As we have previously noted, the EEOC in April 2012 issued enforcement guidance addressing the use of arrest and criminal records in employment decisions under Title VII. Since then, the EEOC has filed two separate lawsuits in South Carolina and Illinois alleging that employer criminal background check policies violated Title VII because they adversely impacted minorities and were not job related and consistent with business necessity. In response, the Attorneys General of nine states (West Virginia, Alabama, Kansas, Montana, Colorado, Georgia, Nebraska, South Carolina and Utah) wrote a letter to the EEOC urging the EEOC to dismiss the lawsuits and rescind its enforcement guidance. Late last month, the EEOC published its response to the Attorneys General, defending its position on criminal history screening processes and naturally declining the invitation to rescind its guidance.
The EEOC’s recent litigation track record in these cases, however, may prompt it to reconsider the stridence of its position on these criminal background cases. In a recent Maryland federal case, EEOC v. Freeman, a federal district court granted summary judgment to the employer in an EEOC lawsuit alleging that the employer’s background screening programs violated Title VII. In an unusually scathing opinion, the court stated that the EEOC’s statistical expert’s testimony was unreliable based on a substantial number of errors in selecting and analyzing the data regarding the employer’s job applicants. In reaching its conclusion, the court noted:
While some specific uses of criminal and credit background checks may be discriminatory and violate the provision of Title VII, the EEOC bears the burden of supplying reliable expert testimony and statistical analysis that demonstrates disparate impact stemming from a specific employment practice before such a violation can be found.
Now, earlier this week, the Sixth Circuit in EEOC v. PeopleMark, Inc., upheld a federal district court’s award of nearly $752,000 against the EEOC for pursuing the case, which erroneously claimed that the employer maintained a company-wide policy against hiring felons. The EEOC initially brought the suit after the employer’s general counsel informed the EEOC that it has such a company-wide policy. When it turned out that he was wrong, however, the EEOC continued to pursue the case even after receiving documentation demonstrating that its position was incorrect. Ultimately, the EEOC agreed to dismiss the case with it being stipulated that PeopleMark was the prevailing party for the purpose of awarding fees and costs.
When the district court awarded fees and costs totaling $751,942.48, the EEOC appealed, arguing that the district court abused its discretion in awarding fees and alternatively that the fees awarded were excessive. The Sixth Circuit disagreed, stating that once the EEOC understood that there was no company-wide policy on which to base its disparate impact claim, it should have abandoned its lawsuit.
Takeaways: No doubt, the EEOC is not going to back away from its focus on criminal background checks. However, these recent developments demonstrate that employers have weapons in their arsenal to permit them to keep the EEOC in check if it overreaches in pursuing litigation based on claims that their background check policies have a disparate impact on minorities.