The Equal Employment Opportunity Commission (EEOC) approved on April 25, 2012 its first Enforcement Guidance (Guidance) in more than 20 years on employers’ use of arrest and conviction records in making employment decisions. The EEOC’s process in approving the Guidance was the subject of some controversy because the Guidance was not made available for public comment or for review by the Office of Management and Budget.

As reported in our February 3, 2010 Pepper@Work,EEOC’s Renewed Focus on Criminal Background Checks,” the EEOC, as part of its E-RACE initiative, has focused in recent years on employment policies that prohibit or curtail the employment of applicants with criminal convictions based on the EEOC’s conclusion that such policies have a disparate impact on minorities. The EEOC has been actively pursuing claims against employers based on their criminal background policies.

The Guidance makes clear that employers whose criminal conviction policies have a disparate impact on race and/or national origin will face a heavy burden in defending their policies before the EEOC. The EEOC’s Guidance cites national statistics showing that African-Americans and Hispanics are arrested at a rate that is two to three times higher than their proportion in the general population. In contrast to white men, of whom one in 17 will be incarcerated during their lifetime, one in six Hispanic men will likely be incarcerated and one in three African-American men will likely be incarcerated.

The Guidance recognizes that denying employment based on a criminal record cannot be a violation of Title VII unless it relates to discrimination based on race, color, religion, sex or national origin, the classes protected by Title VII. Liability under Title VII can arise from disparate treatment or disparate impact. A disparate treatment claim is a claim of intentional discrimination. A disparate treatment claim involving the use of criminal records might be brought if an employer treats applicants with comparable criminal records differently, such as rejecting an African-American applicant convicted of theft but hiring a white applicant convicted of a comparable crime.

Defending a Disparate Impact Claim

A disparate impact claim is based on a facially neutral employment policy that has a disparate impact on a group protected by Title VII. The EEOC’s challenges to employers’ criminal background policies have often been founded on a disparate impact theory, that the neutral application of the criminal background policy has a disparate effect on African-Americans and Hispanics. In a disparate impact case, if the plaintiff shows that the employer’s criminal background check policy has a disparate impact on a protected class, Title VII liability exists unless the employer can show that its policy is job-related and consistent with business necessity. If the employer makes that showing, the plaintiff can still prevail by showing that there is a less discriminatory practice that is just as effective as the challenged practice and which the employer refused to adopt. The Guidance discusses what evidence the EEOC will consider sufficient to establish this job-related and consistent with business necessity defense. Fundamentally, employers can try to show that their particular criminal background check policy does not cause a disparate impact on protected groups despite the national data. The Guidance also affirms the EEOC’s long-standing position that criminal record policies that exclude from employment all applicants with any criminal convictions will not pass muster under Title VII.

The Guidance identifies two approaches that the EEOC suggests employers can adopt to meet the job-related and consistent with business necessity defense. The first is to validate the criminal conduct screen for the position in question as outlined in the EEOC’s Uniform Guidelines on Employee Selection Procedures. Employers are unlikely to use this method; the Guidance notes that studies that could assist in validating employment exclusions, such as those that assess whether convictions are linked to future behaviors or conduct in the workplace, are rare.

Targeted Screen

The second (and the one to which the Guidance devotes the most discussion) is to develop a “targeted screen” that takes into account the three factors set forth in a 1975 decision of the United States Court of Appeals for the Eighth Circuit, Green v. Missouri Pacific Railroad, 523 F. 2d 1290 (8th Cir. 1975). Those factors are (1) the nature and gravity of the offense or conduct; (2) the time that has passed since the offense or conduct and/or completion of the sentence; and (3) the nature of the job held or sought. The EEOC suggests that the timeframe for which an applicant may be excluded from employment should be tailored to satisfy the business necessity standard; the employer should base its assessment on information such as “studies demonstrating how much the risk of recidivism declines over a specified time.” The nature of the job held or sought means the specific job duties and essential functions, the level of supervision, the extent of contact with co-workers or vulnerable individuals and the job environment (outside, in a warehouse, private home, etc.). The EEOC’s targeted screen envisions a detailed analysis of each job, a determination of the types of convictions that may justifiably exclude an applicant from each job and the length of time that it is appropriate to exclude an applicant with a particular conviction from a particular job. A Green-type analysis already is required under some state laws.

Individualized Assessment

The EEOC strongly recommends that employers go one step further, and marry the targeted screen with an individualized assessment of applicants who are initially screened out based on a criminal conviction. In such circumstances, the EEOC suggests that employers give those applicants the opportunity to explain their particular circumstances so that the employer can evaluate whether to make an exception to its criminal records policy based on the information provided by the individual applicant. The Guidance notes that there may be circumstances in which an employer could justify a targeted screen based solely on the Green factors without conducting an individualized assessment, but the “screen would need to be narrowly tailored to identify criminal conduct with a demonstrably tight nexus to the position in question.” Given the EEOC’s statement that “the use of individualized assessments can help employers avoid Title VII liability,” the EEOC may take a dim view of criminal records policies that do not incorporate some form of individualized assessment.

The Guidance describes the individualized assessment as providing applicants with criminal records the opportunity to discuss (1) the inaccuracy of their criminal record; (2) the facts or circumstances surrounding the offense or conduct; (3) the number of offenses for which the individual was convicted; (4) age at the time of the conviction or release from prison; (5) evidence that the individual performed the same type of work post-conviction with the same or different employer, with no known incidents of criminal conduct; (6) length and consistency of employment history before and after the offense of conduct; (7) rehabilitation efforts, such as education or training; (8) employment or character references; and (9) whether the individual is bonded. After this discussion with the applicant, the employer can decide whether it should make an exception to its policy or whether the application of the policy to the particular applicant is still job-related and consistent with business necessity.

Employment Applications

The Guidance also recommends that employers not ask about convictions on their employment applications. Several states and municipalities, including Massachusetts and Philadelphia, already ban this practice.

State Law Restrictions on Hiring Applicants with Criminal Convictions

Finally, employers that are prohibited under state law from hiring applicants with certain convictions for certain jobs are not necessarily insulated from attention from the EEOC. The Guidance states that while restrictions imposed by federal law are not preempted by Title VII, state laws are preempted by Title VII if they “purport[ ] to require or permit the doing of any act which would be an unlawful employment practice under Title VII.” That means that an employer that refuses to hire an applicant based on state law restrictions will not be shielded from Title VII liability unless it can show that its policy is job-related and consistent with business necessity. In many cases, employers should be able to meet that burden, such as where the state laws are based on safety concerns for vulnerable populations, like children. The EEOC’s view, however, is that, if challenged, an employer will have to independently demonstrate that its refusal to hire an applicant based on state law was job-related and consistent with business necessity.

What Does This Mean for Employers?

Although the Guidance provides employers an opportunity to defend their criminal records policies if they use a targeted screen based on the Green factors, the Guidance imposes a high burden on employers that receive a large volume of applications to engage in discussions with each applicant whose criminal record includes a conviction that would be disqualifying under the employer’s criminal background check policy.

In light of the issuance of the Guidance and the EEOC’s increased scrutiny of employers’ criminal background check policies, now is the time to review your criminal background check policies and practices and, if necessary, revise them so that they take into account the Green factors . You should also consider whether to integrate an individualized assessment into your background check process. Finally, you should train the employees who administer the criminal background check process on the requirements of Title VII and the EEOC’s Guidance.