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Compliance and Legislation Update - The EEOC and Me

By Michael Klazema on 9/14/2010

The situation

A few years ago, had you asked the average businessman his personal philosophy on background screening, his response would’ve likely been something to the effect of “better safe than sorry.”  Better to screen every applicant, to eliminate any applicant with a blemish on their record, than to face a due diligence lawsuit.

Now that opinion is changing.  By taking “better safe than sorry” truly to heart, businesses have started to run afoul of the Equal Employment Opportunity Commission (EEOC).  According to the EEOC, making employment decisions (specifically hiring or retention decisions) based on arrest and convictions or on credit reports has a disparate impact on minorities.

The EEOC has also determined that they would generally analyze the following items to determine if a hiring/retention decision was a business necessity or if it was discriminatory:

  1. The nature and gravity of the offense(s);
  2. How much time has passed since the conviction and/or completion of the sentence, and
  3. The nature of the job held or sought.

The forecast

These two differing opinions have put many businesses between a rock and a hard place. Businesses can’t stop doing background checks completely without opening themselves to due diligence lawsuits but to continue in the vein of running all checks on everyone opens the business to discrimination lawsuits.

Ideally, in order to avoid the potential lawsuits, each company would do the following:

  • Look at the risks that a hypothetical criminal in a given job poses to the organization, its customers and its other employees. This can include access to people who are easily victimized (e.g. children), access to easily stolen information or things, and even access to other employees.
  • Consider mitigation of those risks from the job itself. There are two major types of on-the-job risk mitigation: supervision and availability to the public. By these standards, a night watchman who would typically work alone should be subjected to a different set of checks than a cashier who would typically work with a manager nearby. Similarly, a school guidance counselor is much more private than even a teacher and should be subjected to different searches.
  • Look for evidence in your applicants of the kind of criminal behavior that leads to those risks. This is where you should determine what types of checks are necessary for each applicant. Is there a financial risk with a CFO? Absolutely and that may warrant a credit check. Is there a financial risk with the mail room clerk? Unlikely and running a credit check would probably just be a waste of resources.
  • Consider attenuation of that evidence due to the passage of time and any evidence of rehabilitation. The key here would be to consider your grading criteria. Can a single misdemeanor be ignored for a job class? How old is the record? Is there any evidence of rehabilitation?

What it comes down to is that each job class has a different risk profile and because of that, not each job class can be treated the same. The possible risks need to be carefully weighed for each class and policies need to be updated to reflect these risks.


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