To Check or Not to Check: New EEOC Enforcement Guidance on the Use of Criminal History Information in Making Hiring Decisions

About the Authors:

Jon D. Bible is a professor of business law at Texas State University-San Marcos.

Although employers used to conduct criminal background checks of applicants only for certain positions, e.g., security guard or day care worker, the practice is more prevalent now. The Equal Employment Opportunity Commission (EEOC) recently cited a survey that revealed that 93 percent of employers conduct checks at least in some instances. Some employers don't want anyone with a criminal record working for them at all, regardless of the circumstances. Others are concerned about a problematic employee committing theft or fraud or harming a third party, which could result in a negligent hiring claim. This claim might assert that there were facts that should have alerted the employer to the need to conduct a check, which, if it raised red flags, would have led the employer not to hire the applicant. That résumé fraud - lying about one's background, including whether one has a criminal record - is so rampant today, and that the Internet has made it easier to conduct criminal history checks, are additional reasons why more employers are doing so. Although some employers disqualify only for some offenses and/or not for those that occurred fairly recently, some ban the hiring of anyone with a criminal conviction, or even arrest, record.

At the same time, an employer covered by Title VII of the 1964 Civil Rights Act (has at least 15 employees) risks being sued for disparate treatment or disparate impact discrimination based on its criminal history policy. Under the former theory, liability can be imposed for treating people differently based on a protected trait (race, color, religion, national origin, or sex), e.g., hiring a white person but not a Hispanic with comparable criminal histories. The disparate impact theory prohibits policies that have a disproportionate impact on a protected group and are not justified as being job related for the position and consistent with business necessity. Because African-Americans and Hispanics are arrested and convicted more often than whites, a policy of excluding applicants with a criminal history could run afoul of this theory.

Roughly 20 years ago, the EEOC enacted guidelines on how employers could comply with Title VII in using criminal history information in making a hiring decision. In April of 2012, the EEOC published new Enforcement Guidance (the Guidance) - the focal point of this article - that goes beyond anything it had previously said. After several false starts, and by a 4-1 vote of the commissioners, the EEOC acted in recognition of the fact that its prior policy statements, which appeared when the Internet was in its infancy, needed to be updated. That the EEOC had just months before announced a $3.13 million settlement with Pepsi Beverages involving charges of discrimination in its background check policy also, no doubt, made it believe employers would welcome fresh, more detailed advice. The Guidance focuses on race and national origin discrimination, the Title VII protected classes that the EEOC has decided are most often implicated in the use of criminal history in employment decisions.

No sooner had the Guidance appeared than interest groups began protesting it. The main complaint is that it puts employers in a Catch-22. If employers adhere to its strictures and do not use criminal history information in at least some instances, they risk losses from employee theft and fraud and in a negligent hiring claim. As well, some states mandate criminal background checks for certain positions. But if they ignore the Guidance, they risk being challenged for disparate treatment or impact by the EEOC and, down the road, a hefty damage award or settlement. Oddly enough, the Guidance does not even mention the negligent hiring conundrum.

The EEOC maintains that its Guidance does not reflect any change in its fundamental positions on criminal record exclusions. The differences are that it discusses disparate treatment and impact more fully, gives examples of both forms of discrimination, and better explains how the EEOC analyzes the "job related and consistent with business necessity" standard for criminal record exclusions. In one of its most controversial statements, the Guidance provides that federal laws that restrict employing people with certain records afford a defense to a Title VII claim but that state and local laws are preempted if they permit any act which would be unlawful under Title VII. Thus, if an employer adopts an exclusionary policy to comply with state or local law, it is not shielded from liability if the policy does not meet the job-related standard; stated differently, an employer could violate Title VII, as construed by the EEOC, if it rejects someone based on a criminal history background check required by state or local law.

The Guidance also notes that the Uniform Guidelines on Employee Selection Procedures provides that employers should maintain information on the adverse impact of their employment selection procedures, and that if an employer fails to do so, the EEOC may draw an inference of adverse impact of the selection process.

Excluding its 167 often lengthy footnotes, the Guidance is over 20 pages long. The first few pages provide background: the disparity in the arrest, conviction, and incarceration rates of African-Americans and Hispanics versus whites; sources from which criminal history data can be obtained, e.g., court, law enforcement, and correction agency records, registries and watch lists, state criminal record repositories, and the Interstate Identification Index of the Federal Bureau of Investigation; and a discussion of the disparate treatment and impact theories and how to avoid liability under both. In the latter discussion, the Guidance notes that evidence of a racially balanced workforce is not sufficient to disprove disparate impact. After this overview, the Guidance gets into specifics involving arrest and convictions.

Arrest Records

Even today it is not unusual for an application form to ask if an applicant has ever been arrested on a criminal charge. Some add the caveat "other than for a minor traffic offense"; some do not. The Guidance, however, states that

The fact of an arrest does not establish that criminal conduct has occurred. Arrests are not proof of criminal conduct. Many arrests do not result in criminal charges, or the charges are dismissed. Even if an individual is charged and subsequently prosecuted, he is presumed innocent until proven guilty. . . .
Another reason for employers not to rely on arrest records is that they may not report the final disposition of the arrest (e.g., not prosecuted, convicted, or acquitted). . . . Arrest records also may include inaccuracies or may continue to be reported even if expunged or sealed.

The example involves an African-American man arrested, but not prosecuted, for disorderly conduct when he accused a police officer of stopping him for "driving while black" in a white neighborhood. If his employer found the arrest in a background check conducted after he sought a promotion and rejected him for that reason alone, Title VII would be violated.

The Guidance adds than an arrest "may in some circumstances trigger an inquiry into whether the conduct underlying the arrest justifies an adverse employment action." It counsels employers to make a fact-based analysis of this issue. The example involves an employee fired by a school district after it found that his explanation of how he happened to have touched several young girls was not credible; he was also arrested on various charges. He argued that his firing was illegal because there was no conviction, but the EEOC concluded that Title VII was not violated because the employee was fired for the underlying conduct, not the fact of the arrest.

Convictions

According to the Guidance, given the procedural safeguards in the criminal justice system, "a record of a conviction will usually serve as sufficient evidence that a person engaged in particular conduct." The caveats are that there may be evidence of an error in the record, an outdated record, or some other reason for not relying on the fact of the conviction; a database could, for example, continue to report a conviction that was later expunged or one for a felony that was later downgraded to a misdemeanor.

In deciding whether a policy has a disparate impact, the EEOC will examine the text, associated documentation, and information about how the policy was implemented. It will consider which offenses were reported to the employer, e.g., all felonies, all drug offenses; whether convictions (including sealed or expunged), arrests, charges, or other criminal incidents were reported; how far back in time the reports reached; and the jobs for which background screening was conducted. Whether the employer has a reputation for excluding people with criminal records will be examined, and training documents used by the employer will be relevant in this inquiry. Finally, although the EEOC takes the position that national data regarding the disparate impact of criminal record exclusions affords a basis for investigating a disparate impact charge against an employer, it will give the employer an opportunity to exonerate itself by showing that African-Americans and Hispanics are not arrested or convicted at disproportionately higher rates in its geographic area.

The EEOC asserts that an employer is more likely to objectively assess the relevance of a conviction if it learns of that fact after it knows the applicant's qualifications. Accordingly, the Guidance recommends that employers not ask about convictions on applications and that, if and when an inquiry is made, it be limited to convictions for which exclusion would be consistent with business necessity. Employers will meet this standard if they: (1) validate the criminal conduct screen per Uniform Guidelines on Employee Selection Procedures standards, or (2) develop a targeted screen considering the nature of the crime, time elapsed, and nature of the job (criteria derived from a court decision) and individually assess people excluded by the screen. This assessment would consist of notice to the applicant that he or she has been screened out due to a conviction and a chance for that applicant to show that the exclusion should not be applied to him or her.

Regarding the nature of the crime, an employer should consider the harm it caused, e.g., theft causes property loss; the legal elements involved, e.g., felony theft involves deception, threat, or intimidation; and whether it was a felony or misdemeanor. As for the time elapsed, while permanent bans for any offense are not consistent with business necessity, only a case-by-case determination that might involve studies on how much the risk of recidivism declines over time can determine whether the duration of an exclusion will be sufficiently tailored to satisfy the business necessity standard. Finally, the third criterion, the nature of the job sought, should involve an identification of the essential functions of the job, level of interaction with co-workers and others, environment in which the job duties will be performed (out of doors, private home, etc.), and amount of oversight involved.

The Guidance states that individual assessments are not required in all cases but can help employers avoid Title VII liability by allowing them to consider more complete information on applicants. Besides allowing someone to show that he or she was not correctly identified in the criminal record or that the record is otherwise inadequate, other relevant evidence includes:

  • The facts or circumstances surrounding the offense or conduct;
  • The number of offenses for which the individual was convicted;
  • Older age at the time of conviction, or release from prison;
  • Evidence that the individual performed the same type of work, post conviction, with the same or a different employer, with no known incidents of criminal conduct;
  • The length and consistency of employment history before and after the offense;
  • Rehabilitation efforts, e.g., education/training;
  • Employment or character references and any other information regarding fitness for the particular position; and
  • Whether the individual is bonded under a federal, state, or local bonding program.

If an employer shows that its policy is job-related, a plaintiff may still prevail by showing that there is a less discriminatory alternative that serves the employer's goals as effectively as the challenged policy but that the employer refused to adopt.

The Guidance also discusses hiring policies in industries that are subject to specific laws regarding criminal convictions, e.g., security screener, federal law enforcement official, and bank employee.

Best Practices

The Guidance offers the following best practices for employers:

  1. General
    • Eliminate policies or practices that exclude people from employment based on any criminal record.
    • Train managers, hiring officials, and decision makers about Title VII and its prohibition on employment discrimination.
  2. Developing a Policy
    • Develop a narrowly-tailored written policy and procedure for screening applicants and employees for criminal conduct.
      • Identify essential job requirements and the actual circumstances under which the jobs are performed.
      • Determine the specific offenses that may demonstrate unfitness for performing such jobs.
        • Identify the criminal offenses based on all available evidence.
      • Determine the duration of exclusions for criminal conduct based on all available evidence.
        • Include an individualized assessment.
      • Record the justification for the policy and procedures.
      • Note and keep a record of consultations and research considered in crafting the policy and procedures.
    • Train managers, hiring officials, and decision makers on how to implement the policy and procedures consistent with Title VII.
  3. Questions about criminal records
    • When asking questions about criminal records, limit inquiries to records for which exclusion would be job-related and consistent with business necessity.
  4. Confidentiality
    • Keep information about applicants' and employees' criminal records confidential. Only use it for the purpose for which it was intended.

Major Concerns about the Guidance

The U. S. Commission on Civil Rights heard from stakeholders on December 7, 2012. Several witnesses expressed concerns about the Guidance. A Society for Human Resource Management spokesperson stated that it "places employers between a rock and a hard place" in that they could lose their license and/or be open to liability if they do not comply with state or local laws mandating criminal background checks for certain jobs, e.g., health care professional, day-care provider, teacher, police officer, and firefighter. He also said that the interpretation of disparate impact makes employers vulnerable to an EEOC investigation any time they take an adverse action against people of certain races or national origins based on a criminal background check even if they have made an individualized assessment; in effect, this makes criminal convictions a new protected status. Noting that it is unclear how finding disparate impact based on national data can be reconciled with the concept of individualized assessment, he sought clarification of this issue.

Other spokespeople complained that the Guidance places an undue burden on smaller employers and that it is unclear when individualized assessments are necessary and bright-line rules are permissible. A Heritage Foundation speaker claimed that, when it passed Title VII, Congress did not authorize the EEOC to promulgate regulations; despite this, EEOC guidance has become de facto regulations. Other critiques are that the statement that an arrest may "in some cases" trigger an inquiry into whether the underlying conduct justifies an adverse employment action is hardly a model of clarity, and the examples do not pin down when these circumstances exist. The same criticism can be raised about the statement that a conviction will "usually" serve as evidence that a person engaged in particular conduct. As well, although the Guidance states that the EEOC will closely examine whether an employer has a reputation for excluding people with criminal records, it is not explicit on how reputation will be proved.

Conclusion

In sum, the Guidance is useful in many respects. It shows employers who use criminal history information in making hiring decisions how to withstand a disparate treatment challenge to that practice. It explains the origins and evolution of the controversial and difficult-to-understand disparate impact theory and is replete with data - far more so than prior iterations of the Guidance - showing that criminal background check policies are susceptible to attack under that theory. And it gives employers updated advice on how to avoid liability under the theory.

But the Guidance is also problematic. It is vague in many areas. Employers, especially smaller ones, may find it difficult and expensive to follow. Marshaling social science research, deciding how long a ban should last and for what crimes, and individually assessing applicants, particularly in industries with a high turnover rate, will not be easy tasks to carry out. The EEOC must also be faulted for not acknowledging the risk to an employer if it fails to conduct a criminal history check on a new hire who harms a third party. Plaintiffs often seek ways to go after the deep pocket if an employee harms them; the goal of a negligent hiring claim is to reach those with the money, especially if the employee caused the harm while acting outside the scope of employment. Such conduct is actionable in a negligent hiring claim.

Until the Guidance is clarified or discarded, employers have little choice but to make, with the aid of counsel, a cost-benefit assessment of how to proceed. Much will depend on the size of their workforce, nature of their employment positions and risk of harm to third parties that these entail, constraints imposed by state and local law, the extent to which minorities versus whites are disqualified from employment in their geographic area, how willing the employer is to gamble that it can steer clear of an EEOC investigation, and whether it has the time, money, and will to comply with the Guidance in all respects. That an employer has carefully analyzed the issue should stand it in better stead if the policy it develops is challenged. Finally, if an employer decides not to comply with some parts of the Guidance, it can take some comfort in the fact that, just as they are free to ignore rules promulgated by any administrative agency, courts do not always honor the policy statements of the EEOC.

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