The EEOC has filed two lawsuits against employers regarding their use of criminal history records for employment screening purposes.  In the first such lawsuits since the Equal Employment Opportunity Commission (EEOC) issued revised Enforcement Guidance last year, the suits allege disparate impact violations against a BMW manufacturing facility as well as Dollar General stores.  In a press release issued today, the EEOC appears to question the value of criminal history exclusions that go beyond seven years and even perhaps question the value of background checks in general.

Both lawsuits were brought under Title VII of the Civil Rights Act of 1964.  The EEOC will assert claims of disparate impact, in both cases, against African Americans and will seek back pay, as well as injunctive relief to prevent future discrimination of employees and applicants.

To offer some context, in April 2012 the EEOC issued revised guidance for employers regarding the use of criminal history records for employment screening purposes, “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964” (“Enforcement Guidance”).   Speculation has been swirling regarding how aggressively the EEOC would pursue the Enforcement Guidance, in part due to their loss in the Peoplemark case, which related to the use of background checks for employment screening purposes and the fact that the EEOC lost and had to pay more than $750,000 in legal fees, expert witness fees and other costs.  Fast forward to today’s press release announcing that the EEOC’s Charlotte district office filed suit in U.S. District Court of South Carolina, Spartanburg Division against BMW Manufacturing Co., LLC, and a separate suit was filed in Chicago against Dolgencorp, doing business as Dollar General.

Employers Take Note

Employers should keep an eye on the EEOC’s allegations around BMW’s “no time limit” exclusionary policy with respect to their own criminal records exclusionary policy.   This is important because the Fair Credit Reporting Act (FCRA) allows for records of criminal conviction to be reported by a background screening company regardless of the time frame, but the EEOC has previously considered whether to limit such information to seven years.  That’s the case against the BMW manufacturing facility.  Even more worrisome is the case against the Dollar General stores because the question arises around whether the EEOC is effectively saying that all background checks are bad, a belief which some would argue some at the EEOC hold.

Allegations against BMW

The EEOC alleges that BMW disproportionately screened out African Americans from jobs, and that the policy is not job related and consistent with business necessity. The claimants were employees of BMW’s freight forwarder, which provided logistic services at BMW’s South Carolina facility. The logistics services included warehouse and distribution assistance, transportation services and manufacturing support.  Since 1994, BMW has had a criminal conviction policy that denies facility access to BMW employees and employees of contractors with certain criminal convictions. However, when the freight forwarder assigned the claimants to work at the BMW facility, the freight forwarder screened the employees according to its criminal conviction policy. The freight forwarder’s criminal background check limited review to convictions within the prior seven years. BMW’s policy has no time limit with regard to convictions. The policy 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 claimants’ respective positions.

In 2008, the freight forwarder ended its contract with BMW. During a transitional period, its employees were informed of the need to re-apply with the new contractor to retain their positions in the BMW warehouse.  As part of the application process, BMW directed the new contractor to perform new criminal background checks on every current freight forwarding employee applying for transition of employment. The new contractor subsequently discovered that several of the employees had criminal convictions in violation of BMW’s criminal conviction policy. As a result, those employees were told that they no longer met the criteria for working at the BMW facility and were subsequently terminated and denied rehire as employees of the new contractor, despite the fact that many of the employees had worked at the BMW facility for years.

Allegations against Dollar Store

The EEOC filed a nationwide lawsuit based on discrimination charges filed by two rejected black applicants.  That lawsuit charges that Dollar General conditions all of its job offers on criminal background checks, which results in a disparate impact against blacks.  Dollar General operates 10,000 stores in 40 states, plus 11 distribution centers. Ninety percent of all Dollar General employees are store clerks who are both stockers and cashiers at the stores.

According to the EEOC, one of the applicants who had filed a charge with EEOC was given a conditional employment offer, although she had disclosed a six-year-old conviction for possession of a controlled substance.  Her application also showed that she had previously worked for another discount retailer as a cashier-stocker for four years.  Nevertheless, her job offer was allegedly revoked because Dollar General’s practice was to use her type of conviction as a disqualification factor for 10 years.The other applicant who filed an EEOC charge was fired by Dollar General although, according to the EEOC, the conviction records check report about her was wrong – she did not have the felony conviction attributed to her.  The EEOC said that although she advised the Dollar General store manager of the mistake in the report, the company did not reverse its decision and her firing stood.