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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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  1. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  2. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  3. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

  4. Justice has finally been served. So glad that Dr. Ley can finally sleep peacefully at night knowing the truth has finally come to the surface.

  5. While this right is guaranteed by our Constitution, it has in recent years been hampered by insurance companies, i.e.; the practice of the plaintiff's own insurance company intervening in an action and filing a lien against any proceeds paid to their insured. In essence, causing an additional financial hurdle for a plaintiff to overcome at trial in terms of overall award. In a very real sense an injured party in exercise of their right to trial by jury may be the only party in a cause that would end up with zero compensation.

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