Fulfilling a promise it made in its recent strategic plan, the EEOC has launched two highly-publicized lawsuits over the use of criminal background checks in the hiring process, alleging that they discriminate against African-Americans.  A little background is in order.

Disparate Impact Theory

We have described the theory of “disparate impact” on a number of occasions.   Title VII prohibits discrimination in employment based on protected classes such as race, color, national origin, religion, or sex.  However, we know that discrimination comes in two flavors – it may be intentional, or it may involve an employment practice or policy which may have a “disparate impact” upon members of a protected class.  That is, a facially neutral policy or practice may disparately impact people in a protected class.

Criminal Background Checks

One example is criminal background checks. There is nothing in Title VII that deals with people with a criminal history being in a protected class. That is, Title VII does not, by its terms, bar employers from asking job applicants or employees about arrests, convictions or incarceration.

However, in the case of criminal background checks, the EEOC is sensitive to the “disparate impact” which criminal background checks (as well as, for example, credit screening), may have on protected classes, such as African-Americans, and therefore may violate Title VII.  As CNNMoney noted, “[s]tatistically blacks and Latinos face criminal convictions at a rate disproportionately greater than their representation in the population.”

The EEOC’s 2012 “Guidance”

This is not a new issue; the EEOC has been wrestling with this issue since at least as far back as 1987.

On April 29, 2012 we noted that the EEOC  had voted 4-1 to approve its proposed guidance which deals with the use of arrest and conviction records in background checks used for hiring. We reported previously that EEOC Commissioner Lipnic had stated that this was a key upcoming agenda item for the EEOC.

Basically, the approved guidance prohibits the use of criminal record information unless it is “job related” and “consistent with a business necessity defense.” What does this mean? And how will this impact employment practices? And will this put an undue burden on employers?

The EEOC press release referred those interested or concerned to its Enforcement Guidance and a Question-and-Answer (Q&A) document.  These web sites also set forth the EEOC’s suggested “best practices.”

The EEOC’s Two New Lawsuits

The EEOC has now taken two big companies to court claiming that they have violated Title VII by their policies requiring criminal background checks, the first such lawsuits since April 2012, when the commission updated its guidance.

The EEOC sued Dollar General in Illinois federal court and BMW in South Carolina federal court.   In the BMW case, the EEOC claims that “The gross disparity in the rates at which black and non-black employees …  lost their employment on account of BMW’s criminal history background check policy is statistically significant” — 80 percent of the affected employees were African-American at a facility whose workforce was 55 percent black.

With respect to Dollar General, the complaint alleges that it is “statistically significant” that 7 percent of non-black applicants and 10 percent of black applicants have their conditional offer revoked for failing the background check.

Dissent From The Employer Side

Not everyone is happy with the EEOC’s lawsuits (besides the defendants, of course).  A shrill editorial in Investor’s Business Daily declared:

“Aside from the inherent and insulting racism in that presumption — suggesting that black applicants have crime in their DNA because statistics show more have criminal records — the measure puts employers, in this case Dollar General Stores and BMW Manufacturing, in an impossible position. On one hand, they may be sued if they don’t hire criminals to satisfy the EEOC.   On the other hand, if they do hire criminals, they could be sued later by customers and shareholders when employees of whatever race do their jobs under the influence of drugs, get violent with co-workers or customers, embezzle money, or steal from the company.”


We will keep you abreast of this issue as it develops.


The cases:

EEOC v. BMW Manufacturing Co, U.S. District Court for the District of South Carolina, Spartanburg Division, No. 13-01583.

EEOC v. Dolgencorp LLC d/b/a Dollar General, U.S. District Court for the Northern District of Illinois, Eastern Division, No. 13-04307.