EEOC looses key courtcase over disparate impact of background checks and credit reports

By Michael Klazema on 8/12/2013

In what by many is described as a serious blow to the EEOC's perspective on the disparate impact of the use background checks and credit reports onn minorities, U.S. District Judge Roger Titus ruled against the agency in the case of EEOC vs. Freeman. Freeman is an event management company that used both criminal background checks and credit reports in their pre-employment screening process in an effort to reduce the risk of more embezzlement and workplace violence it had been experiencing.

The EEOC targeted the company  for its hiring practices across a five year time span, not because they felt the company actively discriminated againast any particular minority,  but simply because the impact of the company using criminal background checks and credit reports alledgedly caused a disparate impact on the chances of minorities to get a job at the company, because ceretain groups of minorities have for example more criminal convictions than caucasians.

In this case the judge felt that the EEOC not only presented bad data as evidence of disparate impact, but also that the type and extent of that data - even it had been correct - would by far not be enough to justify a disparate impact claim based in relation to criminal background checks by Freeman.

In the absence of any significant case law it appeared as if companies interpreting the EEOC guidance for running criminnal background checks were forced to choose between completing foregoing criminal record checks or risking lawsuits from the EEOC. Freeman early on felt they were justified in using criminal records in their pre-employment screening process and were vindicated last week

The EEOC has targeted a number of other high profile employers in disparate impact lawsuits and if those outcomes mimic this one, more certainty will finally exist for employers nationwide to safely rely on criminal background checks with less risk of being targeted by the EEOC.




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