In previous months, we’ve advised our readers of the EEOC’s increasing focus on employer use of background checks and this month the agency is at it again. On September 3, 2014, the U.S. Equal Employment Opportunity Commission (“EEOC”) argued that the 300-day limit should not apply to EEOC pattern or practice discrimination claims regarding the use of background checks by Freeman, an event services company.
The case, EEOC v. Freeman, currently pending in the Court of Appeals for the Fourth Circuit, was originally filed by the EEOC in September 2009 based on an applicant’s charge of racial discrimination. The applicant, Katrina Vaughn, claimed Freeman had discriminated against her on the basis of her race when it denied her a job after pulling her credit report. The action alleges race and gender discrimination via the alleged disparate impact of Freeman’s credit history and criminal background checks on applicants. The EEOC argued that Freeman’s use of credit history as a hiring criterion had a disparate impact on black applicants and that its use of criminal history had a disproportionate impact on blacks and men.
A Maryland federal judge, however, significantly trimmed the putative class action alleging race and gender discrimination, granting dismissal of all claims relating to hiring decisions made 300 days before Vaughn’s discrimination charge. The EEOC has appealed to the Fourth Circuit claiming the limitations window was erroneously imposed. The agency argues that section 706 of Title VII of the Civil Rights Act of 1964 (“Title VII”), which gives workers the right to take action within 300 days of an allegedly unlawful employment practice, does not apply when the EEOC sues over an alleged discriminatory pattern or practice under section 707, which contains no limitations window. Indeed, the EEOC claims that “the very nature of a pattern or practice of discrimination means that the discrimination did not occur on any particular day, negating the application of the 300-day limitation.” Indeed, in filing such suits the EEOC more often than not does not limit the timeframe of its claims, and sues for relief since the “inception” of the alleged discriminatory pattern or practice.
In the letter appeal to the Fourth Circuit, the EEOC cited two August decisions in support of their position – a ruling by a Missouri federal judge in EEOC v. New Prime Inc., applying no limitation period to the EEOC’s section 707 claim, and the EEOC v. PMT Corp. decision in which a Minnesota district court stated that the continuing violation doctrine allows courts to consider discrimination that took place more than 300 days prior to the filing of the charge.
The issue is one of great significance for employers who often face significant and unfettered financial exposure when accused of a discriminatory pattern or practice by the EEOC. Despite the agency’s arguments, courts have overwhelmingly refused to give the EEOC carte blanche to litigate discrimination claims at their leisure.