EEOC Targets Dollar General and BMW for Criminal Background Checks

Angela Preston

EEOC vs. Dollar General & BMW

The EEOC continued its crusade to fight discrimination by way of litigation this week. The agency has filed two lawsuits in federal courts in Illinois and South Carolina, accusing BMW and Dollar General of discriminatory use of criminal background checks. These lawsuits open a new chapter in the continued debate over the use of criminal background checks in the hiring process. The commission is claiming that both companies have implemented criminal background screening policies that have the effect of discriminating against black applicants.

Background on the EEOC Guidance

These cases are the first significant cases to test the commission’s new guidance for the use of criminal background checks. The guidance, issued in April of 2012, has sparked controversy and confusion over when and how criminal background checks can and should be used. The guidance came out on the heels of some substantial settlements, including a $3.1M payout by Pepsi, based on the EEOC’s theory that certain policies, while neutral on their face, have the effect of discriminating against blacks and other minorities. The agency announced earlier this year that it would continue to focus on enforcement of the guidance, suing big employers for systemic discrimination by filing “disparate impact” cases. And true to their word, here are two new cases to test their theories.

The new guidance is a blending of the old standards, and some new “suggested” best practices. In addition to considering the nature of the offense, its relationship to the potential job, and how much time that has passed since the conviction, the new guidance also recommend that employers review each case individually, creating a new requirement for an “individualized assessment.” Employers are being asked to allow every applicant a chance to show why they should be hired despite a conviction. If you had any doubts, the Dollar General case makes it clear that the EEOC intends to enforce a new requirement for individualized assessment, even though Title VII has no such requirement. Conflicts with state and Federal laws are also looming, especially for health care providers, banks, and schools. For more details on the guidance, you can read my original blog post on the topic.

My problem with the guidance is that it puts employers in an untenable position: On one hand, they can be sued by the EEOC under a confusing set of guidelines for conducting criminal background checks. On the other hand, they risk negligent hiring suits from the victims of a violent employee, or fraud, theft and embezzlement.

The EEOC counters that it is not preventing employers from conducting criminal background checks, but it believes that criminal history information is being used to unfairly discriminate. Ex-offenders are not a protected class, but because of ties between arrest and race, the EEOC thinks that criminal background checks discriminate. And most people deserve a second chance. In the current economic climate where jobs are still scarce and there is abundant competition between job applicants, there are plenty of rejected candidates who are ready to test the EEOC’s theory. In the end, the result is more class action lawsuits with multimillion dollar demands.

BMW

In the BMW case, the company re-screened existing employees who were reassigned to work in a different plant based on a change in contractors. Of the 645 workers who were re-screened, 55% were black and 45% were non-black. The complaint alleges that after screening the workers, BMW denied plant access to a total of 88 employees–around 14% of all employees screened. Of those 88 employees, 70 (80%) were black and 18 (20%) were non-black.

According to the complaint, BMW’s policy:

“has been in effect since the opening of the BMW facility in 1994” and “excludes individuals with convictions of the following categories of crime: “Murder, Assault & Battery, Rape, Child Abuse, Spousal Abuse (Domestic Violence), Manufacturing of Drugs, Distribution of Drugs, [and] Weapons Violations.” As further reflected in the written policy documents, “any convictions of a violent nature are conditions for employment rejection,” and “there is no statute of limitations for any of the crimes.”

The complaint says “BMW also excludes from employment individuals with criminal convictions, involving “theft, dishonesty, and moral turpitude” and “makes no distinction between felony and misdemeanor convictions.”

Is this discrimination? Many employers are wondering why BMW is being sued for trying to maintain safe and sensible hiring standards. But the EEOC claims that the disparity in the rates at which black and non-black employees who lost their employment on account of BMW’s criminal history background check policy is statistically significant. BMW, which employs over 9,000 workers in the US, has issued a statement that “BMW believes that it has complied with the letter and spirit of the law and will defend itself against the EEOC’s allegations of race discrimination.”

Dollar General

In the Dollar General complaint, the commission focuses on a hiring matrix designed by the Defendant with its background screening provider that identifies specific felonies and misdemeanors that will disqualify a candidate. The EEOC claims that Dollar General’s matrix violates the guidance because it is not job-related and consistent with business necessity.

Specifically, the complaint states:

Moreover, the policy as applied does not provide for an individualized assessment for those applicants who receive a “Fail” result to determine if the reason for the disqualification is job-related and consistent with business necessity. For example, Defendant’s policy does not allow for consideration of the age of the offender; any actual nexus between the crime and the specific job duties, employee safety, or other matters necessary to the operation of defendant’s business; or to the time or events that have transpired since the offense. If the applicant was convicted of any of the identified offenses in the specified time frames, the employment offer is not made or the conditional offer of employment is rescinded.”

Like BMW, the EEOC looks closely at what types of crimes disqualify candidates:

Some of the felony convictions on Defendant’s matrix which mandate disqualification include: flagrant non-support (disqualified for 10 years); possession of drug paraphernalia (disqualified for 10 years); illegal dumping (disqualified for 3 years). Some of the misdemeanor convictions mandating disqualification include: improper supervision of a child (disqualified for 3 years); reckless driving (allowed 1 charge in 5-year period); failure to file income tax return (allowed 1 charge in 5-year period).

The commission says that out of 344,300 applicants, Dollar General revoked conditional employment offers for 10% of its black applicants, but only 7% of its non-black applicants, between January 2004 and April 2007, creating an improper “gross disparity” based on race. The company has more than 90,000 employees.

Earlier this week, Dollar General issued a statement saying it “prohibits discrimination in its hiring and employment practices.” The retailer said its criminal background checks are “structured to foster a safe and healthy environment for its employees, its customers, and to protect its assets in a lawful, reasonable and nondiscriminatory manner.”

Now What?

Employers are scrambling for answers. Suits like Dollar General and BMW will likely cause more employers to re-evaluate their screening program. We are watching the outcome of these cases carefully, since a ruling in the EEOC’s favor would establish a legal precedent that the guidance current lacks. The guidance is not actually black letter law, but the EEOC has made it clear that it will use its authority under Title VII to sue employers that disregard their recommendations.

In summary, I think we can learn a few things just by studying these complaints. While I don’t believe the EEOC will necessarily prevail on all of these claims, a few issues stand out:

  • If you are using an adjudication or hiring matrix, review the criteria carefully. Consult with your screening company and your counsel. The matrix used by Dollar General is being singled out and is identified in the complaint as a major concern. Both the types of crimes and the amount of time they are considered appear to be in question. For example, a six year drug possession and a paraphernalia conviction are specifically mentioned in the complaint.
  • The EEOC is pushing for the court to require individualized assessment. While it is a suggested best practice in the guidance, the commission clearly wants this practice to be adopted as a legal requirement. The Dollar General complaint focuses on the fact that a matrix could cause someone to “fail” without any further consideration. Unless the employer      has a process (individual assessment) that allows the applicant to explain why they should not be disqualified, the EEOC believes the employer is discriminating.
  • Time limits matter. The BMW complaint points out the BMW’s written policy made no exception or limitation for the number of years that had passed since committing the crime. Consider what time limits are reasonable depending on the job requirements and the severity of the crime.
  • Standard language that is routinely used in written policies is being questioned. Phrases that I see in policies all of the time, such as criminal convictions involving “theft, dishonesty, and moral turpitude” and “convictions of a violent nature” are cited in the complaint. The EEOC is questioning this language as a potential bright line barrier to      employment. Take a look at the language in your policy with your legal counsel.
  • Distinguish between levels of crime. The EEOC notes that BMW “makes no distinction between felony and misdemeanor convictions.”
  • Employers are being targeted not only by size, but by name and reputation. BMW is not a particularly big US employer, but is a household name that resonates in a press release.

Compliance with the guidance is difficult. So difficult that some employers may decide to forgo criminal background checks altogether. The results of such a drastic decision could be catastrophic—I certainly don’t advocate it. I’ll be watching these new cases intently, to see whether the courts agree with the EEOC. Meanwhile, I welcome your questions and comments on what you can do to make sure you are not the next defendant.

 

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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