Please ensure Javascript is enabled for purposes of website accessibility

Federal judge OK’s hiring-checks

Judge faults bias suit by EEOC as a ‘theory in search of facts’

A federal judge in Greenbelt dealt a stinging blow Friday to the U.S. Equal Employment Opportunity Commission’s attempt to cast the use of pre-employment background checks as a discriminatory hiring practice.

The EEOC maintains that criminal and credit background checks have a disparate impact on minority applicants, who comprise a disproportionate percentage of people with criminal histories or poor-credit records. However, Judge Roger W. Titus faulted the agency’s evidence, saying it would “condemn the use of common sense” to let the case against Dallas-based convention coordinating company Freeman proceed in U.S. District Court.

“The story of the present action has been that of a theory in search of facts to support it,” Titus wrote in his 32-page memorandum opinion, granting Freeman’s motion for summary judgment.

The EEOC said Freeman’s use of background checks constituted unintended but real discrimination against more than 130 black and male applicants nationwide, including at least one in Prince George’s County.

While “some specific uses” of background checks may be discriminatory, the judge wrote, EEOC did not present reliable evidence of a disparate impact resulting from any specific practice in this case.

Titus added that the EEOC’s position could have a chilling effect on companies trying to prevent workplace violence and theft.

“By bringing actions of this nature, the EEOC has placed many employers in the ‘Hobson’s choice’ of ignoring criminal history and credit background, thus exposing themselves to potential liability for criminal and fraudulent acts committed by employees on the one hand, or incurring the wrath of the EEOC for having utilized information deemed fundamental by most employers.”

The judge noted that EEOC itself conducts criminal background checks as a condition of employment.

Titus’ decision marked the EEOC’s second federal district court defeat since it announced in April 2012 its intention to challenge criminal and credit background checks in court as potentially violating Title VII’s prohibition on race and national-origin discrimination in the workplace. In January, a federal judge in Ohio gave similar reasons for dismissing EEOC’s lawsuit against Kaplan Higher Education Corp., a company that helps students prepare for standardized tests.

Freeman’s attorney, Donald R. Livingston, said the twin defeats will make it hard, if not impossible, for the EEOC to prevail in future claims alleging background checks have a disparate impact on minorities. Both courts rejected EEOC’s claim that the checks in general have a disparate impact, saying the agency must point to specific parts of the background investigations that incidentally screen out minorities, Livingston said.

“You’ve got to do the work” to prove disparate impact, said Livingston, of Akin, Gump, Strauss, Hauer & Feld LLP in Washington. “It’s not easy.”

Noting that the EEOC has other background-check cases pending, Livingston said it “remains to be seen” whether the agency will be able to point to specific elements or be forced to rely again on its failed general allegation of discriminatory impact.

EEOC spokesman James Ryan said in an email that “while we are disappointed in the judge’s decision, he did acknowledge that certain uses of criminal history or credit information can be discriminatory. We are considering our options.”

Part of the evaluation

EEOC filed suit against Freeman on Sept. 30, 2009, alleging the company had engaged in a pattern or practice of discriminating against black and male applicants by using criminal history as a hiring criterion. The use of the background checks had a significant disparate impact on blacks and men and was neither job-related nor consistent with business necessity, EEOC added.

Freeman defended its use of the checks as necessary to prevent workplace violence, drug use, theft and embezzlement — crimes the company said it had experienced. Freeman said the checks were part of its evaluation of a job candidate’s trustworthiness, reliability and effectiveness, without regard to race or gender.

Freeman CEO Joe Popolo said in a statement Friday that the company, which has thousands of employees and annual revenues exceeding $1.3 billion, feels “vindicated” by Titus’ ruling.

“We made the decision early on to fight this case because we feel strongly that the EEOC had overstepped its bounds,” Popolo added. “We have a very diverse workforce and as such, discrimination laws are extremely important to us and our employees, but twisting them to deny a business the right to make sure its employees and customers are safe from potential criminal or fraudulent acts goes beyond all reason.”

As the lawsuit progressed, EEOC alleged that 83 blacks and men were unlawfully excluded from employment between Nov. 30, 2007, to July 12, 2012, based on criminal checks unrelated to the jobs for which they applied, Titus wrote. The commission claimed that 51 blacks were illegally excluded between March 23, 2007, and Aug. 11, 2011, based on credit-card checks.

Titus, in granting summary judgment, faulted EEOC’s use of national data to show a disparate discriminatory impact, when the applicant pools for jobs at Freeman were local.

The judge also assailed EEOC’s expert testimony on the percentage of Freeman applicants denied jobs, saying the underlying data were flawed because they were not based on a random sample of applicants and did not cover the time periods listed in the complaint.

“The general population pool cannot be used as a surrogate for the class of qualified job applicants, because it contains many persons who have not (and would not be) applying for a job with defendant,” Titus wrote. “Something more, far more, than what is relied upon by the EEOC in this case must be utilized to justify a disparate impact claim based upon criminal history and credit checks. To require less, would be to condemn the use of common sense, and this is simply not what the discrimination laws of this country require.”

The EEOC, in issuing guidance on background checks last year, said employers should base hiring decisions on an “individualized assessment” of an applicant’s fitness for the job, and that a criminal record is relevant only if the conduct involved is “job related for the position in question.”

Pending actions

EEOC has at least two additional background-check lawsuits pending in federal district courts.

In one, EEOC claims that BMW Manufacturing Co. LLC’s used of criminal background check information disproportionately screened out black contractors at the auto manufacturer’s South Carolina facility.

The agency also alleges in the U.S. District Court in Chicago that retailer Dollar General’s background check policy had a disparate impact on black job applicants nationwide. EEOC claims the applicants were denied jobs due to background-check results that were either incorrect or reflected past charges with no relation to the store-clerk positions for which they applied.

BMW and Dollar General deny the allegations.