When EEOC’s Statistics Are Unreliable – Case Fails

For many employers, conducting a criminal history or credit record check on a potential employee is a rational and legitimate component of a reasonable hiring process.  This is how a federal district court judge started his opinion that went on to rake the EEOC over the coals for using “cherry-picked” data to prove a statistical case against an employer in an “egregious example of scientific dishonesty.”  This stinging rebuke of the EEOC’s litigation strategy over nearly seven years is remarkable.  The opinion exposes the difficulties the EEOC faces in proving a case of unlawful disparate impact when criminal and credit records are used in an employer’s hiring process. 

Criminal Records and Disparate Impact on Minorities

As we reported earlier this year in Arrest and Conviction Records – EEOC Takes a Stand, there has been a recent focus on the use of criminal background checks by employers.  This court decision doesn’t directly challenge the EEOC’s Enforcement Guidance on the appropriate use of criminal history information.  What it does do, however, is set the record straight on the necessary reliability of proof that the EEOC must bring to court to prove a case of discriminatory disparate impact.

In cases alleging a discriminatory disparate impact, it is the plaintiff’s burden to prove discriminatory impact by showing statistical disparities between the number of protected class members in the qualified applicant group and those in the relevant segment of the workforce.  Upon such a showing, the burden then shifts to the employer to prove that the allegedly discriminatory policies or practices are job-related for the position in question and consistent with business necessity. It is sufficient for the employer to point out the numerous fallacies in the statistical analysis to raise the specter of unreliability.

The EEOC’s Unreliable Statistics Sinks Its Case

That’s what happened in this case.  The employer was granted summary judgment because the EEOC’s expert’s statistical analysis was so flawed as to be totally unreliable.

The employer’s use of criminal history and credit records were described in detail and included a multi-step review that varied with the nature of the job and was tailored to 40 separate job categories.  Only events occurring in the past seven years were considered.  The employer’s job application asked for information regarding any past convictions, and it also contained this language:

A conviction does not automatically mean you will not be offered a job. What you were convicted of, the circumstances surrounding the conviction and how long ago the conviction occurred are important considerations in determining your eligibility. Give all the facts, so that a fair decision can be made.

Providing false information was deemed to be an automatic disqualifier for an applicant.  The court determined that, on its face, the employer’s hiring policy and practice appeared reasonable and suitably tailored to the purpose of ensuring a safe and honest work force.

Given the finding that the employer’s hiring practices were legitimate on their face, the court outlined in detail the numerous failings of the EEOC in its effort to prove discriminatory impact through its statistical experts.  This is what got the EEOC in trouble.  Not only were the experts shown to have used hiring data unrelated to the time period in question, but they also failed to consider nearly half of the employer’s many facilities while “cherry picking” certain rejected applicants that skewed the results.  These failings were in addition to the fact that the EEOC was untimely in submitting the experts’ reports and tried to “fix” the problems with other untimely reports.  Finally, the EEOC attempted to fall back on national statistics to prove its case.  The court didn’t buy that argument either, stating that the general population pool cannot be used as a surrogate for the class of qualified job applicants, because it contains many persons who have not (and would not) be applying for a job with the employer.

The court goes on to say that careful and appropriate use of criminal history information is an important and, in many cases, essential part of the employment process of employers throughout the United States. Even the EEOC conducts criminal background investigations as a condition of employment for all employees and conducts credit background checks on approximately 90 percent of its positions.

The Employer’s “Hobson’s Choice”

Finally, the court concludes with an eloquent statement of the problems employers face when attempting, in good faith, to ensure that their work force is honest and reliable:

Any rational employer in the United States should pause to consider the implications of actions of this nature brought based upon such inadequate data. By bringing actions of this nature, the EEOC has placed many employers in the “Hobson’s choice” of ignoring criminal history and credit background, thus exposing themselves to potential liability for criminal and fraudulent acts committed by employees, on the one hand, or incurring the wrath of the EEOC for having utilized information deemed fundamental by most employers. Something more, far more, than what is relied upon by the EEOC in this case must be utilized to justify a disparate impact claim based upon criminal history and credit checks. To require less, would be to condemn the use of common sense, and this is simply not what the discrimination laws of this country require.

Lessons for Employers

In this particular case, the EEOC failed miserably to prove its case.  As the court said, it was a case of “a theory in search of facts to support it.”  That is not to say, however, that the EEOC’s focus on the use of criminal histories and credit reports will be blunted.  Rather, the EEOC may now be more precise in its use of statistics that can be shown to be reliable.  That will ultimately make an employer’s defense more difficult.  To that end, employers should carefully review their policies and practices when criminal and credit records are used in the hiring process.  A review of the EEOC’s Enforcement Guidance is a good place to start.

Reference:  EEOC v. Freeman, (D.C. Md., RWT 09cv2573, August 9, 2013)