ComplianceLegalFinanceTax & AccountingJanuary 09, 2021

Update: are your company's criminal background checks against the law?

For many business owners, criminal background checks are an important part of the employment decision-making process. An individual’s criminal history may be required by law when hiring for certain positions and industries, particularly where a duty of care is owed to children, the elderly and vulnerable adults; a position involves access to sensitive information; or public safety is at risk. Even if not legally required, employers regularly use criminal history to determine suitability for a position, as well as to protect against negligent hiring claims. While the use of criminal history information in making employment decisions is generally permitted, its use is balanced with protecting applicants and employees from prohibited discrimination.

Based on the conclusion that using criminal history records when making employment decisions has a disproportionate impact on African-Americans and Hispanics, the Equal Employment Opportunity Commission (EEOC) is targeting criminal background policies that prohibit or limit hiring applicants with criminal convictions. As a result of these stepped up efforts, on June 11, 2014, the EEOC filed two lawsuits, one against BMW Manufacturing Co., LLC and one against Dollar General, alleging that the employers violated federal law by having in place criminal background policies disproportionately negatively affecting African-Americans.

Update: On August 9, 2013, the U.S. District Court for the Northern District of Maryland dismissed an EEOC lawsuit alleging that a business policy of conducting criminal background checks of all applicants disparately impacted African-American applicants.

The court in EEOC v Freeman, agreed with the defendant that the EEOC experts’ conclusions were based on unreliable data, filled with analytical errors and that the experts did not isolate and identify which aspects of the background check processes cause disparate impact.

The court also agreed with the defendant’s contention that "the national statistics proffered by the EEOC cannot, on their own, demonstrate that the challenged policies cause a disparate impact on suspect classes….a disparate impact case must be carefully focused on a specific practice with an evidentiary foundation showing that it has a disparate impact because of a prohibited factor.”

The court made its displeasure with EEOC actions of this nature apparent by stating that they put employers in the position of “ignoring criminal history and credit background, thus exposing themselves to potential liability for criminal and fraudulent acts committed by employees, on the one hand, or incurring the wrath of the EEOC for having utilized information deemed fundamental by most employers.”

Disparate impact is discriminatory even if unintentional

Generally, federal law (Title VII of the Civil Rights Act) prohibits employers with 15 or more employees from discriminating against applicants and employees in all aspects of employment on the basis of race, color, national origin, religion, or gender. Job qualifications that screen out the members of a protected group—known as “disparate impact”—are considered discriminatory, even if the result is unintentional. Therefore, an employer’s criminal background policy for hiring decisions can be classified as discriminatory due to its impact, despite the fact that the policy is, in and of itself, neutral. Some job qualifications that would otherwise be considered discriminatory may be permitted if they are job-related and based on business necessity.

The EEOC, responsible for enforcing the federal laws against discrimination, updated its guidance on the use of criminal history in 2012. The guidance emphasizes the importance of employers using individualized assessments of applicants and employees where appropriate, as opposed to blanket exclusion-type policies, to avoid disparate impact and violating anti-discrimination laws.

The EEOC’s efforts to combat disparate impact in this area include the increasing scrutiny of employers’ criminal background policies and pursuing claims against employers when the use of criminal history results in disproportionately affecting individuals based on race or national origin.

EEOC files suit alleging employment and hiring discrimination

In its suit against BMW, the EEOC alleges that BMW disproportionately screened out African-Americans from jobs, and that its criminal background policy is not job-related and consistent with business necessity. Since 1994, BMW has had a criminal conviction policy that denies facility access to BMW employees and employees of contractors with certain criminal convictions. When a contractor ended its contract with BMW in 2008, the former contractor’s employees were informed that they needed to re-apply with the new contractor to retain their positions in the BMW warehouse. BMW directed the new contractor to perform new criminal background checks on each employee applying for transition of employment. The former contractor had screened the employees according to its own criminal conviction policy, which limited review to convictions within the prior seven years. BMW's policy has no time limit with regard to convictions. The new contractor discovered that several of the employees had criminal convictions in violation of BMW's criminal conviction policy. These employees were told that they no longer met the criteria for working at the BMW facility and were terminated and denied rehire as employees of the new contractor.

The EEOC’s basis for its suit against BMW is that the company’s criminal background policy violates federal law because it is a blanket exclusion without any individualized assessment of the nature and gravity of the crimes, the ages of the convictions, or the nature of the employees’ positions.

In the case against Dollar General, the EEOC filed a lawsuit based on discrimination charges filed by two rejected African-American applicants and charges that Dollar General conditions all of its job offers on criminal background checks, which results in a disparate impact against blacks.

According to the EEOC, one of the applicants was given a conditional employment offer, although she had disclosed a six-year-old conviction for possession of a controlled substance. Her job offer was allegedly revoked because Dollar General's policy was to use the applicant’s type of conviction as a disqualification for employment factor for 10 years. The second applicant was fired by Dollar General although, according to the EEOC, the conviction records check report about her was incorrect and she did not have the felony conviction attributed to her. The applicant claims that although she advised the store manager of the mistake in the report, the company did not reverse its decision to fire her.

How can you defend against disparate impact claims?

If you use criminal background checks as part of your employee selection screening, you almost certainly should continue to do so, but you may want to examine and tweak your policy in response to the EEOC’s increased scrutiny in this area.

What employers should understand, according to EEOC Regional Attorney John Hendrickson, is that there is “nothing illegal” about employers using criminal convictions in the hiring process. “But if they do use them and if that process has a negative impact on blacks or others, then employers have to be prepared to show that the conviction is actually related to the particular job at issue and there are no less discriminatory alternatives to achieve the employers’ goals.”

So what steps should an employer take to defend its criminal background policy from disparate impact claims? While there are no exact requirements set forth, consider the following guidelines:

  • Your policy should be job-related and consistent with business necessity
  • Avoid a blanket “one-size-fits-all” approach to your criminal background policy, and instead take into account:
    • the nature and gravity of a crime
    • how much time has elapsed since the crime occurred and/or a sentence was completed
    • the nature of the position held or sought


    Criminal background checks are of critical importance to employers for a variety of reasons. Not only do they assist employers in hiring the best candidate, they also help employers create and maintain a safe working environment for other employees as well as customers and clients, and avoid the very real threat of negligent hiring or firing claims for employees’ actions. However, employers will have to more carefully than ever balance their responsibilities and legal obligations as business owners with the constraints imposed on them by federal agency initiatives.

Nikki Nelson
Customer Service Manager
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