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Federal Court Rejects EEOC Challenge to Criminal Background Check Policy

By Ryan Leemkuil

In June, we blogged about two recent lawsuits the EEOC has brought against Dollar General and BMW alleging that these companies’ use of criminal background checks causes a disparate impact on black applicants. In a ruling earlier this month, a federal district court in Maryland rejected a similar suit that has been pending since 2009. The story of this four-year-old case was, in the court’s words, “that of a theory in search of facts to support it.”

In EEOC v. Freeman, the agency brought a disparate impact suit against Freeman Co., an event management firm. Freeman’s use of criminal history checks, the EEOC claimed, had a discriminatory effect on black and male applicants in the hiring process. In a decision that did not pull any punches, the district court granted summary judgment in favor of the employer. The decision rested largely on numerous and significant problems with the EEOC’s expert analysis (a “mind-boggling” number of errors and “cherry-picked” data, to name just a couple). But the court also gave its take on the case from a practical standpoint many employers are sure to understand.

Suits like Freeman, the court explained, place employers in the “Hobson’s choice” of ignoring criminal history—and thereby exposing themselves to potential liability for an employee’s future misconduct—or incurring the “wrath of the EEOC” for simply using information most employers deem “fundamental.” In the court’s view, something more (indeed, “far more”) than what the EEOC brought to the table in Freeman is needed to justify a disparate impact claim based upon criminal history checks. “To require less,” the court wrote, “would be to condemn the use of common sense, and this is simply not what the discrimination laws of this country require.”

On the merits, the court was not convinced by the EEOC’s theory of the case. Freeman’s use of criminal background checks was relatively complex, with multiple criteria and layers of review. It was not, as the court put it, a “simple, one-step process.” Yet the EEOC made no attempt to identify any specific policy causing the alleged disparate impact. Instead, the agency merely alleged that Freeman’s policy of conducting criminal background checks “as a whole” produced a disparate impact on blacks and males. But that is not good enough. The court explained that the plaintiff in a disparate impact case “must isolate and identify the discrete element in the hiring process that produces the discriminatory outcome.” And where an employer’s hiring process has multiple elements, like Freeman’s use of criminal history checks, and is capable of being “broken down into discrete parts,” the plaintiff must identify the specific element it is challenging and show that each particular challenged practice causes a disparate impact. The EEOC made no effort to do so in Freeman, and it thus failed to demonstrate which factor in the employer’s process was “the alleged culprit.”

The result in Freeman was driven largely by the substantial problems with the EEOC’s expert analysis. It stands to reason that the agency will act quickly to prevent similar errors in other cases, particularly given the Commission’s stated intent to target criminal background check policies through disparate impact suits. Nonetheless, Freeman should be welcomed by employers as a reaffirmation that a well-designed and properly administered background check is often “a rational and legitimate component of a reasonable hiring process.”



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