Ohio District Court Dismisses EEOC Suit Challenging Credit Check Policies

by BakerHostetler

Anyone looking for a case rich in irony need look no further than EEOC v. Kaplan Higher Learning Edu. Corp., Case No. 1:10 CV 2882 (N.D. Ohio, Jan. 28, 2013). Kaplan provides, among other services, online college training, and it assists its students with obtaining financial aid from the United States Department of Education. In 2004, it found that some finance employees had misappropriated student funds. In response to this discovery, and to ensure compliance with Department of Education rules and regulations, it began performing credit histories on applicants for certain jobs, primarily those in its finance function.

In 2008, Kaplan hired an outside agency to review applicants’ credit reports for instances such as bankruptcies, mismatched social security numbers, collection activity, and similar matters. In those instances, the applicant was not immediately rejected, but only “flagged” for further review. For the first three years in the only those with defaulted student loans were rejected in the university’s financial aid department, a fairly reasonable standard given that these applicants themselves were to be working in the student loan process.   The school used different standards at different times for applicants to other financial positions. 

The EEOC brought suit against Kaplan in 2010, contending that the use of credit histories had a disparate impact against African-American applicants. Putting aside the obvious question of why requiring credit histories of finance employees working for a regulated industry with a recent history of financial improprieties was the least bit controversial, the case revealed some troubling facts about the EEOC’s own conduct.

Irony No. 1. The EEOC had the same policy. Yes, the court permitted discovery as to the EEOC’s own policies towards credit histories. It found that the EEOC’s own “Personnel Suitability and Security Program Handbook” required credit checks for 84 of the EEOC’s 97 positions. Thus, the EEOC was challenging a policy it created and followed itself.

Irony No. 2. The EEOC had the same reasons as Kaplan for doing so. The EEOC not only had the same policy, but had the same explanation for doing so. As the EEOC explained in its Handbook “overdue just debts increase temptation to commit illegal or unethical acts as a means of gaining funds to meet financial obligations.” How true.

Irony No. 3. The EEOC engaged in an alarming process to identify the “race” of applicants. Kaplan did not keep records of the race of applicants, so the EEOC attempted to identify their race from their drivers license photos obtained from state motor vehicle departments. It retained an expert who created a panel of “race raters” with degrees such as “cultural anthropology” and “economics” to make the determination, apparently, as to whether the applicant “looked” black, white, Asian, or Hispanic. The court’s opinion does not disclose how an economist, or, for that matter, the other panel members would have any more ability to determine race from a photograph than anyone else.

In any event, the court rejected this curious approach outright, finding that the EEOC didn’t even try to meet the standards of Daubert v. Merrell Dow Pharmaceuticals Inc., 509 U.S. 579, 597 (1993). 

Although the court rightly rejected this process under Daubert, the EEOC’s attempt to use it raises disturbing questions about its own notions as to race and the growing numbers of Americans who can trace their ancestries to different ethnic groups. A government agency hiring alleged experts to figure out if someone “looks” black from pictures? The EEOC’s own training materials for its employees urges them not to rely upon an individual’s looks (in EEOC parlance “visual identification”) to determine their race. It might be interesting to see where the EEOC’s race rating panel would have put Alexandre Dumas (author of “The Three Musketeers” among other great books and one-fourth black), his son, also Alexandre Dumas  (author of “Camille”, and one-eighth black), Confederate General Stand Watie (one-fourth Cherokee) or any number of famous historical figures of mixed race heritage. Eradicating race discrimination is a noble goal, but such tactics disserve everyone.

Faced with no legitimate evidence that the employer’s use of credit histories had a disparate impact against African Americans, the court ultimately granted summary judgment in its favor.

The bottom line: The EEOC may have overextended itself in its zeal to address what it now considers to be “systemic discrimination,” but more thoughtful courts are rejecting such claims.


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.

© BakerHostetler | Attorney Advertising

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 info@jdsupra.com. 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: info@jdsupra.com.

- 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.