwise disqualify any individual from employment in a logistics position because of criminal arrests or charges of any type if such arrests or charges did not result in a conviction.
  • Defendant and Logistics Labor Provider may, however, postpone an offer of employment to any individual with a pending charge based on the conduct that is alleged in the underlying charge, pending final resolution of the charge.
  • Prior to declining to hire or otherwise disqualifying any job applicant for a logistics position based on criminal history, Defendant and Logistics Labor Provider shall follow these procedures:

(a) Defendant and Logistics Labor Provider shall exercise due diligence to evaluate and apply all information relevant to the application of Defendant’s current criminal background check guidelines.

(b) Defendant or Logistics Labor Provider shall provide written notice to the Applicant that contains the following:

(i) a statement that the Applicant is being evaluated for hire;

(ii) a verbatim description of the specific information regarding criminal history of the Applicant that is the basis of Defendant or Logistics Labor Provider’s consideration not to hire the Applicant;

(iii) an invitation to the Applicant to communicate with Defendant or Logistics Labor provider (verbally and/or in writing at the Applicant’s election) about the conviction and his/her appropriateness for employment in a logistics position, including explicitly inviting the Applicant to provide information concerning the accuracy of the criminal history information in the possession of Defendant or Logistics Labor Provider, the circumstances of the offense, any employment history and rehabilitative efforts subsequent to the conviction, any references from other persons concerning his/her suitability for employment, and any other information that the Applicant believes bear on his/her suitability for employment and should be considered by Defendant or Logistics Labor Provider before making its final decision to deny employment; and,

(iv) identification of the name, title and contact information (including telephone number, e-mail and business address) of the official with whom the individual should communicate regarding the above information.

(v) Timing/delivery of notice – The notice shall be delivered to the Applicant by reasonable means, and shall afford the Applicant a period of not less than twenty-one (21) days, within which he/she may contact Defendant or Logistics Labor Provider before the contemplated adverse hiring decision is made final.

(c) Defendant or Logistics Labor Provider shall evaluate all relevant information provided by the applicant for the purpose of adhering to the requirements of this Consent Decree.

(d) Defendant or Logistics Labor Provider shall maintain records of the information provided by the Applicant pursuant to the procedures of Paragraph No. 11(b)(iii) and any other records or documents reviewed or considered by Defendant in making the hiring decision.

(e) Before becoming final, all decisions to decline to hire or otherwise disqualify an Applicant due to criminal history shall be reviewed by an official designated by Defendant or Logistics Labor Provider to implement and monitor the application of criminal background check guidelines. The official shall have independent authority to reverse the decision. The purpose for the review shall be to assess whether the proposed decision to decline to hire or otherwise disqualify an Applicant is consistent with the requirements of Defendant’s current criminal background check guidelines and this Consent Decree.

Defendant shall create and maintain narrative documents setting forth any and all information it received concerning applicant criminal history that was not reflected in a written document when the information is received by Defendant. The narrative documents shall identify the name of the Applicant, the date the information was received, the identity and contact information of the source, and the specific information received. The narrative documents shall also be retained in accordance with this paragraph.

In entering into this Decree, BMW expressly denied any liability and wrongdoing. Check back for more analysis of this case.

Angela Preston
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Angela Preston

Vice President of Compliance & General Counsel at EmployeeScreenIQ
Angela Preston has more than 20 years as a licensed attorney and over 10 years in the background screening area. She serves on the Board of Directors of the National Association of Professional Background Screeners (NAPBS), is a member of the NAPBS Background Screening Credentialing Council (BSCC), and is actively involved in the Society for Human Resource Management (SHRM) and ASIS International. Angela is also a member of the Ohio State and Columbus Bar Associations. Angela has direct oversight and management of compliance programs, and will provide guidance in complex legal matters including state and federal legislation, EEO law, client education, adjudication, pre/adverse action process, NAPBS Accreditation and client and vendor contract management.
Angela Preston
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