Earlier this week, the United States Court of Appeals for the Sixth Circuit affirmed the dismissal of a lawsuit brought by the U.S. Equal Employment Opportunity Commission (“EEOC”) alleging that Kaplan, Inc.’s use of credit reports disparately impacted African American applicants.
The Sixth Circuit’s opinion focused primarily on the district court’s decision to exclude the expert testimony offered by the EEOC. The EEOC sought to introduce statistical data compiled by an expert to prove that Kaplan’s credit check policy disparately impacted African American applicants. The expert obtained drivers’ licenses for approximately 900 applicants. He used a team of five “race raters” to review each drivers’ license and classify the applicants race. An applicant was only classified for use in the expert’s statistics if four out of five “raters” agreed on his/her race. However, the “raters” failed to agree on the race of 11.7% of the pool of applicants.The district court excluded the expert testimony for two reasons: (1) the EEOC failed to present any evidence that this testimony was reliable as required by Federal Rule of Evidence 702 and (2) the expert himself admitted the sample used in his report did not represent the applicant pool as a whole.
In upholding the district court’s decision, the Sixth Circuit noted that the EEOC failed to provide the potential rate of error, the technique used was not subject to peer review or publication, and the methodology used is not generally accepted in the scientific community. Accordingly, the EEOC failed to meet the requirements of Federal Rule of Evidence 702, and the opinion was properly excluded.
To prove its case on a disparate impact theory, the EEOC needed to provide statistical evidence that Kaplan’s policy was discriminatory. Thus, the district court dismissed the case because the EEOC could not meet its burden without this expert testimony.
This case previously attracted a lot of attention in April 2012 when the district court judge granted Kaplan’s motion to compel discovery regarding the EEOC’s own use of credit checks in hiring. This did not go without mention in the Sixth Circuit’s opinion, which noted “the EEOC sued the defendants for using the same type of background check that the EEOC itself uses.”
The EEOC has a similar appeal pending in the Fourth Circuit in a case alleging that the use of credit reports and background checks discriminated against applicants based on their race and gender. The EEOC used the same expert in that case.
While this case is good news for employers, many states and cities have introduced or passed legislation limiting the use of credit and background checks in employment decisions. We will continue to report on any new developments on this topic.