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 —Overview—

On April 25, 2012, the US Equal Employment Opportunity Commission (EEOC) issued a guidance document regarding the use of arrest or conviction records in employment decisions.  This Fast Facts attempts to help employers understand its application in criminal background checks.

—Background—

The US Equal Employment Opportunity Commission (EEOC) enforces Title VII of the Civil Rights Act of 1964 (Title VII) which prohibits employment discrimination based on race, color, religion, sex, or national origin. According to the EEOC, the use of arrest and conviction records in making employment decisions can have negative consequences on segments of the population and may be prohibited under Title VII unless the information being considered is job related and consistent with business necessity.

In the past the EEOC has issued policy statements on when it is appropriate for employers to consider criminal records without running afoul of Title VII, but in April 2012 the agency published a 52-page enforcement guidance document: Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964. The document describes the circumstances under which an employer’s practices may be discriminatory, provides hypothetical examples and concludes with best practices for employers.

Employers covered under Title VII should consider the new enforcement guidance prior to utilizing criminal history to make employment decisions like hiring, firing, or promoting. Title VII applies to employers with 15 or more employees over 20 calendar weeks (volunteers, independent contractors and directors in corporations are not counted as part of this total). Title VII applies to private employers as well as federal, state, and local governments.

—EEOC’s interest in Criminal Background Checks —

Why did the EEOC issue guidance on the use of arrest and conviction records in employment decisions?

The EEOC stated that the increasing availability of criminal history to employers required a re-evaluation of its policy statements regarding the use of arrest or conviction records in employment decisions. In addition, its guidance was updated in consideration of federal court precedent issued since the passage of the Civil Rights Act of 1991.

While there is no federal law specifically protecting those with criminal histories, the EEOC and the courts have ruled that adverse employment decisions made based on a criminal record can be a form of race discrimination, and a violation of Title VII. The reason the EEOC gives is that nationally, some racial groups are convicted disproportionately to other groups, and barring people from employment based on their conviction records may have a negative impact on certain races.

How does the enforcement guidance differ from the EEOC’s earlier policy statements?

The guidance essentially builds upon longstanding documents issued by the EEOC in the past, but provides greater depth and examples. Generally speaking, the document reinforces the EEOC’s long-standing position that using criminal background checks has a disparate impact (as explained in the next section) on certain minorities. As a result, certain minorities are more likely to be negatively affected by the use of criminal background checks; thus, violating Title VII unless job related and consistent with business necessity.

While the document does not impose any new bright-line rules to restrict access to information, it does describe circumstances under which an employer’s practices may be discriminatory, provides hypothetical examples to underscore its legal analysis, and concludes with best practices for employers.

Does the enforcement guidance prohibit employers from performing criminal background checks on applicants or employees?

No. The enforcement guidance does not regulate the acquisition of criminal history, nor does Title VII. However, another federal law, the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (FCRA), does establish several procedures for employers to follow when they obtain criminal history information from third-party consumer reporting agencies.

—Employment Discrimination under Title VII—

Which employment practices are discriminatory under the enforcement guidance?

Employers can face discrimination charges under Title VII applying two broad theories of discrimination – “disparate treatment” and “disparate impact.”

Disparate treatment occurs when an individual is treated differently than other candidates on the basis of race, national origin, or another protected category. For example, an employer cannot refuse to hire an African-American with a criminal conviction but hire a similarly situated white person with a comparable conviction.

Disparate impact is less clear-cut. It provides that a neutral policy or practice may still be discriminatory if it disproportionately screens out a Title VII-protected group and an employer cannot prove that the practice is job related for the position in question and consistent with business necessity. Common examples are imposing minimum education requirements or requiring certain pre-employment test scores which are not justified by business necessity.

In considering whether a practice causes a disparate impact, the EEOC generally applies an 80 percent rule of thumb. If the selection rate of the group in question is 80 percent or higher than the group hired, there is often no adverse impact. However, if it is not, disparate impact can usually be proven.

For instance, an employer screens a total of 120 candidates to fill 60 positions. Eighty white candidates are considered of which 48 (or 60 percent are hired). Forty African American candidates are also considered of which only 12 (or 30 percent are hired).

Applicants Hired Selection Rate Percent Hired
80 White 48 48/80 or 60 percent
40 Black 12 12/40 or 30 percent

A comparison of the African American selection rate (30 percent) with the white selection rate (60 percent) shows that the African American rate of hire is 30/60, or one-half (50 percent) of the white rate. Since the one-half (50 percent) is less than (80 percent) adverse impact is usually indicated.

Employers should be aware that other factors may also be considered when the 80 percent rule cannot be applied.  For instance, evidence concerning the impact of a particular policy over a longer period of time may be considered. Further, where an employer has not maintained adequate data, the EEOC may assume that disparate impact has occurred if one group is underrepresented in a particular job category as compared to the group’s representation in the relevant labor market or, in the case of jobs filled from within, the applicable work force.

Can an employer base an employment decision on an arrest record?

An employer may deny employment based on the underlying circumstances of the arrest as long as the conduct makes the applicant unfit for the position. For example, a person applying for a school bus driver position who is arrested for drunk driving may be unfit for the position. However, employers may not use arrest records to automatically screen out job applicants since many arrests do not result in criminal charges, the charges are often dismissed, and a person is innocent until proven guilty.

Can employers still ask applicants to disclose whether they have been convicted of a crime on an employment application under federal law?

Although the EEOC did not explicitly prohibit employers from asking job applicants to disclose whether they have ever been convicted of a crime on their job applications (“ban the box”), it recommended that employers not ask about convictions on employment applications as a best practice. The rationale is that an employer is more likely to objectively assess the relevance of an applicant’s conviction after learning their qualifications and experience.

An applicant may still be denied employment, if the conduct the applicant was convicted of is relevant and makes them unfit for the position. Consequently, to avoid liability, some employers only inquire about criminal history after a candidate receives a conditional offer of employment.

Employers should also be aware that complying with federal laws that require criminal background checks prior to employment could be a defense against discrimination charges.  For instance, federal law precludes certain individuals with criminal histories from working in airports, child care facilities, federal agencies or facilities, etc.  However, if an employer’s policies go beyond a federal restriction, they could face discrimination charges.

New Jersey has its own “Ban the Box” law (P.L. 2014, c. 32) which prohibits employers with 15 or more employees from asking about criminal convictions on employment applications.  The law includes exemptions for certain industries and positions. However, the EEOC reminds employers that if a state law seems to allow blanket rejections of convicted applicants in a particular industry, federal law supersedes all state laws. Therefore, if an employer’s practice or policy is not job related and consistent with business necessity, the fact that it was adopted to comply with a state law or regulation does not necessarily shield the employer from liability.

—Employer Responsibilities—

How does an employer establish that a criminal background check was used for job-relatedness and consistent with business necessity?

There are two ways employers can prove their practices were “job related and consistent with business necessity.”

First, employers may validate their decisions to exclude individuals based on the Uniform Guidelines on Employee Selection Procedures (UGESP). UGESP provides uniform guidance for employers about how to determine if their tests and selection procedures are lawful and do not cause a disparate impact. UGESP applies to interviews, review of experience or education from application forms, work samples, physical requirements, and evaluations of performance. The guidelines are designed to aid in the achievement of equal employment opportunity without discrimination on the grounds of race, color, sex, religion or national origin. (See: http://www.uniformguidelines.com)

Second, employers may develop a targeted screen to determine whether a conviction record is relevant using three factors included in a leading case – Green v. Missouri Pacific Railroad Company. The Green factors require that employers consider:

  • The nature or gravity of the offense or conduct. Who was harmed by the crime? A person, property, society, or no one? Was the crime a felony or a misdemeanor?
  • The time elapsed since the conviction and/or completion of the sentence. Was the applicant convicted seven months ago or seven years ago? (Although the Green decision did not provide a specific time frame after which a conviction should no longer be considered, it did acknowledge that automatically excluding all candidates with convictions is not consistent with business necessity.)
  • The nature of the job sought or held. Does the job include personal interaction, especially with the public and vulnerable populations? Does it involve access to and usage of confidential, financial, and proprietary information, cash, property, and inventory? What is the level of supervision, oversight or monitoring for the job? Where is the job performed – in an office, in a warehouse, at a private home?

As a best practice, the EEOC encourages employers to develop a targeted screen using the three factors above and conduct an “individualized assessment” to avoid Title VII liability.

According to the EEOC, an employer conducts an “individualized assessment” when they:

  • Notify an employee or applicant that they are being screened out as a result of a criminal record;
  • Provide the individual with the opportunity to respond; and,
  • Consider extenuating circumstances before rendering a final decision.

An individualized assessment should include a number of factors such as:

  • The facts or circumstances surrounding the offense or conduct;
  • The number of offenses for which the individual was convicted;
  • Older age at the time of conviction or release from prison;
  • Evidence that individual performed same type of work post-conviction with the same or a different employer with no problems;
  • The length and consistency of employment history before and after the offense;
  • Any efforts the individual has made to rehabilitate themselves;
  • Employment or character references or other evidence of the fitness of an individual for a particular position;
  • Whether the individual is bonded under a federal, state, or local bonding program.

What are the implications for employers who engage in discrimination?

Through its enforcement of Title VII, the EEOC seeks to end discrimination and to make an individual whole as if the discrimination never occurred. Remedies under Title VII include: injunctive relief, reinstatement, retroactive seniority, front pay, back pay, attorney’s fees and costs, compensatory damages (for intentional discrimination which causes emotional harm), and punitive damages if the employer acted with malice or with reckless indifference to the individual’s federally protected rights. (Punitive damages are not available against a federal, state, or local government employer.)

Combined compensatory and punitive damages are based on the size of the employer’s workforce and capped at:

  • $50,000 for employers with 15 – 100 employees
  • $100,000 for employers with 101 – 200 employees
  • $200,000 for employers with 201 – 500 employees
  • $300,000 for employers with more than 500 employees

The caps apply to the sum of punitive damages, and compensatory damages for emotional harm and future pecuniary losses. The caps do not apply to back pay and interest on back pay, front pay, or past pecuniary losses.

—Employer Best Practices—

What steps should an employer take now?

The EEOC recommends that employers revisit their policies regarding background checks and applicants’ or employees’ criminal history.  Although the enforcement guidance does not explicitly deny employers from asking about criminal convictions on job applications or require that employers provide an individualized assessment for every applicant screened out by a background check, the EEOC will examine whether employers have these procedures in place when investigating a discrimination charge. The EEOC provides the following examples of best practices to employers considering criminal record information when making employment decisions like hiring, firing, or promoting:

  • Eliminate policies or practices that exclude people from employment based on criminal record;
  • Develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct;
  • Train managers, hiring officials and decision makers on how to implement the policies and procedures consistent with Title VII;
  • Limit inquiries to records for which exclusion would be job-related for the position in question and consistent with business necessity; and,
  • Keep information about applicants’ and employees’ criminal records confidential and use them only for the purpose for which they were intended.

Employers should proceed with caution when using criminal background checks on potential and current employees and should always consult with legal counsel before adopting any policies, practices or procedures.

Additional Resources

EEOC Enforcement Guidance Press Release

http://www.eeoc.gov/eeoc/newsroom/release/4-25-12.cfm

Copy of the EEOC Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions

http://www.eeoc.gov/laws/guidance/arrest_conviction.cfm

EEOC’s Questions and Answers About the EEOC’s Enforcement Guidance

http://www.eeoc.gov/laws/guidance/qa_arrest_conviction.cfm

Uniform Guidelines on Employee Selection Procedures

http://www.uniformguidelines.com

Adoption of Questions and Answers To Clarify and Provide a Common Interpretation of the Uniform Guidelines on Employee Selection Procedures

http://www.eeoc.gov/policy/docs/qanda_clarify_procedures.html

—For more information—

If you need additional information, please contact NJBIA’s Member Action Center at 1-800-499-4419, ext. 3 or member411@njbia.org.

This information should not be construed as constituting specific legal advice.  It is intended to provide general information about this subject and general compliance strategies.  For specific legal advice, NJBIA strongly recommends members consult with their attorney.