Federal Court Dismisses EEOC Title VII Disparate Impact Suit Over Alleged Discriminatory Background Checks Without Trial

On August 9, 2013, a federal district court judge in Maryland dismissed, without a trial, the Equal Employment Opportunity Commission's (EEOC) Title VII suit against Freeman over alleged discriminatory background checks based largely on fatal flaws in the EEOC's expert report—described by the court as "an egregious example of scientific dishonesty."1 The opinion acknowledges the legitimate, even "essential," business reasons for conducting criminal background checks and highlights significant challenges the EEOC faces when prosecuting such suits. Although the court did not slam the door shut on the EEOC's ability to challenge background checks in general, an appeal to the U.S. Court of Appeals for the Fourth Circuit seems likely. Because the EEOC remains focused on background checks2 - on June 11, 2013, it filed two new criminal record lawsuits, one in South Carolina and one in Illinois3 - the court's opinion merits careful study.

Below, we summarize the court's opinion, with an emphasis on how the court construed the governing legal standard under Title VII, including the court's flat-out rejection of the EEOC's central premise that, because of disproportionate conviction rates, any consideration of criminal or credit background checks has an unlawful disparate impact. In the court's words, the mere consideration of such information is not a matter of concern under Title VII, but what is important is the specific information an employer uses and how it uses that information.

Although we do not discuss related considerations, such as the proliferation of new state law criminal history restrictions, employers should continue to stay abreast of state law and local developments.4

Freeman's Background Screening Program

The defendant-employer ordered different types of background checks for different positions. For some, the company ordered only a criminal check and verification of the applicant's Social Security number. (For "credit sensitive" positions, the company had ordered a credit check, but after the suit was filed, it stopped doing so.) For other positions, such as general managers and department heads, the company added education and credential checks.5

The company's job application included a question about prior convictions, and stated that a "conviction does not automatically mean you will not be offered a job." Rather: "What you were convicted of, the circumstances surrounding the conviction and how long ago the conviction occurred are important considerations in determining your eligibility. Give all the facts, so that a fair decision can be made." Space was provided for the applicant to provide an answer. The company did not consider arrest records, but it did consider outstanding warrants, and it limited its consideration of conviction records to seven years.

The company conducted post-offer background checks and cited a variety of reasons for conducting the checks, presenting the court with evidence that the company had experienced serious problems facing many employers, including theft, embezzlement, drug use and workplace violence. The company designed its background check program with five goals in mind: (1) avoid exposure to negligent hiring/retention lawsuits; (2) increase the security of the company's assets and employees; (3) reduce liability from...