On April 25, 2012, the Equal Employment Opportunity Commission (“EEOC”) issued guidance (“Guidance”) about employers’ use of background checks and, in particular, under which circumstances an employer may use conviction records to disqualify applicants and/or employees from employment.  The EEOC took the general position that if an employer’s use of conviction records results in a disparate impact on a particular minority, then the employer’s policy violates Title VII.  The EEOC stated, however, that an employer’s use of conviction records to make employment decisions does not violate Title VII if: (1) the employer validates the correlation between the conviction and the requirements of the position, or (2) the employer performs an individual assessment of the conviction and its relationship to the job at issue.  For the individualized assessment, the EEOC’s Guidance provides that an employer should inform the individual that he/she may be excluded from employment because of the conviction and allow for the individual to explain why the employer should disregard the conviction for the employment decision.  The EEOC’s Guidance also identifies the following information that may be evaluated during the individualized assessment: how long ago the conviction occurred, the number of convictions, whether the individual has held a job since the conviction without incident, the individual’s age at the time of the conviction, rehabilitation efforts, references, and whether the individual is bonded. 

Now, just over a year later, the EEOC has filed two lawsuits demonstrating its intent to challenge employers’ use of conviction records.  See EEOC v. BMW Manufacturing Co., LLC (S.D.S.C. 2013) and EEOC v. Dolgencorp LLC d/b/a Dollar General (E.D. Ill. 2013).  In both cases, the EEOC has alleged that the employers’ use of conviction records for employment decisions violated Title VII because it disparately impacted a particular minority.  According to the EEOC’s complaint against BMW, BMW had contracted with a third-party to provide certain logistical services at a BMW manufacturing facility.   After a number of years, BMW entered into a contract with a new third party to provide the same logistical services and offered for all of the employees who had already been working at the facility to apply to continue working there.  However, these individuals needed to first pass a background check.  As a result, 88 employees were not re-hired because of convictions.  Eighty percent of those disqualified were black, including at least a couple of individuals who had already worked for multiple years at the same manufacturing facility. 

These lawsuits raise a number of issues, and front and center is whether the EEOC’s disparate impact theory will emerge as a viable theory under Title VII.   If it does, employers will face these complaints all over the country because of the potentially high-value damage awards.  For example, the complaint against BMW is a class action of 69 individuals, all claiming an entitlement to back pay and front pay.  The complaint also suggests that the employment decisions were made in 2008, nearly five years ago.  Assuming that the EEOC is able to prevail and prove that each individual is entitled to damages, the potential damage award is $17,250,000 ($50,000 times 5 years times 69 individuals).  There are a number of uncertainties with this number, but it clearly shows the potential for significant damages because these complaints will frequently involve class actions.  It also is no secret that attorneys migrate towards cases involving high damages and this could emerge as one of those areas in the employment law setting.  

In short, employers may clearly use conviction records during the hiring process, and the EEOC’s 2012 Guidance does not provide otherwise.  However, to steer clear of one of these lawsuits, employers should use conviction records in a defendable manner.  For some employers, this will be easy because a statute or regulation prohibits them from hiring individuals with convictions. Other employers, however, must be able to articulate why that particular conviction should play a role in the selection process.  For some convictions, there will be a clear justification.  For example, a company should not hire an accountant who has a been convicted of fraud.  There are many, many situations like this.  However, the use of convictions in other settings will be more difficult to justify.  For example, terminating an employee for a conviction that occurred many years ago when the employee has performed adequately for years may be problematic.  

Therefore, employers who want to use conviction records as part of their hiring process may do so, but they need to proceed carefully.  If not, they run the risk of being subjected to a Title VII claim in this new and emerging area.