Handling Applicant Criminal Records to Avoid Disability Discrimination Claims

Seyfarth Shaw LLP
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With the 2016 hiring season well under way, California employers are well advised to reconsider their use of criminal records in making hiring decisions.  Although employers are probably aware of “ban the box” and other legislative initiatives, they may not be as familiar with the liability exposure they may create by when using blanket policies to reject applicants because of their criminal histories.  On February 19, 2016, the California Department of Fair Employment and Housing (“DFEH”) announced proposed regulations governing the consideration of criminal history in employment decisions, which will enumerate limitations to the use of criminal history.

According to an EEOC survey, 92% of employers subject at least some candidates to criminal background checks.  Since issuing guidelines on the use of criminal records in 2012, the EEOC has embarked on an aggressive campaign against employer use of criminal records in employment prescreening.  While some EEOC lawsuits have failed, others have resulted in multimillion dollar settlements, such as a $3.13 million prelawsuit settlement with Pepsi.  Each time, the EEOC has focused on whether the employer’s reliance on criminal records has an adverse impact on applicants with protected characteristics, such as race, national origin, or disability.  Of particular note to California employers, the California Department of Fair Employment and Housing (“DFEH”), has recently become more active in pursuing individual and class-based claims, under the California Fair Employment and Housing Act (“FEHA”), California’s counterpart to Title VII, the Age Discrimination in Employment Act, and the Americans with Disabilities Act (“ADA”).

In recent years, we’ve seen individual and class actions asserting indirect discrimination, or “disparate impact” discrimination, primarily involving race and national origin.  Because about  one-sixth to one-fourth of individuals with a criminal record also have a diagnosable mental disability, we anticipate increased litigation by job applicants with disabilities who have a criminal record.  The disabled community has faced historical exclusion from the workplace, and a disproportionate number of them have criminal histories.  And, as mentioned, the DFEH has now become more active in initiating such cases.  Thus, when employers adopt across-the-board hiring practices that reject candidates with criminal records, they may be exposing themselves to lawsuits under the ADA or the FEHA.  This risk is especially prominent in California, because the FEHA defines “disability” much more broadly than the ADA does.  California law defines a disability as any mental or physiological disorders that limit major life activities, as opposed to the ADA definition, which requires that the condition substantially limit major life activities.

On the other side, employers have justifiable reasons for hiring practices that consider criminal background.  Employers must guard against theft and fraud and try to avoid liability for negligent hiring.

Employers thus may perceive a dilemma of (a) not considering criminal histories at all or (b) facing potential discrimination suits.  Though there are as many solutions as there are questions, the best practice has always been to ensure that a criminal history is not the sole reason to exclude a candidate, and to use it in conjunction with other business reasons.  Each candidate’s qualifications deserve individualized attention, with an awareness of potential disability issues. Employers would also be well advised to structure narrowly tailored hiring policies to ensure that they prevent not only racial discrimination, but disability discrimination.  Categorical exclusions based on a criminal record invite a host of potential risks of litigation under the ADA or FEHA that risk-averse employers will want to avoid.

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