1. NOHRPS One Cleveland Center 20 th Floor 1375 E. 9 th Street Cleveland, OH 44114 Labor & Employment Law Update September 26, 2013

2. EEOC v. Freeman A common sense approach to employee background checks.

3. EEOC’s Position on Employee Background Checks In April 2012, the EEOC published its Enforcement Guidance on the Consideration of Arrest and Conviction Records of Employment Decisions. In this Guidance, the EEOC asserted that companies that use criminal histories as an automatic disqualifying factor for applicants per se violate Title VII. Specifically, “A covered employer is liable for violating Title VII when the plaintiff demonstrates that the employer’s neutral policy or practice has the effect of disproportionately screening out a Title VII-protected group and the employer fails to demonstrate that the policy or practice is job related for the position in question and consistent with business necessity.”

4. EEOC v. Freeman The EEOC tried to assert race discrimination in violation of Title VII based upon the disparate impact of an employer’s use of criminal and credit background checks on job applicants. Freeman ran background checks on all job applicants. The extent of the background check varied depending upon the employment position sought.

5. EEOC v. Freeman, cont. Freeman used a multistage, multi-criteria process to evaluate whether or not to hire employees with arrest or conviction or credit issues in their background. The EEOC did not challenge any specific procedure or criteria used by Freeman in connection to its background checks, but instead, generally challenged the process as a whole.

6. EEOC v. Freeman, cont. The EEOC primarily relied upon a statistical expert to prove its case of disparate impact. The EEOC’s statistical experts attempted to show that African-American applicants failed the credit background check and male African- American applicants failed the criminal background checks at a significantly higher rate.

7. Statistical Expert The statistical evidence presented by the EEOC was not sufficient for the Court: –“While some specific uses of criminal and credit background checks may be discriminatory and violate the provision of Title VII, the EEOC bears the burden of supplying reliable expert testimony and statistical analysis that demonstrates disparate impact stemming from a specific employment practice before such a violation can be found.” The Court found the data presented by the EEOC to be unreliable and untimely and that the reliance on general populace data was further inappropriate.

8. Legitimate Concern of Discrimination The Court acknowledged there is a legitimate basis of the EEOC’s concerns: –“Indeed, the higher incarceration rate [of African- Americans than Caucasians] might cause one to fear that any use of criminal history information would be in violation of Title VII.”

9. Importance of Background Checks The Court, however, highlighted the importance background checks play in the hiring process: –“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 reasons for conducting such checks are obvious. Employers have a clear incentive to avoid hiring employees who have a proven tendency to defraud or steal from their employers, engage in workplace violence, or who otherwise appear to be untrustworthy and unreliable….”

10. The Court Sides with Common Sense “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. Something more, far more, than what is relied upon by the EEOC in this case must be utilized to justify a disparate impact claim based upon criminal history and credit checks. To require less, would be to condemn the use of common sense, and this is simply not what the discrimination laws of this country require.”

11. Conclusion The EEOC was taken to task for not sufficiently supporting its disparate impact claims. Employers can use background checks when they are done appropriately. However, employers must still be cautious when using criminal background checks to avoid landing in the EEOC’s crosshairs.

12. Robert S. Gilmore Kohrman Jackson & Krantz One Cleveland Center 1375 East Ninth Street, 20 th Fl. Cleveland, OH 44114 Phone: (216) 736-7240 Fax: (216) 621-6536 Email:rsg@kjk.com