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Navigating EEOC criminal history guidance and holding the agency to its initial burden

January 7th, 2014  |  Pamela Wolf

By Pamela Wolf, J.D.

The EEOC’s release late last year of a pair of informal discussion letters identifying what the agency sees as every employer’s legal obligations when using criminal history information to make employment decisions — particularly at the hiring stage — reminds us of the difficulty faced by employers that want to stay out of the agency’s crosshairs, but yet also want to avoid potential liability for failing to discover an applicant’s predisposition to harmful conduct, such as violence, fraud or theft. The letters also underscore some of the confusion surrounding the “individualized assessment” urged by the EEOC’s updated guidance. If the agency comes knocking , employers should keep in mind that in any particular case the EEOC must have a sound basis for imposing those purported employer obligations.

The letters, one dated November 20 and the other October 24, set out the agency’s position that excluding individuals from employment due to criminal records can raise issues under Title VII, especially when the exclusion disproportionately harms people of a particular race or national origin. Should that be the case, the employer is required, according to the EEOC, to show that its policy is necessary in light of:
     • the nature and gravity of the offense or offenses for which the applicant was convicted;
     • the time that has passed since the conviction and/or completion of the sentence; and
     • the nature of the job held or sought.

The test is drawn from EEOC Enforcement Guidance No: N-915.002, the comprehensive, updated agency guidance on the use of criminal history in employment decisionmaking that was issued on April 25, 2012. The test, however, is nothing new — it’s based on the 1977 decision by 8th Circuit in Green v Missouri Pacific Railroad.

Individualized assessment confusion. Both of the recently released letters state that if an employer excludes an applicant from hire due to the applicant’s criminal record, “the EEOC’s position is that you should have an opportunity to provide more facts before the employer makes a final decision.”

Yet there appears to be considerable confusion surrounding this purported position of the agency. According to the updated guidance, an individualized assessment “generally means that an employer informs the individual that he may be excluded because of past criminal conduct; provides an opportunity to the individual to demonstrate that the exclusion does not properly apply to him; and considers whether the individual’s additional information shows that the policy as applied is not job related and consistent with business necessity.”

Last July, the attorneys general of nine states sent a letter to the EEOC challenging the new guidance, particularly in light of the agency’s lawsuits questioning the “use of bright-line criminal background checks in the hiring process” at Dollar General and BMW Manufacturing. “We believe that these lawsuits and your application of the law, as articulated through your enforcement guidance, are misguided and a quintessential example of gross federal overreach. Our states urge you to reconsider your position and these lawsuits.”

The AGs specifically challenged the updated guidance, which they said asserts that the use of generally applicable criminal background checks as a bright-line screening tool in the hiring process will rarely be “job related” and “consistent with business necessity” and thus, will often violate Title VII — a proposition, according to the AGs, that “defies common sense.”

The “EEOC two-step.” EEOC Chair Jacqueline Berrien responded to the AGs’ primary objection to the guidance — its discussion of individualized assessments. The objection, she said, “appears to be premised on a misunderstanding: that the Guidance urges employers ‘to use individualized assessments rather than bright-line screens.’” However, the guidance “does not urge or require individualized assessments of all applicants and employees,” she wrote. According to Berrien, the guidance “encourages a two-step process, with individualized assessment as the second step.”

     1. In the first step, the guidance calls for employers to use a “targeted” screen of criminal records, which considers “at least the nature of the crime, the time elapsed, and the nature of the job — the three factors identified in Green v. Missouri Pacific Railroad, 549 F.2d 1158 (8th Cir. 1977)).”
     2. In the next step, the guidance “encourages employers to provide opportunities for individualized assessment for those people who are screened out,” Berrien stressed. “Using individualized assessment in this manner provides a way for employers to ensure that they are not mistakenly screening out qualified applicants or employees based on incorrect, incomplete, or irrelevant information, and for individuals to correct errors in their records.” The support in the guidance for an individualized assessment only for those identified via the targeted screen “also means that individualized assessments should not result in “significant costs” for businesses,” she explained.

Berrien also underscored that as explained in the guidance, employers may decide never to conduct an individualized assessment if they are able to demonstrate that their targeted screen is always job related and consistent with business necessity. Thus, the individualized assessment “is a safeguard that can help an employer to avoid liability when it cannot demonstrate that using only its targeted screen would always be job related and consistent with business necessity,” she wrote.

Targeted screen may be enough. Although the two recently released informal discussion letters may at first blush appear at odds with the Chair’s discussion about individualized assessments and the updated guidance, the discussion letters state that the applicant “should have an opportunity to provide more facts before the employer makes a final decision.” (Emphasis ours.) Although not expressed as a requirement, it is understandable that employers reading the two letters (which are not considered formal agency opinions) might mistakenly believe that any applicant screened out due to his or her criminal history must be given a chance to provide additional information.

However, as the guidance states, “depending on the facts and circumstances, an employer may be able to justify a targeted criminal records screen solely under the Green factors. Such a screen would need to be narrowly tailored to identify criminal conduct with a demonstrably tight nexus to the position in question. Title VII thus does not necessarily require individualized assessment in all circumstances.”

When might an employer forgo the individualized assessment? EEOC Commissioner Victoria A. Lipnic, in a public comment addressed to a U.S. Commission on Civil Rights briefing on the EEOC’s criminal history guidance, wrote that although a wise and prudent business practice in many instances, “Title VII does not require an employer to provide such an individualized assessment in any instance.” This fact is “explicitly recognized” in the updated guidance, and is a point about which Lipnic said she feels very strongly.

“This means that there can, and will, be times when particular criminal history will be so manifestly relevant to the position in question that an employer can lawfully screen out an applicant without further inquiry,” Lipnic said. Emphasizing the point, she said that “a day care center need not ask an applicant to ‘explain’ a conviction of violence against a child, nor does a drug store have to bend over backward to justify why it excludes convicted drug dealers from working in its pharmaceutical lab.”

Presumably, the two examples provided by Lipnic are instances in which the targeted screen is “narrowly tailored to identify criminal conduct with a demonstrably tight nexus to the position in question.”

Disparate impact question. Of course, the issues of whether an employer policy on criminal background checks is job related and based on business necessity, as well as whether excluded individuals should be given an individualized assessment, only come into play when the policy has resulted in a discriminatory disparate impact based upon a protected category — usually race or national origin (African-American, Hispanic).

In its updated guidance, the EEOC lays out statistics showing that nationally, African-Americans and Hispanics are arrested and incarcerated at disproportionately high rates compared to their percentage of the overall population and when compared to Whites. The agency’s updated guidance either implies, or comes very close to doing so, from those statistics a rebuttable presumption operating at least during the investigatory stage, that the use of criminal history information in employment screening necessarily results in a disparate impact on African-Americans and/or Hispanics: “National data, such as that cited above, supports a finding that criminal record exclusions have a disparate impact based on race and national origin. The national data provides a basis for the Commission to further investigate such Title VII disparate impact charges. During an EEOC investigation, the employer also has an opportunity to show, with relevant evidence, that its employment policy or practice does not cause a disparate impact on the protected group(s).”

National data. The real question, however, is whether courts are willing to base a finding of disparate impact based fully or in part on national data at the litigation stage. Here the burden is on the EEOC to establish the threshold requirement that a particular policy has resulted in an unlawful disparate impact. In at least one case, a federal district court was far from convinced that the national statistics cited by the agency were enough to support such a finding. In EEOC v Freeman (D. Md. 2013), the court refused to even consider the EEOC’s national statistics as evidence in its lawsuit against a family-owned company because there was no indication that the general populace was representative of the relevant applicant pool. As a result of the agency’s lack of statistical evidence to support its claims and its failure to identify a specific policy that allegedly caused the disparate impact, the court granted the employer’s motion for summary judgment.

With regard to the agency’s contention that the national statistics cited in two expert reports (which the court found unreliable and inadequate in other respects) were sufficient evidence of disparate impact, the court said there was no indication that the general population was representative of the relevant applicant pool. The general population “cannot be used as a surrogate for the class of qualified job applicants” because it includes those who would not apply for a job with the company. Moreover, the general statistics on which the EEOC’s experts had relied included things that were not even considered under the company’s hiring criteria, such as arrest and incarceration rates. Without national statistics or other expert analysis to support its allegations of disparate impact, the EEOC’s case could not survive summary judgment.

Best practices. Based on the issues discussed above, employers should consider implementing a few best practices with regard to the use of criminal background checks in making hiring decisions:

     • If possible, screen job applicants for other required qualifications before inquiring about criminal history information;
     • Once a candidate is determined to be otherwise qualified, inquire only as to criminal history information that is relevant to the particular job applied for and document the reasons why that information (the offenses and period during which they occurred) is relevant;
     • Permit applicants who are otherwise qualified but have been screened out due to criminal history information a reasonable opportunity to provide additional relevant information, and if they are still rejected for hire, document the reasons why (though this step may be eliminated when the targeted screen used by the employer is “narrowly tailored to identify criminal conduct with a demonstrably tight nexus to the position in question,” it may be more prudent to include it anyway);
     • During any EEOC investigation (or litigation) of purported disparate impact discrimination based on a criminal background policy, employers should consider providing the agency with the following:
          o Regional or local data showing that African-American and/or Hispanic men are not arrested or convicted at disproportionately higher rates in the employer’s particular geographic area;
          o The employer’s own applicant data demonstrating that its policy or practice did not cause a disparate impact;
     • When sued by the EEOC for disparate impact discrimination based on criminal background checks, make sure that the EEOC has identified the particular policy that purportedly resulted in the alleged unlawful discrimination, and if it has not done so, move for dismissal or summary judgment;
     • When litigating an agency claim of disparate impact discrimination based on the use of criminal background information, employers should aggressively challenge the agency’s expert analysis of relevant applicant data to make sure it is comprehensive, reliable, and not skewed, as well as its reliance on any national, as opposed to local, data.