EEOC Case Against Kaplan Higher Education Tossed

Nick Fishman

employment credit reports

Strike up the band, pop the champagne and raise the roof!!!!  You can’t see me right now, but I’m doing my happy dance.

For the past 2 years we’ve chronicled the EEOC’s case against Kaplan Higher Education in which they alleged that Kaplan’s use of employment credit reports constituted a discriminatory hiring practice.  Today, I’m happy to share that a motion for summary judgment has granted in Kaplan’s behalf and the case has been tossed.  Special congratulations are in order for our outside counsel and labor and employment attorney extraordinaire, Pam Devata from Seyfarth Shaw who defended Kaplan on the case.

Without getting too technical, it appears that EEOC lost the case because the research conducted by their expert witness which concluded that credit reports have a disparate impact on minorities was flawed and without that research, the EEOC’s case fell apart.  I also found it interesting that the judge followed the same line of thinking on the case as Peter Kirsanow did last month at the U.S. Commission on Civil Rights hearing on the use of criminal background checks.  That is without reliable statistical evidence of discrimination, the EEOC’s hard line enforcement won’t stand up in court.

What does this mean for employers?

I think this means that if you have a legitimate business purpose for considering an candidate’s credit report as part of an employment background check or are in a regulated industry and you use these reports in compliance with state and federal guidelines than EEOC doesn’t have a leg to stand on when alleging discriminatory hiring practices.

I’ve included a copy of the ruling below as well as a recap of the case and an earlier favorable ruling on Kaplan’s behalf last November.

EEOC v. Kaplan

District Court Rulings Favor Kaplan Higher Education’s Case

I wanted to post a must-read article Rod Fliegel and Alex Frondorf from Littler Mendelson recently posted about the EEOC’s lawsuit against Kaplan Higher Education Corp. alleging that Kaplan violated their applicants’ Title VII rights by considering credit history information: “Do As I Say, Not As I Do:” EEOC Required to Provide Discovery of Its Employment Practices”. We are proud to know that this case is being defended by our attorney, Pam Devata from Seyfarth Shaw and from what we can draw from this article, she is doing a masterful job. Here are the high points of Kaplan’s efforts thus far.

EEOC’s Use of Credit Reports

  • Kaplan pointed out that the EEOC conducts credit reports on their applicants and asked the district court to compel the EEOC to produce their guidelines on how they use these reports.
  • The EEOC argued that their practices have nothing to do with this case and shouldn’t be considered.
  • The district court sided with Kaplan and instructed the EEOC to produce their guidelines.

Identity of the People Whom They Are Suing on Behalf of

  • The EEOC refused to share the names of the people they are suing on behalf of and Kaplan asked the district court to compel them to do so.
  • This EEOC tactic is similar to the one they employed in the PeopleMark case, where it was later found that the employees at issue were actually hired.
  • Again, the district court ruled in favor of Kaplan

Read the full article

House Keeping Note on the EEOC

Having had a week to digest the EEOC’s most recent guidance on the use of criminal records, it has given me some time to reflect on what the EEOC is doing and perhaps why.  Being able to step back and look at all sides here, I think it is important for me to turn down the rhetoric.

So here goes.  I am absolutely against all forms of discrimination wherever they exist.  I don’t believe anyone should be treated differently because of the color of their skin, their religion, their age, their sexual orientation, etc. That said, while I cannot speak for the entire marketplace, I suppose I am most frustrated because I believe that EmployeeScreenIQ and our clients are doing everything they can to ensure this doesn’t happen; be it disparate treatment or disparate impact.

And while I believe the EEOC mission is honorable, I am disappointed at times in the way they have acted over the last couple years. So here’s my promise.  No more incendiary posts questioning the EEOC or their commissioners in a way that I would not were I sitting across the table from them.  We’re going to continue pointing out what we think is wrong and advocate our positions with the same passion we always have (just nothing inflammatory).

 

Nick Fishman
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Nick Fishman

Nick Fishman is the co-founder of EmployeeScreenIQ, a leading, global employment background screening provider, and serves as the company’s executive vice president and chief marketing officer. He pioneered the creation of EmployeeScreen University, the #1 educational resource on employment background checks for human resources, security and risk management professionals. A recognized industry expert, Nick is a frequent author, presenter and contributor to the news media. Nick is also a licensed private investigator in the states of Ohio and Texas.
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