On April 25, 2012, the EEOC issued a new Enforcement Guidance memorandum focusing on potential race and national origin discrimination arising out of employer use of criminal background checks in making employment decisions. The Guidance discusses disparate treatment and disparate impact analysis under Title VII and concludes that the use of criminal background information may result in a violation of Title VII under either theory of discrimination. Specifically, the Guidance notes that a disparate treatment violation may occur when an employer treats criminal history information differently based on an applicant's or employee's race or national origin. Or, an employer's neutral policy (e.g., excluding applicants from employment based on certain criminal conduct) that disproportionately impacts individuals based on their race or national origin would violate Title VII if the policy is not job related and consistent with business necessity.

The Guidance addresses the differences between arrest and conviction records. With respect to arrest records, the Guidance states that the fact of an arrest does not establish that criminal conduct has occurred, and an exclusion based on an arrest, in itself, is not job related and consistent with business necessity. However, an employer may make an employment decision based on the conduct underlying an arrest if the conduct makes the individual unfit for the position in question. By contrast, a conviction record will usually serve as sufficient evidence that a person engaged in particular conduct, but according to the EEOC, under certain circumstances, there may be reasons for an employer not to rely on the conviction record alone when making an employment decision.

The Guidance spends the most time discussing the potential disparate impact arising out of criminal background checks. According to the Guidance, national data generally supports a finding that criminal record exclusions have a disparate impact based on race and national origin. As a result, the EEOC will scrutinize a criminal record exclusions. This does not mean that employers cannot demonstrate that the particular exclusion it utilizes will automatically be found to have a disparate impact based on race or national origin. Instead, the EEOC will assess relevant evidence in determining whether a disparate impact exists. For instance, the EEOC will look at applicant flow information, workforce data, criminal history background check data, demographic availability statistics and incarceration/conviction and other similar data for the relevant labor market. Therefore, the employer may demonstrate the lack of any disparate impact by showing that local statistics show that African Americans and/or Hispanics are not arrested or convicted at disproportionately higher rates in the geographic area from which it does its hiring.

If the EEOC's investigation establishes the existence of a disparate impact, the employer can still defend the criminal record exclusion by demonstrating that it is job related for the position in question and consistent with business necessity. In its Guidance, the EEOC identifies two circumstances in which it believes employers will consistently meet this standard:

  • The employer validates the criminal conduct screen for the position in question per the Uniform Guidelines on Employee Selection Procedures (Uniform Guidelines) standards (if data about criminal conduct as related to subsequent work performance is available and such validation is possible); or
  • 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 opportunity for an individualized assessment for people excluded by the screen to determine whether the policy as applied is job related and consistent with business necessity.

By the Commission's own admission, the existence of social science studies that would permit validation of a criminal conduct screens are "rare at the time of this drafting."

Absent such a validation study, the EEOC Guidance suggests therefore that the employer should develop a targeted screen followed by an individualized assessment. The targeted screen should consider:

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

The individualized assessment would consist of notice to the individual that he has been screened out because of a criminal conviction; an opportunity for the individual to demonstrate that the exclusion should not be applied due to his particular circumstances; and consideration by the employer as to whether the additional information provided by the individual warrants an exception to the exclusion and shows that the policy as applied is not job related and consistent with business necessity. The individual's showing may include information that he was not correctly identified in the criminal record, or that the record is otherwise inaccurate. Other relevant individualized evidence includes, for example:

  • The facts or circumstances surrounding the offense or conduct;
  • The number of offenses for which the individual was convicted;
  • Older age at the time of conviction, or release from prison;
  • Evidence that the individual performed the same type of work, post conviction, with the same or a different employer, with no known incidents of criminal conduct;
  • The length and consistency of employment history before and after the offense or conduct;
  • Rehabilitation efforts, e.g., education/training;
  • Employment or character references and any other information regarding fitness for the particular position; and
  • Whether the individual is bonded under a federal, state, or local bonding program.

The EEOC concedes that the individualized assessment may not be necessary in all circumstances. However, the use of individualized assessments can help employers avoid Title VII liability by allowing them to consider more complete information on individual applicants or employees, as part of a policy that is job related and consistent with business necessity.

The Guidance then goes on to note, that where an employer successfully demonstrates that its policy or practice is job related for the position in question and consistent with business necessity, a Title VII plaintiff may still prevail by demonstrating that there is a less discriminatory ?alternative employment practice that serves the employer's legitimate goals as effectively as the challenged practice but that the employer refused to adopt. In this regard, however, the Guidance provides that employers can still avoid Title VII liability by showing:

  • Compliance with federal laws and/or regulations that prohibit individuals with certain criminal records from holding particular positions or engaging in certain occupations is a defense to a charge of discrimination, but any exclusion that goes beyond the scope of a federally imposed restriction will need to withstand scrutiny under the job relatedness and business necessity standards;
  • Compliance with federal statutes and regulations that govern eligibility for occupational licenses and registrations; however, while Title VII does not mandate that an employer seek such waivers, where an employer does seek waivers it must do so in a nondiscriminatory manner;
  • The individual or employee has not fulfilled or has ceased to fulfill federal national security requirements to hold the position in question;
  • Compliance with states and local laws and/or regulations that restrict or prohibit the employment of individuals with records of certain criminal conduct; however, if an employer‘s exclusionary policy or practice is not job related and consistent with business necessity, the fact that it was adopted to comply with a state or local law or regulation does not shield the employer from Title VII liability.

The Guidance concludes with a list of its examples of best practices for employers who are considering criminal record information when making employment decisions. Interestingly, the list does not include another recommendation that was included in the body of the Guidance; that is, eliminate any inquiry about criminal convictions on the employment application itself consistent with some state "ban the box" statutes. In any event, here is the list:

  • Eliminate policies or practices that exclude people from employment based on having any criminal record.
  • Train managers, hiring officials, and decisionmakers about Title VII and its prohibition on employment discrimination.
  • Develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct.
  • Identify essential job requirements and the actual circumstances under which the jobs are performed.
  • Determine the specific offenses that may demonstrate unfitness for performing such jobs.
  • Determine the duration of exclusions for criminal conduct based on all available evidence.
  • Record the justification for the policy and procedures.
  • Note and keep a record of consultations and research considered in crafting the policy and procedures.
  • Train managers, hiring officials, and decisionmakers on how to implement the policy and procedures consistent with Title VII.
  • When asking questions about criminal records, limit inquiries to records for which exclusion would be job related for the position in question and consistent with business necessity.
  • Keep information about applicants‘ and employees‘ criminal records confidential. Only use it for the purpose for which it was intended.