EEOC Settles Background Check Litigation With BMW, But Also Faces Steep Attorneys' Fees In Freeman Case

After several high-profile setbacks in disparate impact discrimination lawsuits challenging criminal record screening policies,1 the EEOC has entered into a settlement (consent decree) in one of its few remaining cases, a settlement that includes payouts to individual employees in an amount up to $1,600,000. Beyond this not insubstantial settlement amount, the consent decree also reflects the EEOC's view of a model criminal record screening policy, and is useful in that respect.2 While the EEOC has been trumpeting the settlement on its Web site, the EEOC's bluster may have been tempered by a further and strongly worded opinion in the Freeman case in Maryland, one of the EEOC's spectacularly unsuccessful disparate impact lawsuits challenging criminal record screening policies (affirmed by the Fourth Circuit).3 The opinion awards Freeman just under $1,000,000 in attorneys' fees and costs from the EEOC. Together, these two developments create some uncertainty about whether the EEOC will continue to steadily focus on criminal record screening policies. Odds are the settlement will embolden the EEOC, notwithstanding the award in Freeman, and thus employers should continue to monitor this and related areas of the law, including fair credit reporting act class action litigation.4

EEOC v. BMW

Background of Litigation

On July 11, 2013, the EEOC filed a lawsuit against BMW's manufacturing facility in South Carolina claiming that BMW violated Title VII by implementing and utilizing a criminal background policy that allegedly disproportionately screened out African Americans from jobs, and rejected job applicants with convictions without considering whether the conviction was job-related and consistent with business necessity.

The claimants were employees of UTi Integrated Logistics, Inc. (UTi), which provided logistic services to BMW at its South Carolina facility. The logistics services included warehouse and distribution assistance, transportation services and manufacturing support.

BMW implemented its criminal conviction policy in 1994. The policy understandably restricted facility-access to BMW employees and employees of contractors with certain criminal convictions. When UTi assigned the claimants to work at the South Carolina facility, UTi ran criminal background checks on employees according to UTi's criminal conviction policy. UTi's criminal background check limited review to convictions within the prior seven years. BMW's policy, however, had...