Yet another reminder that everyone using criminal background checks in the hiring process needs to review their standards—BMW just entered a consent decree with the EEOC under which it will pay $1.6 million and offer to hire dozens of people previously rejected as having unacceptable criminal histories. BMW had (note the past tense) a criminal background check requirement that excluded applicants with certain felony convictions, no matter how old the conviction or the type of job at issue. In 2008, when BMW changed contractors providing logistics services at its South Carolina facility, it required the new contractor to apply the criminal history standard. The new contractor did so and, according to the EEOC, ended up excluding about 100 candidates, 80% of which are African American. That is what the EEOC calls a disparate impact. (The EEOC’s press release does not suggest that BMW or its contractor intentionally discriminated on the basis of race.) If that wasn’t enough to get the EEOC’s attention, most of these applicants were already performing the jobs for the old contractor—so not only were they not hired, they actually lost their jobs.

These events all occurred before the EEOC issued its April 2012 Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII. Under that Guidance and Title VII, employers can use criminal histories in employment decisions but if the criminal history policy has an adverse impact against a protected category, the employer must prove that the policy is job-related and consistent with business necessity. The Guidance strongly encourages employers’ policies to include an individualized assessment, including consideration of the nature of the crime, the time elapsed since the crime, and the nature of the job.

Although a disparate impact theory only arises when a neutral hiring practice has an adverse impact on the basis of race or another protected category, employers who want to stay off of the EEOC’s radar should consider following the Guidance. Doing so may not change whom you hire, but it will certainly improve your ability to defend the decision.