By a 4-1 vote of its commissioners, the U.S. Equal Employment Opportunity Commission (the “EEOC”) recently issued its “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions under Title VII of the Civil Rights Act of 1964” (the “Guidance”). The Guidance strongly discourages the use of any blanket exclusion of applicants for hire or promotion based on criminal records, recommending instead that employers consider adopting a two-step approach to the use of criminal record information in making hiring and promotion decisions. Employers should consider incorporating at least some aspects of the EEOC’s recommendations into their hire and promotion policies.
This Client Alert summarizes the key aspects of the Guidance and comments on its recommendations. The Guidance can be found on the EEOC website here.
Overview of the EEOC’s Guidance
Risks of Disparate Treatment Liability
The Guidance reminds employers that it is unlawful to treat individuals with similar criminal records differently based on factors such as race or national origin. It notes that inconsistencies in treating different applicants who have similar criminal records can be used to support a disparate treatment claim. Accordingly, as with all policies and practices, employers should apply any policy or practice concerning the consideration of applicants’ criminal records in a nondiscriminatory manner.
Risks of Disparate Impact Liability
The more controversial aspect of the Guidance is its discussion of the possibility of disparate impact liability for the use of criminal records as a basis for excluding candidates. Disparate impact liability does not require proof of discriminatory intent. Under its framework, an employee can establish adverse impact through statistical evidence that an employment practice results in a substantial adverse impact on a protected group. If (and only if) the employee does so, the burden shifts to the employer to demonstrate that the practice is “job-related for the position in question and consistent with business necessity.” If the employer satisfies its burden, the employee can still prevail if he or she can show that there was an effective alternative that had less of an adverse impact.
Applying this framework to the subject of criminal records exclusions, the Guidance cites national data indicating that African American and Hispanic men have a statistically higher rate of incarceration than white men. It concludes that this national data “supports a finding that criminal record exclusions have a disparate impact based on race and national origin.” The Guidance states that if an employer excluded applicants with criminal records, then an employer could respond to such evidence with local incarceration data or its own applicant data to show the absence of an adverse impact, but suggests that in the absence of evidence to the contrary, a finding of adverse impact may be based on the national data.
An employer may respond to an adverse impact with proof that an exclusion based on criminal conduct is job related and consistent with business necessity. The Guidance identifies two alternatives:
validate the criminal conduct screen for a position under the EEOC Uniform Guidelines on Employee Selection Procedures, although the EEOC notes that the studies that could support validation under the Uniform Guidelines are “rare;” or
- develop a “targeted screen” for relevant types of criminal conduct and provide an opportunity for “individualized assessment” of those who are screened out for criminal convictions.
The Guidance states that the “targeted screen” should be based on at least three factors, referred to as the “Green factors,” based on the name of the case in which they were articulated:
(i) the nature and gravity of the offense or conduct (e.g., felony v. misdemeanor, legal elements of a crime such as deception, threat or intimidation and harm caused by the crime);
(ii) the time elapsed since the offense, conduct and/or completion of the sentence; and
(iii) the nature of the job held or sought (e.g., job duties, environment, level of supervision, interaction with co-workers or vulnerable individuals).
The EEOC’s position is that such a screen needs to be “narrowly tailored” to identify the type of criminal conduct that has a “demonstrably tight nexus” to the position for which the employer is hiring. If a person is presumptively screened out based on a targeted screen using the Green factors, the Guidance states that the employer should undertake an individualized assessment, including an opportunity for the individual to dispute the accuracy of the record. Aside from accuracy of the record, the Guidance identifies the following as examples of factors to consider:
(i) the circumstances surrounding the offense;
(ii) the number of offenses for which the individual was convicted;
(iii) the individual’s age at the time of conviction or release from prison;
(iv) the nature, length and consistency of employment history before and after the offense;
(v) rehabilitation efforts;
(vi) employment or character references; and
(vii) whether the individual is bonded under a federal, state or local bonding program.
The Guidance also states that when using a criminal record screen, an employer should not include arrest records. However, the employer may make inquiries of an applicant concerning the circumstances leading to an arrest.
The two-step standard of a “targeted screen” followed by an “individualized assessment” goes beyond the holdings of the leading court decisions on which the Guidance relies. In the Green case, where the Green factors were established, the court concluded that it was sufficient for the employer to apply the Green factors when making hiring decisions concerning applicants with criminal records.
In any event, the Guidance acknowledges that some positions are subject to federal, state or local laws restricting or prohibiting the hiring of persons with certain criminal convictions. The Guidance provides that it is not intended to preempt legal restrictions under federal law, such as restrictions on hiring bank employees and financial services licensing requirements. However, hiring practices that go beyond the federal law requirements can be subject to disparate impact challenges. The Guidance states that hiring restrictions based on state or local law are not insulated from disparate impact challenges.
EEOC’s Best Practices
The Guidance recommends the following “best practices” for employers that consider criminal record information when making employment decisions:
(i) eliminate policies and practices that exclude individuals from employment based on the mere existence of a criminal record;
(ii) develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct, including the identification of particular offenses relevant to specific jobs and the time period for any exclusion;
(iii) train managers and decision makers on how to implement hiring policies and procedures; and
(iv) limit inquiries regarding an individual’s criminal background to situations in which such information is job-related for the position in question and consistent with business necessity.
The Guidance will likely lead to greater attention to the use of criminal background screens in employment decisions. Except when otherwise mandated by law, absolute exclusions of applicants with criminal records are vulnerable to disparate impact challenges. Developing and utilizing a policy of considering individual circumstances, at least including the Green factors, would be useful in responding to such a challenge. State law considerations may also affect policies. In each of California, Massachusetts and New York, among others, state laws affect the collection and consideration of criminal background information in making employment decisions.
In terms of employment discrimination law risks, the most conservative course for an employer that considers criminal records of applicants would be to adopt the two-step approach recommended in the Guidance. Even if the employer does not adopt a policy as extensive as what is contemplated by the Guidance, it would be important to show that the employer genuinely considers at least the Green factors in the event of a legal challenge. When considering possible approaches, employers should also recognize that an overly restrictive policy that results in not obtaining relevant criminal record information could lead to other risks, such as risks of negligent hire claims and risks to property, employees and customers.
 In Green v. Missouri Pacific Railroad Co. 549 F.2d 1158 (8th Cir. 1977), the court approved an injunction that prohibited the employer from utilizing an absolute exclusion on hiring those with criminal convictions but expressly permitted the employer to consider criminal records as long as the employer also considered the three Green factors. It rejected the argument that the application of the Green factors needed to be statistically validated and did not suggest that a further level of individual inquiry would be necessary. In El v. Southeastern Pennsylvania Transportation Authority, 479 F.3d 232 (3d Cir. 2007), the court upheld a policy that applied a limited criminal record exclusion based on the nature of the job and the type of offense and rejected the argument that a further individualized assessment would be necessary, at least in the circumstances of that case.