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‘Not so fast,’ Kansas AG tells EEOC

The college football season is upon us. Which means the return of the antics and banter of Lee Corso, Kirk Herbstreit, and Chris Fowler on ESPN’s College GameDay program. As part of their weekly shtick, Herbstreit makes a prediction about a game, to which Corso expresses wild disagreement, uttering his catchphrase, “Not so fast, my friend!”

Last year the Equal Employment Opportunity Commission issued controversial enforcement guidance regarding the use of arrest and conviction records in employment decisions. This summer the EEOC put its playbook into action by suing two employers, BMW and Dollar General, for their use of criminal background checks. In response, the Kansas Attorney General (along with the AGs from eight other states) said, “Not so fast!” Well, not literally. And, unlike Lee Corso, they did not say “my friend.” What the AGs actually said, in an open letter to the EEOC, is that the guidance and lawsuits are “misguided” and “a quintessential example of gross federal overreach.”  Boo Yah!
Things went from bad to worse for the EEOC two weeks later, when a federal court punted the commission’s lawsuit against another employer based on its use of criminal background checks. The EEOC alleged that the background checks caused a disparate number of African-American and male workers to be disqualified from jobs. But the court threw out the case, calling the EEOC’s analysis “flawed,” “rife with analytical errors,” “laughable,” and “an egregious example of scientific dishonesty." Read the play-by-play below.
EEOC game plan
In April of last year, the EEOC issued Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decision Under Title VII of the Civil Rights Act of 1964. As explained in the guidance, an employer's use of an individual's criminal history in making employment decisions may, in some instances, violate prohibitions against employment discrimination, particularly with regard to race and national origin. This can occur when an employer's neutral policy disproportionately impacts persons of a particular race or national origin, and the policy is not job-related and consistent with business necessity.
The guidance says that employers that want to consider criminal record information when making employment decisions need to develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct. Such a policy and procedure should consist of several steps:
  • Identify essential job requirements and the actual circumstances under which the jobs are performed.
  • Determine the specific offenses that may demonstrate unfitness for performing such jobs.
  • Determine the duration of exclusions for criminal conduct based on all available evidence, including an individualized assessment.
  • Record the justification for the policy and procedures.
  • Note and keep a record of consultations and research considered in crafting the policy and procedures.
AGs blitz EEOC
On June 11, the EEOC sued BMW and Dollar General for their use of criminal background checks. In the case against BMW, the EEOC alleges that BMW disproportionately screened out African Americans from jobs, and that the policy is not job-related and consistent with business necessity. The lawsuit against Dollar General, on behalf of two applicants, alleges that the company conditions all of its job offers on criminal background checks, which results in a disparate impact against African Americans.
"The Commission is committed to using public education and informal resolution to address discriminatory hiring practices," said David Lopez, EEOC General Counsel. "When these methods are unsuccessful, the Commission will, if necessary, seek redress from the federal courts and ensure equal opportunity for all. This is the latest in a series of systemic cases the Commission has filed to challenge unlawful hiring practices." In other words, the EEOC uses a carrot and stick approach. And BMW and Dollar General are now getting the stick.
On July 24, Kansas Attorney General Derek Schmidt and eight other state AGs sent an open letter to the five EEOC commissioners expressing concern about the BMW and Dollar General lawsuits and the underlying enforcement guidance. “It defies common sense to suggest that a bright-line criminal conviction screen will only rarely be ‘job related’ and ‘consistent with business necessity,’” the AGs wrote. Employers may have many business reasons for not wanting hire applicants who have been convicted of murder, rape, assault, or weapons violations (all crimes mentioned in the BMW and Dollar General cases), such as customer and employee safety, and a desire to reduce liability risks.
The AGs also expressed concern that forcing employers to undertake more individualized assessment will be costly and time-consuming. Such assessments are also likely to increase employment discrimination suits by rejected applicants, they say. In addition, the guidance is a “gross federal overreach” because it purports to supersede state and local hiring laws that impose bright-line criminal background restrictions. The AGs thus urge the EEOC to reconsider its position, rescind the enforcement guidance, and drop the lawsuits filed against BMW and Dollar General. 
Court sacks EEOC
On August 9, the U.S. District Court for the District of Maryland dismissed a case in which the EEOC tried to show that an employer's use of credit history and criminal background checks had an adverse impact on African American and male applicants and thus violated Title VII. The EEOC sued Freeman, Inc. in 2009. Freeman screened applicants for convictions, but not arrests, within seven years of the application date. It conducted individualized assessments, generally disqualifying applicants whose convictions involved violence, property destruction, and sexual, felony drug, and job-related offenses. The only bright-line disqualification was for applicants who refused to disclose or made material misrepresentations.  
The court found that the EEOC’s statistical evidence was so replete with errors and “analytical fallacies” that it was completely unreliable, inadmissible, and insufficient to support a finding of disparate impact. Among a "mind-boggling number of errors," the court found that the EEOC’s expert "cherry-picked" data from “only a distorted fraction of the time period relevant in this case" to try to support the EEOC's theory. Freeman, on the other hand, provided complete background check logs, which included the name, location, background check date, and a determination of whether the applicant was hireable, for each applicant for whom it conducted a background check for the entire period of time covered by the EEOC investigation.
Even if its reports were not flawed, the court found that EEOC nevertheless failed to identify a specific employment practice responsible for the alleged impact. “Under Title VII, it is not enough for the plaintiff to show that 'in general' the collective results of a hiring process cause disparate impact," the court ruled. Instead, “[s]tatistical analysis must isolate and identify the discrete element in the hiring process that produces the discriminatory outcome."
"Something more, far more, than what is relied upon by the EEOC in this case must be utilized to justify a disparate impact claim based upon criminal history and credit checks," the court held. "To require less, would be to condemn the use of common sense, and this is simply not what the discrimination laws of this country require." EEOC v. Freeman, Inc., Case No. 8:09-cv-02573 (D. Md. Aug. 9, 2013).
Post-game analysis 
Keep these points in mind if your organization uses criminal background checks.
  • Follow all requirements of the Fair Credit Reporting Act.
  • While courts may ultimately find parts of it too expansive, be mindful of the EEOC’s enforcement guidance, which provides a safe harbor and best practices guide.
  • If your organization is subject to a state law requirement to conduct across-the-board criminal background checks, does this conflict with the EEOC’s position that a blanket requirement violates Title VII? While you should consult with your lawyer, following the state law is the best play. Yes, Title VII may preempt state laws, but the need to follow state law ought to be a business necessity, which means that doing so would not violate Title VII.
  • Keep good records of your background checks.
  • Analyze your screening process. If it adversely impacts a group, identify the element of the process causing the impact, and ensure that the reason for this requirement is job-related and consistent with business necessity. Use a lawyer so the analysis is protected by attorney-client privilege.

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