Big Brother’s Attempt to Handcuff Employers Use of Criminal Background Checks in Hiring.

Employers’ long-standing practice of using criminal background checks to screen potential hires is under heightened scrutiny by both federal and state governments. On April 25, 2012, the Equal Employment Opportunity Commission (“EEOC”) issued guidance on the use of criminal background checks in hiring decisions, warning employers that the use of an applicant’s criminal history in making employment decisions may, in some cases, violate Title VII of the Civil Rights Act of 1964, a federal statute that prohibits employment discrimination based on race, color, religion, sex, or national origin. Some states and local governments have responded to the EEOC’s guidance by passing “ban-the-box” legislation, which limits or prohibits employers from inquiring about an applicant’s criminal history as part of the hiring process. This article will summarize the EEOC’s stance on the use of criminal background checks and suggest ways in which employers can (and should) continue to use background checks without running afoul of the EEOC or state law.

EEOC: Blanket Prohibitions on Hiring Convicts Violates Title VII

The EEOC is charged with enforcing Title VII. On April 25, 2012, the EEOC issued a comprehensive update explaining how employers could violate Title VII by rejecting, outright, applicants with a criminal history. On December 17, 2012, the EEOC approved a Strategic Enforcement Plan for Fiscal Years 2013-2016 with a specific objective to eliminate barriers in recruiting and hiring. With this, the EEOC’s focus is to “target class-based recruitment and hiring practices that discriminate against racial, ethnic and religious groups, older workers, women, and people with disabilities,” which means increased enforcement efforts against employers who refuse to hire individuals with a criminal record without further consideration.

The EEOC explained that, statistically, African American and Hispanic men are arrested in numbers disproportionate to their representation in the general population. Therefore, an employer who has a blanket policy prohibiting the hiring of applicants with a criminal history will, in theory, disproportionately eliminate African American and Hispanic men from the work force. While acknowledging that having a criminal record is not itself a protected category under Title VII, the EEOC asserts that a blanket prohibition on hiring convicts could effectively have a “disparate impact” on the hiring of certain protected groups.

Under a “disparate impact” theory of discrimination, an employer could be liable for violating Title VII if it is proven that an employer’s neutral policy or practice – i.e., a policy or practice that applies to all applicants – disproportionately screens out a protected group and the employer is unable to demonstrate that the policy or practice is “job-related” and “consistent with business necessity.” A neutral policy or practice will generally be deemed to have a disparate impact on a protected group if the hiring rate for applicants within the protected group is 80% or less than the hiring rate for applicants outside of the protected group. For example, if an employer has a policy that prohibits hiring individuals with a criminal history, and the application of that policy results in a hiring rate for one group (Caucasians) of 60% and, a hiring rate for another group (Hispanics) of 45%, the EEOC would likely conclude that the policy discriminates against Hispanics because the selection rate for Hispanics is 75% (45/60) that of Caucasians.

The EEOC has identified two circumstances in which an employer will consistently meet the “job related and business necessity” defense: (1) through the validation of its screening process using the EEOC’s Uniform Guidelines on Employee Selection Procedures (a process that utilizes scientific studies and can be costly for many employers); or (2) by developing a “targeted screening process.” The “targeted screening process” requires that employers consider the following factors when screening applicants’ criminal history:

• The nature and gravity of the crime;
• The time that has passed since the crime; and
• The nature of the job held or sought.

This guidance requires that employers consider whether the crime committed poses concerns to the position applied for before rejecting an applicant based on criminal history. For example, a theft conviction may reasonably concern an employer hiring for a bookkeeping position because the employer could have concerns about the applicant stealing money from the company. However, the risk imposed by a misdemeanor shoplifting conviction would be less than a conviction for embezzlement. On the other hand, a conviction for trespassing would not raise the same concern and would not likely be deemed job-related. Furthermore, the more distanced in time the applicant is from the crime may result in a reduced risk that the applicant would presently engage in similar behavior. Finally, employers must consider the nature of the job duties for the position at issue in evaluating the risk posed by the applicant. For example, the risk posed by an applicant with a conviction for reckless driving would not be job-related, or pose a risk to the employer, if the job did not require the employee to drive for work.

The EEOC further provides that employers can reduce their risk of liability by making “individualized assessments” of employees screened out of the hiring process because of a criminal conviction. The EEOC recommends that employers notify individuals who have been screened out of the process and provide them the opportunity to offer additional information in an effort to convince the employer that the exclusion should not apply. Such information may include inaccuracies in the criminal record, the facts and circumstances surrounding the conduct, subsequent performance history, and rehabilitation efforts. If the applicant chooses not to provide additional information, the employer may make its hiring decision based on the targeted screen results.

It is important to note that the EEOC maintains its long-held position that eliminating applicants who have been arrested, but not convicted, is never job-related and consistent with business necessity. That is because an arrest, by itself, is not proof of criminal conduct and individuals are presumed innocent until proven guilty. The EEOC does, however, acknowledge that while an arrest record, standing alone, may not be used to deny employment, an employer may consider the conduct underlying the arrest to determine whether it makes the applicant unsuitable for the job. The EEOC cautions employers to fully investigate the circumstances of an arrest before using it as a basis to reject an applicant, including confirming that the underlying criminal conduct actually occurred, as part of evaluating the applicant’s fitness for the job.

States Are “Banning-the-Box”

States are jumping on the bandwagon with the EEOC and are “banning-the-box,” which refers to the box on employment applications that requires applicants to indicate whether they have been convicted of a crime. Effective January 1, 2014, Rhode Island will become the fourth state to restrict private employers from asking about criminal history information on an employment application. So-called “ban-the-box” laws are spreading in cities and states across the United States. While most “ban-the-box” legislation currently applies only to government employers and/or contractors, states and local governments are beginning to broaden the ban. In addition to Rhode Island, Hawaii, Minnesota and Massachusetts have enacted private employer “ban-the-box” laws, and cities, such as Newark, New Jersey, Philadelphia, Pennsylvania, Buffalo, New York, and Seattle, Washington are following suit.

While each law is unique and provides various exceptions (including those instances where consideration of criminal history is statutorily required), it seems legislators are responding to the EEOC’s stance that an employer’s outright ban on hiring convicts is per se unlawful. But, no state (nor the EEOC) has gone so far as to impose an outright ban on private employers’ consideration of an applicant’s criminal history after the initial screening process. For example, Massachusetts has “banned-the-box” from employment applications and initial screening decisions, and Rhode Island and Minnesota have banned private employers from seeking criminal history information until the first interview. In Hawaii, employers must wait for criminal history information until after they extend a conditional offer of employment. Similarly, in Seattle and Buffalo, employers must wait until after the initial screening process to ask about an applicant’s criminal history, whereas in Philadelphia, employers must wait until after the first interview before inquiring into conviction history. In Newark, a conditional offer must be made before asking about criminal history.

In line with the EEOC’s guidance, state and local laws have imposed requirements that employers considering criminal history information as a factor in hiring must analyze the job-relatedness of past crimes and consider the business reasons for rejecting the applicant. While Georgia does not have a “ban-the-box” law, employers can learn from the other states’ laws regarding factors that may be considered permissible when considering an applicant’s prior criminal history. Particularly instructive to an employer’s analysis is Seattle’s Ordinance 124201, which states that a “legitimate business reason” for rejecting an applicant based on past criminal history may exist if the underlying conduct:

• Will have a negative impact on the employee’s or applicant’s fitness or ability to perform the position sought or held, or
• Will harm or cause injury to people, property, business reputation, or business assets, and the employer has considered the following factors
  • the seriousness of the underlying criminal conviction or pending criminal charge;
  • the number and types of convictions or pending criminal charges;
  • the time that has elapsed since the conviction or pending charge, excluding period of incarceration;
  • any verifiable information related to the individual’s rehabilitation or good conduct provided by the individual;
  • the specific duties and responsibilities of the position sought or held; and,
  • the place and manner in which the position will be performed.

While certain restrictions and limitations may control the background check process, what is clear is that private employers may almost always consider criminal history at some point in the application process. Employers should, however, be aware if they are subject to laws with “look-back” restrictions, which would narrow the time-span for which criminal convictions could be considered for employment purposes. In Hawaii, for example, employers may only consider convictions within the most recent 10-years. Employers also need to be cognizant that in some places, they could be subject to monetary penalties for failing to comply with “ban-the-box” restrictions (e.g., Newark).

Risk of Negligent Hiring Claims for Failing to Conduct a Criminal Background Check

While the EEOC and some states and cities are seemingly taking an aggressive approach to attack employers’ continued use of criminal background checks in the hiring process, employers should not completely jump ship and eliminate criminal background checks from their hiring toolbox. Under most state tort laws, employers who fail to take reasonable steps to vet new hires could be exposing themselves to negligent hiring claims. Negligent hiring is a claim made against an employer by a party injured by an employee, alleging that the employer failed to take reasonable care in hiring the employee and, therefore, unreasonably exposed the victim to a risk of injury. The theory is that if the employer conducted a criminal history check on the employee, it would have known of the employee’s propensity to engage in the conduct that caused the injury and, therefore, could have prevented the victim’s injury by refusing to hire the employee.

Recently, the Court in EEOC v. Freeman, a case brought by the EEOC against Freeman in the United States District Court of Maryland, confirmed the importance of criminal history information as a factor in the hiring process. In that case, the EEOC challenged Freeman’s use of credit and criminal-background checks after it denied employment to a black female based on her background. The Court held in favor of Freeman, and recognized that “[c]areful and appropriate use of criminal history information is an important, and in many cases essential, part of the employment process of employers throughout the United States.” The Court went on to state that “[e]employers have a clear incentive to avoid hiring employees who have a proven tendency to defraud or steal from their employers, engage in workplace violence, or who otherwise appear to be untrustworthy and unreliable.” To this end, despite Big Brother’s attempts to control the hiring process, employers maintain a duty to investigate the fitness of potential employees, in part, through the discovery of past criminal conduct.

Employer Action: Review and Refine Your Background Check Policy

In light of the EEOC’s guidance, “ban-the-box” legislation, and court recognition that criminal background checks have a place in the hiring process, employers must review and evaluate their background check policies to ensure protection from all fronts. At the very least, employers must determine whether any applicable state or local law limits or restricts their use of criminal history information, and ensure that job applications and employees involved in the hiring process do not run afoul of these laws. Big Brother also requires that employers tailor criminal background checks to the specific positions for which the background check applies to ensure that the screening process is job-related and consistent with business necessity. For reassurance that you are protected and legally compliant, consider communicating with legal counsel to have them assist you in tailoring your background check policies to the specific positions to which the checks would apply and, ultimately, to assist you in avoiding Big Brother’s ‘cuffs.

Published by: Georgia Restaurant Association