The Equal Employment Opportunity Commission (EEOC) recently addressed two noteworthy issues. On April 25, 2012, the EEOC issued guidance warning employers that policies excluding applications based on criminal records may be subject to disparate impact claims of discrimination. On April 20, it issued a decision finding that Title VII’s prohibition against sex discrimination covers claims of discrimination based on gender status and gender identity.  

Use of Criminal Records in Employment Decisions

Employers routinely use criminal records as a screening tool during the application process for many reasons, such as to minimize negligent hiring claims, and to prevent theft, fraud and violence in the workplace. Unfettered use of criminal records, however, may expose employers to claims of disparate impact discrimination under Title VII, according to the EEOC’s updated Enforcement Guidance on the use of criminal arrest and conviction records in employment decisions.  

In its guidance, the EEOC states that national data shows that employment policies that exclude persons from employment based on arrests and convictions disproportionately screen out individuals based on race and national origin. Under Title VII, a neutral employment practice that causes a disparate impact on a protected class is discriminatory unless the employer shows that the practice is job-related for the position in question and consistent with business necessity. The EEOC long had held the position that use of arrest records is not job-related or consistent with business necessity, because arrest records provide no indication that any criminal conduct actually occurred. Accordingly, employers have been discouraged from asking about or relying upon arrest records in making employment decisions.  

In its updated guidance, the EEOC takes the position that use of convictions will be job-related and consistent with business necessity in two circumstances:  

  • The employer validates the criminal conduct exclusion for the position in question pursuant to the Uniform Guidelines on Employee Selection Procedures.  
  • The employer develops a targeted screen considering at least the nature of the crime, the time elapsed and the nature of the job, and then provides an individualized assessment for those excluded by the screen to determine whether the policy as applied is job-related and consistent with business necessity.  

Based on this guidance and the EEOC’s enforcement authority, employers would be wise to reconsider their use of criminal convictions in employment decisions. Broad policies that exclude applicants based upon criminal convictions without considering the crime, the time elapsed since the crime and the nature of the job will likely violate Title VII. Employers are encouraged to implement “targeted exclusion” policies that exclude individuals from consideration for particular positions for specified criminal conduct consistent with the above.  

The EEOC acknowledges that employers may have a defense if another federal law or regulation conflicts with its guidelines, but state laws that conflict with Title VII (i.e., those that authorize use of criminal records in employment decisions but cause a disparate impact under Title VII) are preempted and will not serve as a defense. For this reason, the new guidance impacts employers who have practices that are allowed by state law. At the same time, an employer’s obligation to comply with reasonable state laws that regulate criminal records for certain occupations (e.g., childcare workers may not have certain convictions) likely will mean the employer’s screening policy is job-related and consistent with business necessity.  

Title VII Covers Transgender Discrimination

The EEOC has issued a decision clarifying that transgender discrimination is considered sex discrimination as prohibited by Title VII. Under longstanding U.S. Supreme Court precedent, Title VII’s protection against sex discrimination includes not only “sex” in the biological sense, but also gender stereotyping. Thus Title VII prohibits employers from making decisions based on gender-based expectations and gender-nonconforming behavior.  

The EEOC decided that discriminating against someone because of transgender identity or status is discrimination based on sex. It explains that sex discrimination occurs “whether an employer discriminates against an employee because the individual has expressed his or her gender in a non-stereotypical fashion, because the employer is uncomfortable with the fact that the person has transitioned or is in the process of transitioning from one gender to another, or because the employer simply does not like that the person is identifying as a transgender person.”  

Several federal courts already had found that discrimination against transgender individuals is actionable sex discrimination under Title VII. However, until this decision, the EEOC had not clearly recognized transgender discrimination to be prohibited by Title VII and thus within its enforcement authority. Its decision will open the door to enforcement actions in response to charges of discrimination by transgendered individuals. This means that many employers may need to reassess their policies if they wish to avoid claims.