On April 25, 2012, the United States Equal Employment Opportunity Commission (EEOC) issued an updated Enforcement Guidance on criminal background check policies. This guidance serves as a warning to private sector employers that they can be exposed to substantial liability if they do not carefully tailor the use of arrest and criminal conviction records in making hiring and other employment-related decisions. The guidance is not based on any new legal principles and, in fact, is a consolidation of court decisions and the EEOC’s prior policy statements over the last 20 years. The EEOC’s concern is that African Americans and Latinos are disproportionately incarcerated at "rates [two] to [three] times their proportion of the general population[,]" and that they suffer racial discrimination when companies use automatic, across-the-board exclusions based on criminal conduct.

Indeed, the guidance does not have the strength and effect of statute, regulation or force of law. In the courts, it is entitled to only Skidmore deference, Skidmore v. Swift Co., 323 U.S. 134, 140 (1994), under which EEOC guidelines "get[] deference in accordance with the thoroughness of [their] research and the persuasiveness of [their] reasoning." El v. SEPTA, 479 F.3d 232, 244 (3d Cir. 2007) (citing EEOC v. Arab Am. Oil Co., 499 U.S. 244, 257 (1991)). That being said, no employer wants the EEOC knocking at its door. Employers will likely take its recommendations very seriously rather than become a test case.

The guidance focuses almost entirely on disparate impact claims, while briefly discussing disparate treatment claims. An employer is liable for disparate treatment discrimination when it treats protected-group members differently on account of race, national origin or another protected basis. See 42 U.S.C. §??2000e-2(a). For example, disparate treatment liability can be imposed when an employer rejects an African-American applicant with a criminal record but hires a similarly-situated white applicant with a comparable record. Essentially, the guidance’s relationship to disparate treatment claims has virtually remained the same since the 1987 guidance. The EEOC has provided greater detail with respect to disparate impact claims, however, which is the focus of this article.

Under Title VII, disparate impact discrimination occurs when an employer’s neutral policy or practice has a disproportionately negative effect on members of a Title VII-protected group, and the employer fails to demonstrate how the policy or practice is related to the job and consistent with business necessity. See 42 U.S.C. §??2000e-2(k)(1)(A)(ii). Whenever a minority job applicant is excluded from employment based on a criminal record exclusion, the EEOC states that the national data "supports" a finding of disparate impact due to disproportionate minority incarceration rates (although the EEOC stops short of stating that the use of criminal records in hiring is per seevidence of disparate impact). The employer will have the opportunity to show, whether through data or statistical analysis, that its policy or practice does not disproportionately deprive ex-offenders of employment opportunities.

In order to avoid the proverbial "knock at the door," the EEOC makes several recommendations.

Because arrest records do not establish criminal culpability, employers should generally avoid the use of them in employment-related decisions, unless the charges remain pending and the crime, if proven, would disqualify the individual from employment based on job-relatedness and business necessity. An employer will learn about the nature of the underlying offense by conducting an investigation or questioning the individual. The EEOC’s examples indicate that a person can be put on administrative leave pending the outcome of the investigation. Notably, the guidance does not distinguish between charges that are pending with a court date and older charges with no prosecution. The EEOC does grudgingly acknowledge that the underlying conduct, rather than the arrest, can make an individual unfit for employment.

Criminal convictions are strong evidence of culpable conduct (although the EEOC acknowledges there can be errors in criminal records). As best practices, the EEOC recommends that employers not ask about convictions on job applications, and that when such inquiries are made — preferably later in the hiring process (e.g., during the interview) — the inquiries be limited to job-relatedness and business necessity. In fact, a number of cities, counties and states across the country have "banned the box," effectively removing any questions related to arrests or convictions on employment applications. The EEOC strongly forbids blanket "no-hire felon" policies, which exclude from employment individuals with criminal backgrounds.

Instead, employers should develop targeted screens tailored to the particular job based on the so-called Green factors, Green v. Missouri Pac. R.R. Co., 549 F.2d 1158, 1160 (8th Cir. 1977):

The nature and the gravity of the offense or conduct;

The time that has passed since the offense or conduct or completion of the sentence; and

The nature of the job held or sought.

The EEOC does not stop there, however. If the individual would be disqualified for employment under the Green factors, the EEOC also recommends employers conduct an individualized assessment, which it claims "can help employers avoid Title VII liability." Although the EEOC makes clear that Title VII "does not necessarily require individualized assessments in all circumstances[,]" most employers will likely feel compelled to conduct such inquiries. An individualized assessment requires an employer to: (1) advise the individual that he/she may be excluded from employment because of his/her criminal background; (2) provide the individual with an opportunity to demonstrate that the exclusion should not be applied to him/her; and (3) consider whether the additional information provided shows that the policy as applied to the individual is not job-related and consistent with business necessity.

The individual may present evidence of misidentification or inaccuracies in the criminal record. Other relevant considerations include:

The facts or circumstances surrounding the offense or conduct;

The number of offenses for which the individual was convicted;

Older age at the time of conviction or release from prison;

Evidence that the individual performed the same type of work, postconviction, with the same or a different employer, with no known incidents of criminal conduct;

The length and consistency of employment history before and after the offense or conduct;

Rehabilitation efforts, e.g., education/training;

Employment or character references and any other information regarding fitness for the position; and

Whether the individual is bonded under a federal, state or local bonding program.

For the first time, the guidance specifically addresses the interplay between federal and state laws and regulations with Title VII. The guidance acknowledges that, in some industries, employers are obligated to comply with federal statutes and/or regulations that prohibit people who have committed certain felonies from holding employment (e.g., bank employees, federal law enforcement officers, childcare workers in federal agencies or facilities, and port workers, among others). In those instances, the EEOC emphatically states: "Compliance with federal laws and/or regulations is a defense to a charge of discrimination." However, the EEOC makes clear that an employer may not shield itself from Title VII liability by proffering a defense that it complied with state laws or regulations. Notwithstanding, the EEOC is not the final arbiter, and it remains a judicial question whether compliance with a state law or regulation is a valid defense. Until there is judicial review, however, employers will remain uneasy.

The EEOC certainly has the intention to level the playing field for ex-offenders — much to the chagrin of those who argue, incorrectly, that the guidance goes too far — by essentially cloaking ex-offenders with the status of a Title VII-protected group. No doubt, ex-offenders face challenging obstacles to re-enter the workforce and are vulnerable to recidivism. To be sure, the tenacity with which the EEOC seeks to protect them is commendable, but employers have questioned whether the EEOC has stretched Title VII race discrimination beyond the breaking point. The guidance may prove burdensome to some employers, particularly those utilizing electronic application procedures in mass hiring, as they may feel compelled to conduct individualized assessments of each and every applicant deemed ineligible for employment. As stated, while an individualized assessment is not required by Title VII, the EEOC has unequivocally put its stamp on conducting them as a means to avoid liability. Certainly, the manpower required to conduct these assessments and the training of human resources personnel could prove financially prohibitive and a logistical nightmare for most employers.

Employers are now on the precipice — not wanting to receive the EEOC’s knock on the door — forced to choose between conducting background checks and risking Title VII liability or abandoning background checks altogether, which could potentially expose them to liability, in the form of negligent hiring suits, for criminal conduct by employees. It is far too early to ascertain the full impact of the guidance on private sector employers, and whether it will serve its ultimate purpose of ensuring ex-offenders are transitioned back into the workforce.

What we do know today is that for responsible employers, inaction is certainly not an option. When the EEOC knocks, you must answer. ■

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