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

January 7th, 2014  |  Pamela Wolf  |  Add a Comment

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.

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Law firm should have paid closer attention to its responsibility to client

January 2nd, 2014  |  Ron Miller  |  Add a Comment

A law firm is still on the hook for legal malpractice stemming from a memo it drafted and provided to a former employee of a client after the memo was later used against the client in litigation by that employee. In D’Andrea v Epstein, Becker, Green, Wickliff & Hall, PC, a Texas Court of Appeals found that preparation of the memo implicated the law firm’s fiduciary duty to the client and also determined that fact issues remained as to whether a reasonably prudent attorney would have foreseen that the memo would likely harm the client and whether it was foreseeable that the discharged employee would have used the memo against the client.

In 2009, an attorney for Epstein Becker spearheaded the drafting of a memo at the request of the general counsel for one of his clients. The attorney was representing the client in another, unrelated matter. A month prior to requesting the memo, the general counsel had allegedly secretly deposited over $400,000 belonging to client in an account under his sole control. The stated purpose of the memo was to apprise client’s president and board as to the company’s potential exposure arising from the alleged misconduct of the client’s owner.

While working on the memo, the firm contacted no officers or directors of client other than the general counsel and the factual basis of the opinions in the memo were based on the general counsel’s declarations. The firm did not perform an independent investigation. As work on the memo continued, the law firm received information that indicated that the general counsel would soon be fired or had been fired by the client. Nevertheless, upon completion of the memo, it was sent to the now former general counsel by way of his personal e-mail address and to the president of the client.

The client alleged that the memo “all but destroyed” the medical practice operated by the client. It sued the law firm alleging negligence, breach of fiduciary duty, intentional tort, and common law fraud. However, a trial court granted the law firm’s motion for summary judgment on all claims.

Fiduciary duty. Although the subject matter of the memo was not substantially related to the law firm’s representation of the client, preparation of that memo implicated its fiduciary duty to the medical practice, ruled the appeals court. The fact that the bankruptcy litigation for which the attorney was retained and the memo were unrelated did not establish that the firm’s work on the memo did not breach its duties arising from the bankruptcy matter. Moreover, whether a conflict of interest existed could not be decided as a matter of law. A violation of state disciplinary rules of professional conduct was not necessary to show that the firm could be held liable for breach of fiduciary duty. At any rate, official comments found in the disciplinary rules indicated that the propriety of representation could depend on the nature of the litigation and, the appeals court determined, preparation of this memo fell into the “high-conflict part of this spectrum.”

Foreseeability. The appeals court next determined that the trial court erred in concluding, as a matter of law, that the law firm’s malpractice and fiduciary duty did not proximately cause the client’s harm and that the evidence conclusively established that such use of the memo was not a foreseeable result. First, the client had presented evidence that preparing a written investigation report could breach the standard of care because it was foreseeable that such a document would become public. It also presented evidence indicating that such reports carry a high risk of creating confusion and credibility issues and also run risks of potential unfairness. Lawyers should consider carefully whether to what opinions to reduce to writing during internal investigations because written opinions could be harmful. This was supported by an email from one of the law firm’s associates who suggested that the firm conduct a more formal inquiry. The appeals court therefore determined that summary judgment was inappropriate because there were fact issues regarding whether a reasonably prudent attorney would have foreseen that harm to the client that likely would result from a written memo, whether that attorney would have produced the memo and what steps he would have taken before doing so.

Employee’s use of the memo. Second, there was evidence of indications to the law firm the general counsel was considering litigation, which raised a fact issue regarding whether the general counsel’s actions were foreseeable. Here, the client presented evidence that the general counsel’s use of the memo was foreseeable by the law firm, where the attorney working on the memo had previously looked into getting him a job at the firm and that he had referred the general counsel to a plaintiff’s attorney certified in labor and employment law.

There was also evidence to suggest that the law firm’s attorney may have known that the employee would soon be fired. The general counsel’s imminent departure became apparent as the memo progressed and the firm’s attorney solicited advice from the other members of the firm, noting that the general counsel thought he would be fired the next day or in the days following. He also emailed a copy of the finished memo to the general counsel’s personal account. Thus, the evidence suggested that the law firm’s attorney knew the general counsel was about to be fired, that litigation over that termination was possible, and that the general counsel wanted the client to be on notice regarding certain whistleblower claims. As a consequence, the appeals court reversed the trial court’s grant of summary judgment against the client’s claims.

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The road to liability is paved with inconsistent enforcement of grooming, tipping, and other employment policies

December 28th, 2013  |  Lorene Park  |  1 Comment

By Lorene D. Park, J.D.

Employers, here’s a thought: how about telling managers to enforce your policies consistently and then making sure they follow through? Time and again, employment discrimination and retaliation cases hinge on whether or not an employee can show he or she violated the same policy as, but was treated differently than, a coworker outside his or her protected category. Even if there is no similarly-situated comparator, an employer’s failure to follow its own policy can support a claim that whatever adverse action it took was discriminatory or retaliatory.

Inconsistent policy enforcement. In one case, a court denied an airline’s motion for summary judgment on the sexual orientation discrimination claim of an openly gay flight attendant who was told he could not work a flight to Paris with his hair styled in a Mohawk. The court ruled that a jury would have to determine whether he was subjected to a different grooming standard based on his sexual orientation in violation of the New Jersey Law Against Discrimination (Falcon v Continental Airlines). Grooming was also at issue when a court awarded a Pennsylvania housekeeper $25,000 on her discrimination claim after she was fired for refusing to take braids out of her hair. She produced evidence that the hair policy as applied prohibited cornrows showing scalp, but not braids, and that non-African-American employees wore braids but were not disciplined (Vazquez v Caesar’s Paradise Stream Resort).

Inconsistent enforcement of policies is also at issue in many retaliation cases. For example, the First Circuit revived a skycap’s claim that he was fired in retaliation for his role in a separate FLSA suit based in part on evidence that, despite purportedly firing him for violating a tip solicitation policy, managers did not fire other skycaps who violated the same policy. To the court, a jury could find that the decisionmakers’ knowledge that the CEO was angry over the FLSA suit tipped the scales in favor of their finding that the employee violated company policy in a way that required his termination (Travers v Flight Services & Systems, Inc).

Failing to follow own policy. Many cases hinge upon a claim that an employer has enforced its policies in a way inconsistent with the way they were written. An employer’s departure from its own policy is suspect and calls into question whether the departure is due to discriminatory or retaliatory animus. In one case, an African-American driver who was required to take a drug test after his legally parked vehicle was struck by another car alleged that the employer discriminated against him based on his race, as evidenced by the departure from its drug policy. The policy required a test only if a driver “may have caused/contributed to the accident” but the employee here was not at fault. A “deviation from standard procedure may raise an inference of discrimination,” the court explained (Jones v Ottenberg’s Bakers, Inc).

An employer’s failure to follow its own policy was also one basis for a Pennsylvania court denying summary judgment on the ADA and ADEA claims of an employee who was rejected for a position in favor of an external applicant, despite a policy of preferring internal candidates (Buller v PPG Industries, Inc). These cases show without question that employers should make sure their policies are enforced consistently, and enforced as written.

Consistency supports defense. As much as inconsistency can be used against an employer in court, the converse is also true and consistent application of employment policies can support an employer’s argument that it had a legitimate non-discriminatory or non-retaliatory reason for taking an adverse employment action. For example, an African-American employee who was fired for trying to sneak a cell phone into a facility against policy had her race discrimination claims dismissed because the policy violation was a legitimate reason for her discharge and she failed to show pretext. The court found it significant that the employer had recently fired another employee and banned a Caucasian visitor from the premises after they did the same thing (White v Oklahoma).

Survey the consistency of enforcement. As the above cases show, consistency (or lack thereof) in enforcing an employer’s policies can determine the outcome of potential litigation over discrimination and other claims by employees. They also show that a wide variety of policies could be at issue, including those on drug or alcohol use, cell phone use, grooming, tipping, and more. With that in mind, it is a good idea to investigate how managers enforce policies that have the potential to impact the terms and conditions of employment (including the potential for raises, promotions, discipline, etc.). Some areas of inquiry when surveying managers include:

  • A manager’s knowledge of policies he or she enforces, including policy goals.
  • Any policies that a manager might find unclear (e.g., violations should be clearly defined).
  • Which policies have been “enforced” in a given period of time, including instances where managers provided training, suggestions for improvement, warnings, or discipline.
  • If an employee was disciplined for violating a policy, inquire as to whether the level of discipline was consistent with that imposed on other employees; whether the “punishment” fit the “crime;” and whether the level of discipline was consistent with the employer’s policy (including any progressive discipline policy).
  • If an employee was disciplined in a way suggesting inconsistency in policy enforcement, investigate why and address any disparities that cannot be explained away based on differences in level of responsibilities and expectations, a history of prior violations, or other legitimate (non-discriminatory or non-retaliatory) reasons for the seeming inconsistency.

After surveying each manager’s understanding of the employer’s policies and his or her consistency in enforcing them, address any weaknesses found in a manager’s knowledge of the policies and understanding of the importance of consistency and fairness. More than likely, the mere fact that the employer is performing such an audit will remind each decisionmaker that consistency is important.

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New split in Circuit Courts regarding whether EEOC’s failure to conciliate a defense to a discrimination suit

December 23rd, 2013  |  Ron Miller  |  Add a Comment

There’s a new split among the U.S. Courts of Appeal regarding whether the EEOC alleged failure to engage in good-faith conciliation before filing suit warrants dismissal of a discrimination case against an employer. In EEOC v Mach Mining, LLC, the Seventh Circuit created a split with its sister circuits, including the Eighth, Second, Eleventh, Sixth, Fifth, Fourth, and Tenth Circuits, and held that the statutory directive to the EEOC to negotiate first and sue later does not implicitly create a defense for employers who have allegedly violated Title VII.

In 2008, the EEOC received a charge of discrimination from a woman who claimed that Mach Mining denied her applications for coal mining jobs because of her gender. After investigating the charge, the agency determined there was reasonable cause to believe the employer had discriminated against a class of female job applicants at its mine. In late 2010, the EEOC notified the company of its intention to begin informal conciliation. The parties discussed possible resolution but did not reach an agreement. In September 2011, the EEOC told the employer that it had determined the conciliation process had been unsuccessful and that further efforts would be futile. The EEOC filed its complaint in the district court two weeks later.

Failure to conciliate defense. In response, Mach Mining asserted several affirmative defenses, including its contention that the suit should be dismissed because the EEOC failed to conciliate in good faith. The EEOC moved for summary judgment solely on the issue of whether, as a matter of law, an alleged failure to conciliate is an affirmative defense to its suit for unlawful discrimination. The district court followed the decisions of other circuits and denied the motion, but it certified for interlocutory appeal the question whether an alleged failure to conciliate is subject to judicial review in the form of an implied affirmative defense to the EEOC’s suit.

Ultimately, the Seventh Circuit concluded that the language of Title VII, the lack of a meaningful standard for courts to apply, and the overall statutory scheme convinced it that an alleged failure to conciliate is not an affirmative defense to the merits of a discrimination suit. Further, the court explained that finding in Title VII an implied failure-to-conciliate defense would add to that statute an unwarranted mechanism by which employers could avoid liability for unlawful discrimination.

The court first noted that Title VII contains no express provision for an affirmative defense based on an alleged defect in the EEOC’s conciliation efforts. Moreover, it was persuaded that the express statutory language makes clear that conciliation is an informal process entrusted solely to the EEOC’s expert judgment and that the process is to remain confidential.

No standard for review. Next, the appeals court concluded that the second major problem with an implied failure-to-conciliate defense is the lack of a meaningful standard to apply. Title VII says nothing about the informal methods the EEOC is required to use or how hard the agency should “endeavor” to pursue them. The statute gives no description of what a negotiated settlement should look like beyond eliminating the discriminatory conduct. Moreover, the statute gives the agency complete discretion to accept or reject an employer’s offer for any reason. Such an open-ended provision looks nothing like a judicially reviewable prerequisite to suit, explained the court.

Statutory scheme of Title VII. An implied affirmative defense for failure to conciliate also does not fit well with the broader statutory scheme of Title VII, concluded the Seventh Circuit. Offering the implied defense invites employers to use the conciliation process to undermine enforcement of Title VII rather than to take the conciliation process seriously as an opportunity to resolve a dispute. In 1972 Congress gave the EEOC the new power to bring suit in order to spur more voluntary compliance. Congress’s purpose is not served well by litigating the parties’ informal endeavors at “conference, conciliation, and persuasion.”

Finally, the Seventh Circuit observed that its own decisions provide some guidance on this question of an implied defense. Here, the appeals court noted that its rejection of the defense is consistent with its earlier decisions rejecting similar attempts by employers to change the focus from their employment practices to the agency’s pre-suit processes. All an employer loses from a deficient conciliation effort is the chance to comply with the discrimination laws without need for a trial. If the EEOC’s demands are so high that they offer no real chance at bargaining, a trial on the merits should bring them back to earth. If the employer feels it lacked the time or information necessary to settle before suit is filed, litigation will provide both.

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New report shows federal government’s number of new hires of persons with disabilities is highest in 32 years

December 20th, 2013  |  Deborah Hammonds  |  Add a Comment

A significant increase in the number of individuals with disabilities that were hired by the federal government is being touted by the Office of Personnel Management (OPM) in a new report released yesterday.  According to OPM’s report, the federal government hired more individuals with disabilities in Fiscal Year (FY) 2012 than at any point in the past 32 years. In addition, people with targeted disabilities were hired at a higher percentage than at any time in the past 17 years.

“People with disabilities are a vital part of the federal workforce, as we are better able to serve the American people because of the talents and experience they bring to the table.” said OPM Director Katherine Archuleta. “Since President Obama issued his Executive Order in 2010, we’ve made substantial progress in hiring and retaining people with disabilities over the past three years. This work is enabling the federal government to continue to develop as a model employer for people with disabilities.”

OPM’s report, “Employing People with Disabilities in the Federal Executive Branch,” states that in FY 2012, federal employees with disabilities represented 11.89 percent of the overall workforce, including veterans who are 30 percent or more disabled. 16.31% of new hires in FY 2012 were people with disabilities (up from 14.65% in FY 2011). Additionally, 14.65% of General Schedule grade 14 and 15 new hires in FY 2012 were people with disabilities (up from 12.24% in FY 2011). On July 26, 2010, President Obama issued Executive Order 13548 – Increasing Federal Employment of Individuals with Disabilities, in which he stated that the federal government must become a model for the employment of individuals with disabilities.

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