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June 19, 2013

EEOC Files Suit Over Employers’ Use of Criminal Background Checks

On June 11, 2013, the United States Equal Employment Opportunity Commission (“EEOC”) brought two separate lawsuits against a BMW manufacturing facility and the Dollar General retail chain for using criminal background checks in hiring or rehiring applicants, alleging that these checks disparately impacted African-Americans. These cases are the first brought by the EEOC since the release of its April 25, 2012 Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions (“EEOC Enforcement Guidance”) (available here).  The EEOC Enforcement Guidance provides that, unless shown to be job-related and consistent with business necessity, basing employment decisions on criminal background checks may violate Title VII of the Civil Rights Act of 1964 if such a practice has a disproportionate impact on a protected class.

EEOC v. BMW Manufacturing Co.

In EEOC v. BMW Manufacturing Co., filed in the District Court for the District of South Carolina, the EEOC is acting on behalf of 69 individuals who began as employees of the company—UTi Integrated Logistics Inc.—then providing services for BMW’s Spartanburg plant. According to the complaint, when UTi’s contract ended, BMW asked its subsequent contractor to perform new criminal background checks on the former UTi employees in order for them to retain their positions. The new contractor discovered dozens of criminal convictions which contravened BMW’s policy of precluding the hiring of workers with criminal records.  The EEOC alleges that BMW declined to assess each case individually and categorically refused to rehire the UTi plant employees with criminal convictions.  The EEOC claims that BMW’s practice had a disparate impact because 80 percent of the affected employees were African-American.  The EEOC argues that there is a statistically significant difference between the rates at which African-American and non-African-American workers lost their employment due to the background checks.

EEOC v. Dolgencorp LLC d/b/a Dollar General

In EEOC v. Dolgencorp, filed in the District Court for the Northern District of Illinois, the EEOC alleges that the retail chain engaged in nationwide unlawful employment practices by weighing past criminal convictions in a way that had a disparate impact on African-American applicants and conditional hires.  Dollar General’s national practice required post-offer criminal background checks conducted by a third-party, which could result in an offer being rescinded.  According to the EEOC, there were no reviews on an individual basis after an applicant failed the criminal screening; instead, Dollar General simply rescinded the conditional offers for anyone with a criminal conviction. The EEOC argues that there is a statistically significant disparate impact on African Americans because seven percent of non-African-American applicants had their offers rescinded, as compared to ten percent of African-American applicants.

Takeaway for Employers

In light of the EEOC’s policy regarding criminal background checks and its willingness to pursue class actions, such as those against BMW and Dollar General, employers should consider the EEOC Enforcement Guidance and ensure that the use of criminal or other background screening of applicants and current employees is job-related and consistent with business necessity.  We remind New York employers that New York law prohibits employers from categorically denying employment to those with a criminal conviction record.  New York employers must weigh certain factors bearing on the relationship between the conviction and the job before making employment decisions based on criminal conviction record information.

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Please do not hesitate to contact us should you have any questions on the use of criminal background checks or other employment screening policies.