Reading the ruling from the U.S. Court of Appeals for the Sixth Circuit in Equal Employment Opportunity Commission v. Kaplan Higher Education, it becomes obvious early on which side scored the win. “In this case,” reads the court’s first sentence, “the EEOC sued the defendants for using the same type of background check that the EEOC itself uses.”
The April 9 summary judgment in favor of Kaplan, the education company perhaps best known for providing standardized test preparation, asserted that not only did the commission lack the evidence that Kaplan practiced racial discrimination in its hiring process, but that the commission uses comparable credit checks in its own employment practices. The case is another setback for the commission, which recently had a big discrimination case loss in EEOC v. Sterling Jewelers.
Gerald Maatman Jr., the Seyfarth Shaw partner who represented the defendants in the Sterling case and argued on behalf of Kaplan told CorpCounsel.com that he sees the Kaplan case as “a wholesale rejection of the EEOC’s strategy in trying to demonstrate that hiring screens are discriminatory.”
In the case, the EEOC alleged that the credit checks used by Kaplan in its hiring process screened out more African-American than white applicants, causing a disparate impact in violation of Title VII of the Civil Rights Act of 1964. In order to prove this, the EEOC’s expert witness conducted an investigation using “race raters,” who went through photos of Kaplan applicants and classified them by what racial group they appeared to belong to.
The Sixth Circuit affirmed the opinion of the U.S. District Court in the Northern District of Ohio, which also deemed the EEOC’s methodology for examining the Kaplan records unreliable.
There was also the issue of the similarity between the credit checks used by the EEOC and those used by Kaplan. Maatman said he realized last spring that he “ought to have the right to conduct discovery as to the government’s own practices. It’s to my knowledge the first time a court has allowed discovery of what the EEOC’s screening practices are.”
The commission stated in its most recent strategic enforcement plan that it is set on examining employment screening tools as a mode of discrimination. David Lopez, the general counsel of the EEOC, said in a statement emailed to CorpCounsel.com that although the commission is “disappointed” by the ruling in Kaplan, it is only “evidentiary” and “does not go to the merits of the underlying discrimination allegation made by the EEOC.
“The commission continues to be concerned about the impact of using credit history to screen out worthy applicants for employment and will not abandon its efforts to challenge such practices for their impact on protected groups in appropriate cases,” Lopez’s statement said.
Maatman believes with the Sterling and Kaplan cases, “the pendulum seems be swinging back toward the defense.”
Nonetheless, he advises in-house attorneys to keep watching the EEOC, particularly its upcoming case in the Fourth Circuit against Freeman Companies, an event planning company that the EEOC has accused of discriminating against applicants through the use of credit and criminal history in the hiring process. “Stay tuned and see what’s going on,” Maatman said. “Things are in flux and employers seem to be doing better when they stick to their guns and use their defense rather than buckle under from these threats from the EEOC.”