"Where there's Pepsi, there's music" … is a slogan from a Pepsi marketing campaign. No doubt the EEOC agrees – in 2012, Pepsi paid over $3 million to settle race discrimination claims and agreed to provide job offers and training because of its former background check policy. According to a press release on the EEOC's website, the EEOC determined that "more than 300 African Americans were adversely affected when Pepsi applied a criminal background check policy that disproportionately excluded black applicants from permanent employment." The EEOC contended that Pepsi’s former policy barred job applicants even where there had been no conviction.
Also in 2012, Integrity Staffing Solutions reached a settlement involving a black job applicant who had been denied a job based upon a felony conviction occurring 30 years prior to his application. ISS had a prohibition against hiring individuals with felony convictions. As part of the settlement, ISS modified this policy to preclude a wholesale ban.
So, does this trend mean that employers should dispense with criminal background checks? In short, no. However, the EEOC's position is that employers may not have blanket policies using criminal background checks against applicants or employees.
The EEOC isn't the only threat to employers when it comes to the use of background checks. In February, 2014, a class action lawsuit was filed against Whole Foods in California alleging Fair Credit Reporting Act claims stemming from its purported online application process which included forms (to be signed by applicants) which were designed to obtain background check information. The outcome in the Whole Foods case is likely to impact the plaintiffs' bar and employers.
In light of the EEOC's increasing opposition to the use of criminal records in hiring decisions and the compliance issues arising under the federal Fair Credit Reporting Act, employers must stay current on the law in this area and be able to show that the use of backgrounds checks is either directly related to job performance or justified by a legitimate business necessity. Additionally, it is imperative that employers have the required disclosure and acknowledgement forms in order to minimize the risk of ending up in the situation in which Whole Foods is now.