How to Use Criminal Background Checks and Not Get Sued

The EEOC has put companies in a difficult position regarding the use of criminal background checks to screen job applicants.  This is because companies are obligated to screen out criminals, but now they face potential liability for doing just that.  Here I will explain the reason for the conflict and how companies can best protect themselves.

Why Companies Use Criminal Background Checks

Criminal background checks are used by 70 to 80% of companies according to the Society for Human Resource Management.  Federal Judge Roger Titus recently noted that even the EEOC uses criminal background checks in its hiring process.  Companies use criminal background checks for several reasons and listed below are the top three:

1) Most companies simply do not want to employ dangerous or dishonest people.

2) Companies can get sued for negligent hiring and retention if they employ a person with known criminal propensities.

3) Some companies are legally required to screen out criminals for certain positions.

The Case Against Using Criminal Background Checks

There is a risk that the blanket exclusion of convicted criminals in employment screening will have a discriminatory impact on minorities.  Racial minorities have disproportionate conviction rates.

For example, African Americans make up approximately 13% of the general population, but they account for 40% of the incarcerated population.  The U.S. Department of Labor offers statistics and an explanation of the EEOC’s enforcement guidance. The concern advanced by the EEOC and civil rights organizations is that a blanket exclusion of those with criminal records will exclude more minorities and create a risk of employment discrimination.

The EEOC’s Solution and Attempts to Enforce It

The EEOC has launched an aggressive campaign against the use of criminal background checks.  They sued a number companies, including BMW and Dollar General, over their use of criminal background checks.  The EEOC charged these companies with discriminating against minorities for excluding all applicants with criminal records.   The EEOC contends that companies cannot exclude all applicants with a criminal records.  To do so, they say, will discriminate against minorities.

Instead, companies should assess each situation individually and determine if the applicant’s criminal record presents a genuine disqualification.

A Set Back for the EEOC and Confusion for Businesses

A federal judge recently dismissed one of the EEOC’s background check cases and sharply criticized the EEOC for filing the case.  The court found that there was no evidence of employment discrimination.   The judge stated that the companies use of criminal background checks was “reasonable and suitably tailored to its purpose of ensuring an honest workforce.”

The company in that case, Freeman Companies, screened for convictions that had occurred in the last seven years and did not screen for arrests.  The judge rejected the EEOC’s argument that this screening process would adversely impact minorities.  The Wall Street Journal offers more details on the judges ruling.

How to Use Background Checks and Stay Out of Trouble

Now that the courts have rejected the EEOC’s position on background checks, how should businesses use background checks to screen job applicants?  The safest course of action is to follow the EEOC’s rules because they may continue their enforcement efforts .

Here is a summary of best practices:

• Conduct Background Checks Only After a Conditional Offer of Employment is Made

The best way to control risk is to reduce the number of background checks.   Do not run background checks on all applicants.  Instead, make your employment offers conditional on passing a background check.

This will dramatically reduce the number of background checks and avoid numerous other thorny issues as well (background checks often reveal other sensitive personal info that could create other grounds for suit).

• Modify the Use of Criminal History Information 

Only search for criminal convictions, not arrests.  Arrests do not mean much so exclude them.  Consider limiting convictions to 7 to 10 years.  Conduct an individualized inquiry into each case to determine the nature of the crime and how it relates to the position.

For example, if an applicant is applying to be a truck driver and he has driving related offenses, you can safely exclude that applicant. However, if the applicant has a 30 year old conviction for disturbing the peace, then that offense should be ignored because it does not relate to the applicant’s ability to drive a truck.

Also, allow the applicant an opportunity to explain the situation.  The point is to use the criminal background information in a reasonable individualized manner instead of a broad policy of systematic exclusion.

It is essential to have a consistent policy in how criminal background checks are used.  If people are treated differently, the company would be open to allegations of employment discrimination.   This puts employers in a conundrum because the EEOC wants companies to look at each criminal history finding on an individual basis.  This makes it almost impossible to have a truly consistent policy because subjectivity will creep into the individualized inquiries.

Companies will need to document each case and explain the basis for each decision.  As long as a logical basis exists for each decision, the company should be able refute any allegations of discrimination if they arise.

Conclusion

The EEOC is putting employers in a difficult situation with its aggressive enforcement efforts over criminal background checks.  No perfect solution exists now.  The EEOC should modify its position and issue clear realistic guidelines for companies.

In the meantime, companies need to walk a fine line and keep accurate records to support each decision involving an applicant’s criminal history.

Background Check Photo via Shutterstock