On April 25, 2012, the Equal Employment Opportunity Commission (EEOC) issued an updated Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions under Title VII (the "Guidance").  The Guidance, effective immediately, summarizes the EEOC's long-held position that an employer's reliance on arrest and conviction records may have a disparate impact on individuals because of their race or national origin.  The Guidance also contains significant changes in certain areas that are important to many employers.  While courts defer to the EEOC's published guidances to some extent, an EEOC guidance is not controlling on courts' interpretation of Title VII and is not entitled to the high level of deference given to federal regulations.  Employers can expect courts and litigants to refer to the EEOC's interpretations set forth in the Guidance.  While the use of criminal records is not prohibited, the updated Guidance raises significant questions for employers, given the EEOC's strong encouragement for employers to conduct an "individualized assessment" of each potentially disqualified ex-offender applicant or employee.

The EEOC references a 2010 survey indicating that 92% of employers use criminal background checks and that the practice did not necessarily violate Title VII.  However, it emphasizes that discrimination could happen in two employment background check situations: 

• Disparate treatment: when employers treat criminal history differently for different applicants or employees based on race or national origin.
• Disparate impact: when seemingly neutral background check practices disproportionately impact protected classes.

To establish a disparate impact claim, the EEOC first must identify the policy or practice causing the disparate impact and then confirm that there is disparate impact.  As part of the "confirmation" step to establish a disparate impact, employers may expect to receive expanded EEOC requests for applicant and hiring data.  Where the EEOC establishes disparate impact, the employer then has the burden of proving the affirmative defense that its policy or practice is job-related and consistent with business necessity and does not result in a disparate impact (e.g. applicants and employees of a particular racial group are not arrested and convicted at disproportionately higher rates).  Specifically, the Guidance states that "evidence of a racially balanced workforce will not be enough to disprove disparate impact."  The Commission states that it "will closely consider whether an employer has a reputation in the community for excluding individuals with criminal records." The Guidance does not shed any light on how an employer's "reputation in the community" will be established.

The EEOC reiterates its long-held position that arrest records are of limited value in considering conduct that is job-related and consistent with business necessity because an arrest does not establish that criminal conduct has occurred, individuals are presumed innocent until proven guilty, and many arrests do not result in convictions.

Although the EEOC identifies two circumstances allowing employers to establish the "job-related and consistent with business necessity" defense, the one useful for most private-sector employers is having a targeted screening process that takes into account the following factors: 1) the nature and gravity of the offense or conduct; 2) the time that has passed since the offense and/or completion of the sentence; and 3) the nature of the job held or sought. The EEOC takes that position that before an employer disqualifies an individual based on past criminal conduct, the employer's policy should provide "an opportunity for an individualized assessment."  While the EEOC stops just short of actually requiring employers to conduct individualized assessments as part of their targeted screening process, the Guidance repeatedly stresses that a screening process that does not include individualized assessments is more likely to violate Title VII.  The practical message to employers is that individualized assessments are expected.  The Guidance provides several factors for consideration during the individualized assessment including: 1) the facts or circumstances surrounding the offense or conduct; 2) the number of offenses for which the individual was convicted; 3) the older age at the time of conviction or release from prison; 4) evidence that the individual performed the same type of work, post-conviction, with the same or a different employer, with no known incidents of criminal conduct; 5) rehabilitation efforts; 6) employment or character references and any other information regarding fitness for the particular position; and 7) whether the individual is bonded.

The second way an employer can satisfy the "job-related and consistent with business necessity" defense is more involved and expensive.  The employer must validate the criminal conduct exclusion for each such position, by using the Uniform Guidelines on Employee Selection Procedures, including its statistical models, to demonstrate a link between criminal conduct and subsequent work performance.  The Guidance indicates that issues about the availability of criminal conduct data and the application of validation studies may be tough hurdles for employers to clear.

The EEOC Guidance suggests "Employer Best Practices" that include identifying essential job requirements, determining specific offenses that may relate to demonstrated unfitness for performing a particular job, and the duration of exclusion for the criminal conduct. Additionally, the EEOC recommends recording the justification for the policy and procedure, the training of managers and others who make hiring decisions on how to avoid discrimination when considering criminal records, and maintaining criminal history information in a confidential manner.

Especially in light of the provisions of the updated Guidance, employers are encouraged to reexamine their background check policies and practices.  The Guidance notably does not prohibit employers from using consumer reporting agencies to provide background checks, but such employers must still comply with the other aspects of the Guidance.

Should you have any questions about the new Guidance or would like to discuss manager training, contact Lommen Abdo attorney Stacey A. DeKalb at 612-336-9310 or by email at stacey@lommen.com.