On June 11, 2013, the Equal Employment Opportunity Commission (“EEOC”) filed two separate lawsuits against Dollar General and BMW Manufacturing Co. LLC, accusing each company of discriminating against Black job applicants through the improper use of criminal background screens. The aggressive positions taken by the EEOC in these cases demonstrate the agency means business with respect to cracking down on criminal background check policies that it feels are not consistent with its April 25, 2012 enforcement guidance on the use of criminal conviction and arrest records in employment decisions. The lawsuits also underscore the importance of reviewing existing policies in light of the EEOC’s emphasis on this issue.

For decades, the EEOC has taken the position that criminal background check policies pose a particular threat of adverse impact discrimination against Black and Hispanic job applicants in light of statistics showing that they are convicted at a rate disproportionally greater than their representation in the population. The agency’s first written policy guidance on the use of criminal background screens, published in 1987, explains that “the Commission has held and continues to hold that [criminal background check policies are] unlawful under Title VII in the absence of a justifying business necessity.” In April 2012, the EEOC issued new guidance on the topic (click here to read our April 30, 2012 blog entry on the EEOC’s guidance). Technically, the new guidance did not establish new rules. It undoubtedly illustrates, however, the increased scrutiny under which EEOC is reviewing criminal background check policies such as those at issue in the Dollar General and BMW lawsuits.

For example, according to the EEOC’s complaints, neither Dollar General nor BMW had in place criminal background check policies that include a blanket prohibition against hiring individuals with criminal histories. Rather, BMW’s policy allegedly excluded only individuals convicted of certain types of crimes, such as those involving violence, drugs, weapons, theft, dishonesty or moral turpitude. Similarly, Dollar General’s policy allegedly excluded only individuals convicted of certain types of crimes, and also took into consideration the length of time since the conviction took place. Neither policy considered arrest records. In both cases, the EEOC claims that the criminal background check policies operate to exclude disproportionate percentages of Black applicants, and cites to statistics purportedly based on actual applicant data (as opposed to presuming adverse impact based on general population statistics). The EEOC also alleges in both cases that the employer has not demonstrated that the use of its criminal background check policy is job-related and consistent with business necessity.

The EEOC position on joint employment in the BMW case, and its insistence in Dollar General on making individualized determinations – something the agency emphasized in its April 2012 guidance – should be of particular interest to employers, especially those who use contractors and/or have large applicant populations. In BMW, the claimants were Black employees of a contractor that provided logistics services to BMW. BMW required these individuals to go through its criminal background check in order to work at the BMW warehouse. EEOC claims that BMW was a joint employer of these individuals, and therefore could be liable under Title VII even though they never applied for work directly with BMW. In Dollar General, the EEOC takes the position that the company’s use of a “matrix” in its criminal background check policy, which identifies specific felonies and misdemeanors and specifies how recent these convictions must be before they are deemed to disqualify an applicant, is impermissible because the “matrix” does not allow for “an individualized assessment” of each and every applicant with a criminal record.

Additionally, although not at issue in either the BMW or Dollar General case, the EEOC also has been pursuing banks and other financial institutions who use criminal background checks, despite the fact that they are covered by the Section 19 of FDIA. Section 19 prohibits the hiring of any individual who has been convicted of a criminal offense involving dishonesty or breach of trust or money laundering. EEOC takes the position that some financial institutions use background check policies that go beyond the requirements of the Section 19, and therefore the policies run afoul of Title VII because they have an adverse impact on Black or Hispanic applicants and are not justified by business necessity.

According to a 2010 survey by the Society of Human Resource Management, 92 percent of employers use some type of criminal background check policy for job applicants. For many employers, criminal background checks are necessary to prevent employee theft in the workplace, to avoid lawsuits based on the conduct of an employee with a criminal history, and to comply with laws that bar people with criminal records from working in certain occupations. These two new lawsuits illustrate, however, the EEOC’s aggressive enforcement and strict interpretation of its own guidance on the topic of criminal background check policies.