The EEOC has pushed hard in recent years to curb employer use of background checks in hiring decisions (see our blog post here). In 2009, the EEOC filed suit against Freeman, a national provider of integrated services, alleging that Freeman relied on credit and criminal background checks that caused a disparate impact on black and male job applicants. A federal judge in Maryland granted summary judgment to Freeman, slamming the EEOC’s questionable use of shoddy expert reports (referring to the reports, with particular focus on expert Kevin Murphy’s work, as “unreliable,” “rife with analytical errors,” “mind-boggling,” and “laughable,”). Within the thirty-page Memorandum Opinion, Judge Titus dedicated nearly the entire legal analysis section to criticizing the EEOC’s expert reports and data.
On February 20, 2015, the Fourth Circuit affirmed Judge Titus’ order of summary judgment. The court called out Murphy’s expert report for its “alarming number of errors,” “analytical fallacies,” and “utterly unreliable analysis.” Judge Agee wrote a separate concurring opinion with the apparent purpose of telling the EEOC he wasn’t mad, just disappointed (in the EEOC’s “litigation conduct”). As with the district court, the Fourth Circuit focused almost exclusively on the shortcomings of Murphy’s expert report, and in doing so avoided the need to address the legal boundaries of permissible background checks. Judge Agee explicitly referenced a recent Sixth Circuit case where the EEOC relied on Murphy and lost, noting that the expert is “no stranger to having courts reject his work for improper sampling.” (EEOC v. Kaplan Higher Educ. Corp., 748 F.3d 749 (6th Cir. 2014))
Although Freeman and Kaplan provide employers with enough sound bites to discredit any future Murphy report, these cases hardly illustrate courts’ positions on whether background checks can cause a disparate impact. Although the EEOC might see these losses as reason to focus on different employment practices, it could just as easily hire a different expert and keep pushing. Employers should therefore continue to exercise caution when using background checks in the application process, avoiding blanket consideration for all positions.