On April 25, 2012, the EEOC issued new Enforcement Guidance on employers’ use of criminal background checks during the hiring process.  What should employers do to improve their background check policies and procedures, and how can insurers and their insureds stay off the EEOC’s radar and avoid a costly EEOC investigation or direct action?

First, why is the EEOC focused on employer use of criminal background checks?  Two words: disparate impact.  According to EEOC, African Americans and Hispanics are arrested and convicted in numbers disproportionate to their representation in the general population.  By extension, where criminal records are used to screen job applicants, the same disparate impact is reflected in the workforce.

So are employers supposed to simply ignore a candidate’s criminal record?  If so, aren’t employers being set up for negligent hiring and retention claims when they are forced to hire violent criminals who then assault their co-workers on the job or embezzlers who then steal from the cash register after closing up the store?

Fortunately, the answer to both questions is “no,” as the new EEOC Guidelines recognize that an employer may continue to exclude those job applicants with criminal records as long as the exclusion is job related and “consistent with business necessity.”  To prove that a criminal records exclusion is job related and consistent with business necessity, an employer is expected to consider 3 factors identified by the Eighth Circuit in Green v Missouri Pacific Railroad (the “Green” factors):

  • the nature and gravity of the offense;
  • the time that has passed since the offense or conduct and/or the completion of the sentence;
  • the nature of the job held or sought.

If, for example, a 55 year old candidate to drive a bus was convicted of second degree murder arising from a gang fight 40 years earlier when he was 15, and he served his time and has no criminal record in the ensuing 40 years, a criminal records exclusion has been found not job related or otherwise consistent with business necessity based on these 3 factors.

To avoid costly EEOC investigations and possible direct actions, employers should review their criminal background check policies and follow the 3 Green factors to ensure that application of the exclusion is job related and driven by a legitimate business necessity.  Blanket no hiring policies for any criminal record, no matter how old or what the crime, will invite EEOC scrutiny and potential Title VII liability based on disparate impact.