Employment Law Alert: Bad Use of Background Checks Can Be Very ($6m+) Costly
January 22, 2020
The use of criminal histories in hiring continues to prove challenging and costly for employers. As we have previously written, employers can face liability if they fail to follow the proper procedures when conducting background checks (for example, compliance with the Fair Credit Reporting Act, (FCRA)). However, even if the procedure is proper, employers can still be on the wrong end of a lawsuit if the background check leads to discriminatory hiring practices.
Dollar General learned this lesson the hard way at the end of 2019 when it agreed to pay $6 million to settle a federal class race discrimination lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC) stemming from allegations that its use of post-conditional offer of employment criminal background checks denied employment to African-American applicants at disproportionate rates compared to white applicants, in violation of Title VII.
In addition to the monetary payment, the case resolution included a three-year consent decree, whereby should Dollar General continue the use of criminal background checks, it would be required to retain the services of a criminology consultant to evaluate the factors considered, such as the time since conviction, the number of offenses, the gravity of the offenses and the risk of recidivism. The consent decree also enjoins Dollar General from discouraging applicants with criminal backgrounds, engaging in retaliation and otherwise discriminating on the basis of race in utilizing criminal history checks. Dollar General agreed to reconsider conditional offers of employment previously withdrawn based on criminal history, and to train its managers on the new policies related to the use of criminal history in hiring. The decree also requires Dollar General to update its reconsideration process and, specifically, it must include clear communication to previously rejected applicants that they may provide information to Dollar General to support reconsideration of their exclusion. Lastly, Dollar General must report the implementation of any new criminal history checks and reconsideration processes to the EEOC.
Employers need to be vigilant about compliance with federal, as well as state and local laws. Localities are increasingly adopting “ban-the-box” laws severely restricting the use of criminal background checks in hiring. Employers using criminal background checks in hiring should ensure they have some demonstrable business necessity and connection to the job at issue.
If you have any questions about this Alert, or want information on background-check materials, please contact a member of the Shulman Rogers Employment and Labor Law Group or the Shulman Rogers attorney with whom you regularly work.
The contents of this Alert are for informational purposes only and do not constitute legal advice. If you have any questions about this Alert, please contact the Shulman Rogers attorney with whom you regularly work or a member of the Shulman Rogers Employment and Labor Law Group.