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The Changing Landscape for Using Background Checks in the Hiring Process

    Employers that use criminal and/or credit background information in the hiring process have been camped on shifting sands for some time now.  The EEOC issued guidelines in April 2012 that clearly signaled that they look unfavorably on the use of such information and in fact have used it as the basis of legal action against individual employers.  The courts have not given the EEOC’s guidelines a green light, though.

    In January 2013, the Northern District of Ohio granted the defendant’s motion for summary judgment in EEOC v. Kaplan Higher Education Corp, saying the EEOC failed to meet its burden of proving that Kaplan’s use of background checks had a “disparate impact” on minority (black) applicants.  This ruling forces the EEOC to provide “reliable” statistical analysis that demonstrates that the use of background checks actually “caused the exclusion of applicants” because of their race. (The EEOC had used a panel of “race raters” to look at driver license photographs of Kaplan applicants to guess their race in determining whether Kaplan’s use of background checks had negatively impacted black applicants.  Pretty scientific, huh?)

    In a second case, EEOC v. Freeman, the Maryland district court also granted summary judgment and soundly rebuked the EEOC.  Judge Titus said that the EEOC’s expert reports, designed to prove statistical evidence of racially disparate impact, contained a “plethora of errors and analytical fallacies” that were “mind-boggling” and “based on unreliable data”; “rife with analytical error” and “completely unreliable.”   Judge Titus further accused the EEOC’s statistical expert of cherry-picking applicants for inclusion in the data and committing “an egregious example of scientific dishonesty.”  For good measure, Judge Titus called the EEOC’s analysis “laughable.”  In a nod to employers’ appropriate use of credit and criminal histories in the hiring process, Titus went on to say: “Careful and appropriate use of criminal history information is an important, and in many cases essential, part of the employment process of employers throughout the United States.”  Hooray, right?

    But if your employer uses criminal and/or credit background information as part of its hiring process, don’t relax yet.  Senator Elizabeth Warren, D-Mass., introduced legislation in the Senate last December that would prohibit employers from asking job applicants to disclose their credit history.  Similar legislation had been introduced in February 2013 in the House.  Warren’s bill has more than a half-dozen co-sponsors in the Senate and over thirty co-sponsors in the House.

    In addition, the “Ban the Box” movement is gaining momentum nationally and seeks to eliminate questions about past criminal conduct on initial job applications; the use of commercial criminal databases is becoming more controversial and is expected to be a focus of increased scrutiny in 2014; and the updated guidelines from the EEOC, while not a law or legally enforceable regulation, sends a strong message to employers of the EEOC’s intent.  In short, the EEOC will continue to pursue this particular passion of theirs; they will just need to be a whole lot smarter as to how they go about it.

    A final irony:  the EEOC itself uses criminal background checks in the hiring process for all of its positions, and uses credit background checks for about 90% of its positions.