EEOC Criminal Background Check Cases Come With Big Price Tags for All Parties

Faegre Drinker Biddle & Reath LLP

One of the EEOC's top priorities has been ensuring individuals are not discriminated against based on their criminal histories. In recent years, it has filed multiple headline-grabbing lawsuits related to background checks against employers throughout the country. Two recent decisions show the EEOC has had mixed success in this pursuit, but they also illustrate the potential for significant employer liability for background check violations.

On September 8, 2015, BMW Manufacturing Company, LLC entered into a consent decree with the EEOC in which it agreed to pay $1.6 million to African-American employees whom the company failed to rehire in 2008 due to their criminal histories. The EEOC sued BMW in 2013, alleging BMW's criminal background check policy prohibited employment of individuals with convictions for certain crimes, regardless of when the conviction occurred or whether it was for a felony or misdemeanor. After both parties' motions for summary judgment were denied, the parties entered into the $1.6 million consent decree. Needless to say, this was a big win for the EEOC.

On the other hand, the EEOC found itself on the wrong side of a $1 million fee award in EEOC v. Freeman, 2015 WL 5178420 (D. Md. Sept. 3, 2015). In 2009, the EEOC alleged that Freeman's use of applicants' criminal histories in its hiring decisions had a disparate impact on African-Americans and men. Freeman successfully argued that the EEOC's expert analysis was too unreliable to make a prima facie case of discrimination, and the EEOC appealed to the Fourth Circuit, but to no avail. In granting much of Freeman's $1.6 million fee request, the district court noted that reasonable attorneys' fees of approximately $1 million were appropriate due to the EEOC's pursuit of a case that both it and the Fourth Circuit determined it simply could not win.

How these two cases will affect the EEOC's strategy in other cases remains an open question. To reduce the risk of liability, employers should examine the EEOC's guidance on criminal background checks, which provides for consideration of the nature of the crime, the time elapsed and the nature of the position, and allows the individual to respond. As the EEOC has been pursuing these cases for some time, we will likely see the results of other background check cases in the near future, and new cases against employers who fail to heed the EEOC's guidance.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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