Ex-EEOC GC on Background Checks in Hiring Decisions

Note: This story has been updated to better characterize Judge Titus's opinion in the third paragraph.

On August 9, U.S. District Judge Roger Titus in Maryland dismissed an Equal Employment Opportunity Commission lawsuit against Freeman Cos., which the agency claimed was discriminating against minority and male job applicants.

The EEOC said in a September 2009 complaint that the event-services company used discriminatory hiring criteria against minorities by looking at the credit history of some of its job applicants and by considering candidates' criminal history. The agency alleged that Freeman's hiring policies led to disparate impact on proposed class members.

Titus wrote in his opinion that while some specific uses of criminal and credit background checks could be discriminatory, the EEOC gave unreliable expert testimony to demonstrate disparate impact stemming from Freeman's practices.

CorpCounsel.com this week discussed the case with Akin Gump Strauss Hauer & Feld partner Donald Livingston, who was Freeman's lead attorney. The Washington, D.C.-based lawyer is a former EEOC general counsel. The following conversation has been edited for length and clarity.

CorpCounsel.com: How did you get involved with the EEOC v. Freeman case?

Donald Livingston: Prior to EEOC v. Freeman, I'd done a lot of work and thinking on the Title VII ramifications of the use of criminal history information in the hiring process. I'd represented a few clients in some EEOC matters that concerned [the use of criminal history information]. I'd given some testimony at an EEOC meeting as a management representative. I helped work with the U.S. Chamber of Commerce to submit their comments on the EEOC's potential policy guidance, and I served as a liaison with the EEOC on behalf of the American Bar Association.

CC: Is this case part of a major push by the EEOC to challenge employer usage of background checks?

DL: Yes. Some number of years ago, the EEOC launched two initiatives almost simultaneously. One was its systemic initiative that was intended to place more EEOC resources and emphasis on big-picture issues and pattern or practice claims of discrimination. And the second was an EEOC initiative called E-RACE. E-RACE was a race and color discrimination initiative, which, among other things, was intended to attack hiring practices that the EEOC believed had an unfair disparate impact on the basis of race. One of the targets of the disparate impact initiative portion of E-RACE was the use of criminal histories by employers during the hiring process. Freeman was the second lawsuit that the EEOC filed after E-RACE that I know of.

CC: What is the significance of the Freeman decision?

DL: The most significant holding involves the application of the Title VII no-cumulation rule for calculating disparate impact. The court ruled that it's not sufficient for the EEOC to show that a criminal history or a credit check policy as a whole has a disparate impact on a protected group if the policy has specific criteria or procedures that are capable of separation for the purposes of analysis. Instead, the court held that the EEOC must isolate a specific and discrete element that produces the discriminatory outcome. The no-cumulation rule of Title VII was one of two alternative bases for the award of summary judgment for Freeman.

CC: Why should companies be able to use criminal and credit histories when hiring employees?

DL: A company that is hiring a new employee, except in the most unusual situations, doesn't have any first-hand information about the person, their capabilities, whether they can be trusted to perform their jobs in a way which will keep their assets and employees safe, and has to rely on proxy information. That proxy information might be performance evaluations from a previous employer, might be letters of recommendation, it might be educational credentials.

Another piece of proxy information would be whether the person has engaged in violent acts, whether the person has stolen, whether the person has trafficked in narcotics. So, it's an important piece of information that can help the employer determine whether the person is trustworthy.

The court noted that the EEOC itself relies upon criminal history information in making hiring decisions, certainly in making retention decisions within the short period of time after the individual is hired. And the EEOC has an adjudication handbook for how it should deal with these criminal history records. The handbook expresses the EEOC's belief that a history or pattern of criminal activity creates doubts about a person's judgment, honesty, reliability, and trustworthiness.

Private employers use criminal conviction records for the same reason that the EEOC uses criminal history records. And that's to make judgments about the individual's judgment, honest, reliability, and trustworthiness.

CC: Is this issue settled?

DL: It's far from settled. This case doesn't settle any issues concerning the EEOC's initiative or concerning interpretations of Title VII as they might pertain to the use of criminal history records. What it does do is establish one court's view that the no-cumulation rule makes it more difficult for the EEOC to demonstrate disparate impact, because the EEOC has to demonstrate a specific element in the criminal history background process that causes the disparate impact. An employer would then need to demonstrate the job relatedness only of the element that the EEOC or plaintiff has been able to identify as causing disparate impact.

CC: Is there anything else you would like to add?

DL: The court's opinion states that Freeman's criminal background check policy "on its face" appears reasonable and suitable to ensure an honest workforce. And this statement is significant given Justice O'Connor's plurality opinion with the U.S. Supreme Court in Watson v. Fort Worth Bank that a court can find a policy as job related without expert proof or proof of validation, if the linkage between the hiring requirement and the job is obvious. So it appears from the opinion that Judge Titus believed that the linkage between Freeman's hiring requirements and its jobs were obvious, and that had he relied upon Justice O'Connor's opinion in Watson, he would have found that Freeman's policy was job related without Freeman having presented expert proof or proof of validation.