Criminal Background Checks: The Saga Continues

by BakerHostetler

In the past few weeks there have several noteworthy decisions regarding employers’ use of criminal background information to make hiring decisions. In one case, EEOC v. Peoplemark (6th Cir., Oct. 7, 2013), the Sixth Circuit handed the Equal Employment Opportunity Commission (EEOC) a significant bill for attorneys’ and expert fees exceeding $750,000, when the court found that the EEOC pushed forward on a policy-based class action claim after discovery definitively established that no such policy existed. Another case, Smith v. USG Corp. (Pennsylvania Superior Court, Sept. 23, 2013), involved a Pennsylvania state court suit, which was revived to allow a plaintiff to re-plead a state law “violation of public policy” claim that her termination was based on her pre-hire disclosure of a criminal background history, causing the employer to claim it had hired her in error. Here are the key facts and takeaways from both cases, as employers attempt to navigate continuing background check litigation.

EEOC v. Peoplemark and Its Take-Away

EEOC v. Peoplemark is a case with origins back to 2005, when Peoplemark, a temporary staffing agency operating in multiple states, declined to refer a Michigan-based applicant for employment at Peoplemark’s clients due to her felony conviction. Peoplemark handled the EEOC investigation internally. During the investigation, Peoplemark initially advised the EEOC that it had a companywide policy of rejecting applicants with felonies. In 2008, after a 2-year investigation where 18,000 documents were provided to the EEOC, the EEOC sued Peoplemark on a class action claim. The 2008 lawsuit alleged that Peoplemark had a companywide policy that prohibited the hiring of any person with a criminal record, which the EEOC alleged had a disparate impact on African-American applicants.

In April 2009, Peoplemark’s attorneys advised the EEOC that Peoplemark did not in fact have a company-wide policy  of rejecting all applicants with felonies. After extensive discovery and expert reports, by October 1, 2009, it was clear from the evidence that Peoplemark DID NOT have a company-wide policy prohibiting hiring of those with criminal records. The EEOC then sought to change its theory of the case, claiming that the applicant flow and current workforce data could be used to establish that African-Americans with felonies were disparately impacted by Peoplemark’s hiring process (e.g. a disproportionate number of African-American applicants were not hired). Five years after the litigation began, on March 24, 2010, the EEOC dismissed the case with prejudice, and agreed that Peoplemark was the prevailing party in the lawsuit, enabling Peoplemark to seek its fees and costs.

Peoplemark then sought and received $750,000 in attorneys’ fees, expert witness fees, and other expenses from the district court. On appeal by the EEOC, the 6th Circuit upheld the  $750,000 award. It did so because there is a very high standard of reviewing attorneys’ fees awarded by a lower court – unless there is a clear error, or abuse of discretion on the part of a district court, fee awards will be upheld. According to the 6th Circuit, the EEOC pursued the lawsuit and continued to litigate after October 2009, when it was clear that Peoplemark did not have a company-wide policy of excluding felons/applicants. The 6th Circuit stated that as of October 2009, the EEOC should have either dismissed the case, or attempted to amend its complaint. Since the EEOC did neither, Peoplemark was awarded attorneys’ fees and costs incurred after October 2009 and all of its expert witness fees, even expert fees incurred prior to October 2009.

Despite the significant fee “win” by Peoplemark, employers are well advised to view EEOC v. Peoplemark as a cautionary tale. This eight-year ordeal began when Peoplemark provided information that led the EEOC to conclude that Peoplemark had a company-wide policy excluding applicants with felonies. Whether a case is handled internally or by outside counsel, employers should be extremely cautious about overstating policies, particularly when such policies are implemented and interpreted at a local vs. companywide level. Employers responding to EEOC Requests for Information should take pains to emphasize, where possible, the unique, fact-specific decisions made with respect to the charging party identified in the particular EEOC charge. This case was not without expense to Peoplemark – attorneys’ fees from 2008 to October 2009, when a large portion of the class-wide discovery occurred, were not awarded. These attorneys’ fees were likely significant, and potentially avoidable if Peoplemark had provided more limited, site-specific information at the beginning of the EEOC’s investigation.

Smith v. USG Corp. and Its Take-Away

Smith v. USG Corp. involved a Pennsylvania state law, which provides: “Felony and misdemeanor convictions may be considered by the employer only to the extent to which they relate to the applicant’s suitability for employment in the position for which he has applied.” 18 Pa.C.S.A. § 9125(b). Here, the employer (USG) hired an individual who had revealed a criminal background history during the application process. Shortly after the applicant was hired, USG allegedly claimed that the hiring had been in error given the criminal background history, and terminated the individual. All of this appears to have occurred within a few months. The trial court dismissed the employee’s claims that the termination of her at-will employment violated public policy, finding that the Pennsylvania law only applied to pre-employment process. In reversing the decision, the appellate court stated: “while Smith may have already begun her employment, her termination may have actually been a hiring decision error that could trigger the applicability of section 9125.” Plaintiff Smith was allowed to re-plead her lawsuit to allege that her employer’s use of criminal background history information as part of the hiring process violated public policy. While it remains to be seen whether Smith will be able to meet the necessary pleading requirements, the lawsuit is revived and pending. It is also important to note that this Pennsylvania law requires the employer to provide a notice in writing “if the decision not to hire the applicant is based in whole or in part on criminal history record information.”

The bigger lesson from Smith v. USG Corp. is that given ongoing litigation regarding employers’ use of criminal background history to make hiring decisions, it is always a good idea to be aware of the state laws regarding use of such information AND the written notice requirements if the information results in a non-hire decision. State law claims could provide a refuge to individual claimants who have not timely pursued EEOC Charges, or where EEOC class action efforts have proven unsuccessful.

BakerHostetler will continue to follow these background check issues, as it has been doing (see post 1, post 2, post 3, post 4, post 5), and is available to assist employers in navigating these issues.


Written by:


BakerHostetler on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.