IN KAPLAN, THE EEOC FLUNKS OUT
Employer practices of using credit and criminal background checks to screen potential hires is under heightened scrutiny by the federal government as well as many state and local governments. Yesterday, however, a federal court of appeals dealt a significant blow to the U.S. Equal Employment Opportunity Commission's efforts in challenging credit checks.
The EEOC brought suit against Kaplan, Inc., asserting that the company's use of credit checks in hiring had caused a disparate impact on African-American job applicants in violation of Title VII of the Civil Rights Act of 1964. An Ohio district court granted summary judgment to Kaplan, holding that the report and testimony of the EEOC's expert witness was unreliable and therefore inadmissible. The Sixth Circuit Court of Appeals unequivocally affirmed the dismissal of the EEOC's case, finding that the methodology used by the EEOC's expert witness “flunked” all of the factors considered by the courts in determining whether expert testimony may be admitted. EEOC v. Kaplan, Higher Educ. Corp., No. 13-3408.
Kaplan has a particularly strong rationale for using credit checks, to wit: Some of its students receive financial aid through programs operated by the U.S. Department of Education, which has regulations that circumscribe the manner in which Kaplan employees can access and use students' information – violations of which could subject Kaplan to severe penalties. Moreover, the court of appeals observed that the EEOC had sued Kaplan “for using the same type of background check that the EEOC itself uses.”
The testimony of the same EEOC expert witness in Kaplan is at issue in another case pending before the Fourth Circuit Court of Appeals, which is reviewing a Maryland district court's grant of summary judgment for the employer in an EEOC suit challenging the use of credit and criminal background checks. EEOC v. Freeman, No. 13-2365. Employers, however, also need to be aware of the growing number of state and local laws restricting the ability of employers to ask about the credit and criminal histories of applicants and employees.
If you have any questions about your use of employment background checks, please respond to this email or contact your Elarbee Thompson attorney.