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Changes may prompt review of background check policies

August 14, 2013
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Indiana Lawyer Focus

For more than 20 years, the Equal Employment Opportunity Commission has taken the position that an employer’s use of applicants’ criminal history in making employment decisions may constitute discrimination under Title VII of the Civil Rights Act of 1964, as amended. The underlying premise has always been that because minorities are historically and statistically arrested and incarcerated at higher rates than their representation in the general population, the use of criminal records by employers in making hiring and retention decisions may be discriminatory.

erdel-katherine.jpg Erdel

The EEOC’s enforcement guidance

Citing increased access to criminal history information as motivation, the EEOC issued an updated “Enforcement Guidance” memo on this topic in April of 2012. This past June, the EEOC filed two lawsuits against employers alleging that the employers’ respective criminal background policies violated Title VII. The lawsuits both seem to highlight the EEOC’s increased interest in the potential discriminatory impact of employers’ use of criminal records in employment decisions.

In EEOC v. BMW Manufacturing Co., LLC, pending in the U.S. District Court of South Carolina, the EEOC alleges that BMW’s background check policy disproportionately screened out African-Americans and that the policy is not job related or consistent with business necessity. The second suit, a nationwide lawsuit pending in District Court in Chicago, EEOC v. Dolgencorp (which does business as Dollar General), addresses discrimination charges filed by two rejected black applicants. That suit alleges that Dollar General conditions its job offers on criminal background checks and that the policy results in a disparate impact against blacks.

Indiana law

States, including Indiana, are also showing an increased interest in this area. Though there is no federal law or law in Indiana prohibiting employers from using criminal background information in the hiring process, a new state background check law includes several provisions aimed at limiting the types of information that may be disclosed to employers in Indiana.

Effective July 1, 2013, House Enrolled Act 1033 (2012) permits Indiana residents with restricted or sealed criminal records to state on an employment application that they have not been adjudicated, arrested or convicted of the offense included in the restricted records. On the flip side, the new law prohibits employers from asking about sealed and restricted criminal records, and courts are prohibited from disclosing information related to certain infractions. For example, a court cannot disclose information related to an infraction (which generally includes traffic citations and other minor violations) when the individual has satisfied the judgment and five years has passed since that satisfaction. Criminal history providers may be penalized for violating this law, including up to $1,000 for a first violation, up to $5,000 for a second violation, actual damages, liquidated damages, and costs and attorney’s fees. The text of the bill can be found at: http://www.in.gov/legislative/bills/2012/HE/HE1033.1.html.

Appropriate use of criminal history information

While Indiana law and the EEOC’s Enforcement Guidance provide clear guidance on certain prohibited conduct, many employers are still unclear on what they can and should do to appropriately use criminal history information in the hiring process. In its Enforcement Guidance, which can be found at www.eeoc.gov/laws/guidance/arrest_conviction.cfm, the EEOC concludes that employers cannot exclude an applicant from employment based on an arrest record alone. The EEOC also recommends that “employers not ask about convictions on job applications and that, if and when [employers] make such inquiries, the inquiries be limited to convictions for which exclusion would be job related for the position in question and consistent with business necessity.”

Policy validation under the EEOC’s Enforcement Guidance

The EEOC’s Enforcement Guidance goes on to suggest two methods under which an employer may be able to “validate” that its background check policy and use of criminal records to exclude individuals from employment is job related and consistent with business necessity.

The first involves validation using Uniform Guidelines on Employee Selection Procedures, found at 29 C.F.R §1607. However, the EEOC seems to acknowledge that this particular method is currently unworkable given the limited amount of empirical data on the links between certain conduct, criminal histories and job performance. As a result, most employers will likely need to rely upon the second method to determine whether its policies and practices are job related and consistent with business necessity.

Under the second method proposed by the EEOC, an employer first develops a “targeted screen” that considers, at a minimum, the nature of the crime, the time elapsed since the offense or completion of the sentence, and the nature of the job. After an applicant has been preliminarily disqualified by the screen, the employer conducts an individualized assessment to determine whether the screen, as applied, is actually job related and consistent with business necessity.

For example, if employer XYZ determines that any individual who has been convicted of embezzlement in a business setting in the last five years should be preliminarily disqualified from a job as an accounting department manager, XYZ has likely created a reasonable “targeted screen” that takes into account the three factors required by the EEOC. However, when applicant John Doe applies for an accounting department manager position and is preliminarily screened out because of his four-year-old embezzlement conviction, XYZ must then talk with Mr. Doe and conduct an individualized assessment.

The EEOC provides a list of criteria that employers should consider in the course of an individualized assessment: whether the individual identified in the report is the same individual who has applied for the position; the facts or circumstances surrounding the conduct; the number of offenses; older age at the time of conviction or release; evidence that the individual has performed the same type of work successfully post-conviction; the length and consistency of employment history before and after the conduct; rehabilitation efforts (like education or training); employment or character references or other information regarding fitness for the position; and whether the individual is bonded under a state or local bonding program. Only after considering all of these factors should XYZ make its ultimate decision as to whether or not to hire Mr. Doe.

Simple, right? Not quite. As interest grows in this area and as the courts involved hand down decisions on related cases, additional guidance and examples should be forthcoming. In the meantime, all attorneys, especially those who advise employers, should familiarize themselves with the EEOC’s Enforcement Guidance and HEA 1033 (2012).•

__________

Katherine G. Erdel is a member of Bingham Greenebaum Doll LLP’s Labor and Employment Practice Group, focusing her practice in the areas of discrimination defense, wage and hour advice, general workplace policies, and employment agreements and covenants not to compete. Kate regularly advises clients in these areas and is familiar with background checks, pre-employment inquiries and other employment best-practice issues. Opinions expressed are those of the author.

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  2. Yes diversity is so very important. With justice Rucker off ... the court is too white. Still too male. No Hispanic justice. No LGBT justice. And there are other checkboxes missing as well. This will not do. I say hold the seat until a physically handicapped Black Lesbian of Hispanic heritage and eastern religious creed with bipolar issues can be located. Perhaps an international search, with a preference for third world candidates, is indicated. A non English speaker would surely increase our diversity quotient!!!

  3. First, I want to thank Justice Rucker for his many years of public service, not just at the appellate court level for over 25 years, but also when he served the people of Lake County as a Deputy Prosecutor, City Attorney for Gary, IN, and in private practice in a smaller, highly diverse community with a history of serious economic challenges, ethnic tensions, and recently publicized but apparently long-standing environmental health risks to some of its poorest residents. Congratulations for having the dedication & courage to practice law in areas many in our state might have considered too dangerous or too poor at different points in time. It was also courageous to step into a prominent and highly visible position of public service & respect in the early 1990's, remaining in a position that left you open to state-wide public scrutiny (without any glitches) for over 25 years. Yes, Hoosiers of all backgrounds can take pride in your many years of public service. But people of color who watched your ascent to the highest levels of state government no doubt felt even more as you transcended some real & perhaps some perceived social, economic, academic and professional barriers. You were living proof that, with hard work, dedication & a spirit of public service, a person who shared their same skin tone or came from the same county they grew up in could achieve great success. At the same time, perhaps unknowingly, you helped fellow members of the judiciary, court staff, litigants and the public better understand that differences that are only skin-deep neither define nor limit a person's character, abilities or prospects in life. You also helped others appreciate that people of different races & backgrounds can live and work together peacefully & productively for the greater good of all. Those are truths that didn't have to be written down in court opinions. Anyone paying attention could see that truth lived out every day you devoted to public service. I believe you have been a "trailblazer" in Indiana's legal community and its judiciary. I also embrace your belief that society's needs can be better served when people in positions of governmental power reflect the many complexions of the population that they serve. Whether through greater understanding across the existing racial spectrum or through the removal of some real and some perceived color-based, hope-crushing barriers to life opportunities & success, movement toward a more reflective representation of the population being governed will lead to greater and uninterrupted respect for laws designed to protect all peoples' rights to life, liberty & the pursuit of happiness. Thanks again for a job well-done & for the inevitable positive impact your service has had - and will continue to have - on countless Hoosiers of all backgrounds & colors.

  4. Diversity is important, but with some limitations. For instance, diversity of experience is a great thing that can be very helpful in certain jobs or roles. Diversity of skin color is never important, ever, under any circumstance. To think that skin color changes one single thing about a person is patently racist and offensive. Likewise, diversity of values is useless. Some values are better than others. In the case of a supreme court justice, I actually think diversity is unimportant. The justices are not to impose their own beliefs on rulings, but need to apply the law to the facts in an objective manner.

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