EEOC Lawsuits on the Rise

EEOC Lawsuits on the Rise

The Equal Employment Opportunity Commission (EEOC) has determined that the use of criminal background checks and credit checks in the employment process– and denying candidates with poor scores and backgrounds — could be (and usually is) discriminatory.

The EEOC has been aggressively attempting to enforce its position as was the case in EEOC v. Freeman, filed in the U.S. District Court in Maryland. A family-owned company provides exhibitor services for conventions and employs 3,500 full-time and 25,000 part-time workers. The EEOC sued the company based on its credit and criminal background screening on candidates after it denied a black female a position with the company based on her background. She filed a charge with the EEOC, and the EEOC chose to sue the employer on behalf of the complainant and all candidates who were denied employment on this basis. The court resolved the case in favor of the employer.

What can an employer learn from this case?

The primary shift that some employers should make is to change their policy from a blanket no hire policy based on specific background check fail criteria to looking at the results of background checks on a case by case basis. If we look at the Freeman case for clues as to what they did right, we can draw the following conclusions:

In regard to criminal records:
1. The application did ask for conviction/plea of guilty information (lying was a bright line violation resulting in denial of employment).
2. Background screening was conducted after the decision to hire.
3. Outstanding warrants were reviewed and the applicant was allowed a reasonable amount of time to resolve these.
4. Convictions were only considered if occurred in the last 7 years.
5.  Each offense was evaluated as whether it was job related.
6. Crimes were rated and those of most concern to Freeman were:  violent crimes, destruction of private property, sexual misconduct, felony drug convictions and job related misdemeanors.
7. Recommendations of “not to hire” were reviewed by upper HR officials.

The court stated that “on its face” these policies and procedures appeared to be reasonable. The court was not faced with an employer that had a blanket “no hire” policy for any conviction. Rather it established what appeared to be a serious method by which it attempted to evaluate criminal conduct that actually related to the conduct of their business.

The use of credit was restricted to those handling customer credit cards, money and customer’s property of value. Under all state credit use restrictions recently passed, these positions appear to fall within the guidelines permitting credit history checks for these types of employees. Again, Freeman was quite judicious for what positions they would consider a credit report. In addition, they had certain bits of information that they believed were relevant. Thus the HR people were looking for specific facts.

The Freeman loss does not mean that the EEOC will give up on its effort to attack the use of criminal and/or credit in the employment setting. They currently have open suits against BMW and Dollar General. Most likely, this case will educate the EEOC in how to better pursue these claims.  However, the more sophisticated an employer’s process is, the more difficult it will be for the EEOC or a state equal employment agency to pursue a claim.

Our advice is to make sure you identify the interests of your organization. Once those interests are identified (i.e: financial or safety interests), make sure you carefully screen out anyone who has a demonstrated failure to protect those interests (i.e.: a prior conviction of theft). Going back seven years is the industry standard, unless you are a national financial institution with FDIC requirements or have other industry standards.

You should not rely upon arrests and cannot rely upon anything that has been expunged. However, you can rely on convictions or guilty pleas, and can also rely on misdemeanors and felonies. Using a case-by-case analysis of each conviction will help you when the candidate goes to the EEOC to complain of discrimination. If you have a legitimate, job-related reason for denying a candidate a position, you should prevail.

U.S. Information Search is a national background & substance abuse screening company located in Rockland County N.Y. As a trusted partner to business clients in every state, we have been delivering reliable, current and complete information to thousands of companies since 1999. For more information visit: