Wednesday, September 4, 2013

EEOC Loses Criminal Background Check Case

Back in June I wrote about two Equal Employment Opportunity (EEOC) cases filed, one against BMW (EEOC v. BMW Manufacturing Co., LLC, No. 7:13-cv-01583-HMH-JDA, South Carolina) and the other against Family Dollar (EEOC v. Dollar General, No. 1:13-cv-04307, Illinois), on the basis of their use of criminal background checks in hiring.  Though there is no federal statute that bans discrimination on the basis of an applicant's arrest and conviction record/criminal background like there is in Wisconsin under the Wisconsin Fair Employment Act (WFEA), the theory the EEOC pursued was disparate impact under Title VII when they suggested data showed such use of criminal background checks had a disparate impact on African-American applicants.  Prior to these suits, back in 2009, the EEOC also filed a suit based on the same theory against Freedman Companies and the district court where that suit was filed recently granted summary judgment in favor of the employer dismissing this suit and the opinion was somewhat scathing.  

The law firm Fisher & Phillips, LLP has a great write-up on the opinion:

The direction of the district court’s decision was prefaced in the first sentence when it noted, “For many employers, conducting a criminal history or credit record background check on a potential employee is a rational and legitimate component of a reasonable hiring process.” The court went on to explain, as any retailer knows, that there are numerous legitimate reasons to employ criminal-background checks in the hiring process and noted that the EEOC itself performs criminal-background checks on applicants for every one of its positions. In light of these facts, the court concluded that “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.” 
Under this standard, the court found the EEOC’s proof wanting in virtually every respect. The EEOC presented testimony of an expert witness, whose statistical analysis of data obtained from Freeman showed that Freeman’s use of criminal-background checks had a disparate impact on African-American males. The district court concluded that the database upon which the expert had based his report contained so many fallacies and errors that it rendered any conclusion based on that database unreliable. 
Some of the problems stemmed from the expert’s failure to use a random sample of the data provided it by Freeman. Rather, the expert “cherry picked” the data for inclusion, suggesting he was manipulating the underlying data to reach a predetermined result.
Next, the court noted that the analysis did not address decisions made over the time frame at issue. Finally, the court pointed out that the expert had hand picked additional data to add to the database to further manipulate the results in favor of the EEOC’s position calling this “an egregious example of scientific dishonesty.” 
The EEOC tried to save its case by relying on national data contained in the reports. The district court quickly rejected this attempt noting that the generic national data did not reflect the applicant pool. After noting several other flaws in the information, the district court excoriated the EEOC noting, “By bringing actions of this nature, the EEOC has placed many employers in the “Hobson’s choice” 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.” 
The most compelling aspect of the decision is not that it broke any new ground on the issues of the use of statistics in disparate-impact cases or in the use of criminal-background checks. Rather, it was the district court’s concluding that the EEOC brought a massive case against an employer using an expert who cooked the books to prove a fact that was not true.

Apparently, Texas has passed legislation protecting employers' against liability from negligent hiring which allows employers to not only avoid suits based on use of criminal background checks by not having to use criminal background checks at all, but shields them from liability in hiring those with criminal records who later commit some sort of crime during the course of their employment.  Thus, it may appear, likewise, potentially depending on the outcome of the cases against BMW and Family Dollar, that the only way the EEOC will win these cases is likewise with legislation specifically passed to ban use of criminal background checks just as it is under the WFEA.  Stay tuned!

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