What You Need to Know about EEOC Lawsuits

By Michael Klazema on 2/4/2020

When conducting background checks and making decisions based on criminal history, employers must be familiar with guidance issued by the Equal Employment Opportunity Commission (EEOC).

The EEOC’s focus in recent years has been fighting racism and discrimination in the workplace, identifying policies that may inadvertently disproportionately impact minorities compared to Caucasian employees and job seekers. Employers whose policies result in a disparate impact must revise their screening and hiring standards or face potential legal action from the EEOC.

A reminder of the seriousness of disparate impact in criminal history background check policies came recently when the EEOC settled a years-long lawsuit against Dollar General. The EEOC—along with a class of plaintiffs affected by Dollar General’s hiring policies—alleged that the company’s background check policy was built around a “matrix” of criminal convictions. On the matrix, each criminal conviction was assigned a certain number of years. If a candidate had a conviction for a crime that was newer than the number of years specified on the matrix, that person failed his or her background check and was disqualified from further employment consideration.

The EEOC has long been critical of any absolutist, “if/then” criminal history background check. In a matrix-based system, employers are only paying attention to the type of crime committed and the amount of time since conviction. While the EEOC does instruct employers to consider these factors, it also demands that employers take into account the relevance of each crime to the job at hand.

Since Dollar General failed to make sure that its hiring decisions were based on job-related criteria, the company had little defense against the EEOC’s claim that its hiring standards had a disproportionately negative impact on African-American job candidates. Minority groups often have higher-than-average rates of criminal history, which means hiring policies that are overly discriminatory against individuals with criminal records can have a disproportionate racial or ethnic impact.

The settlement between Dollar General and the EEOC requires the retail chain to pay $6 million to a class of black applicants named in the class-action lawsuit. It’s a costly mistake for the Fortune 500 company, and a reminder to other employers that while they can making hiring decisions based in part on the results of a criminal history background check, they cannot do so without assessing the relevance of those findings to each open position.

Employers should keep in mind that criminal history and background checks aren’t the only factors that the EEOC considers for potential legal action: the case of a trucking company that the EEOC sued in 2018 concerns alleged discrimination against an individual with a disability.

To learn more about the EEOC, and how the organization’s policies may impact your business, read our Learning Center page.

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