The Equal Employment Opportunity Commission filed suit against Freeman, a company
It claimed that Freeman’s policy of conducting background checks into criminal convictions and credit histories resulted in exclusion of more minorities than whites from the applicant pool. The EEOC has been pursuing this practice, which results in a “disparate impact” against minority groups, whose members are more likely to have had interactions with the criminal justice system and suffered credit problems during the recession. Studies have shown that bias has also led to harsher treatment, meaning more convictions instead of probation, for minority arrestees.
Given this backdrop, the EEOC’s goal is ambitious and laudable. The employer side of it, though, is reasonable. Depending on the job, an employer would want to exclude someone proven to have a violent past, or a history of theft. No employer should be required to hire a convicted embezzler as its bookkeeper, and may risk public safety, not to mention lawsuits, if it hires a convicted rapist to do service calls at customers’ homes.
The EEOC pursued in Maryland federal court a privately held company with offices around the country. The EEOC alleged that Freeman’s use of credit checks and criminal background checks resulted in the illegal exclusion of a disproportionate number of minority candidates. Federal district judge Titus threw out the case last week. There were two main problems with the EEOC’s case. The worst was that its statistical expert delivered a report with egregious errors. The judge seemed to question whether many were purposeful, but it also appeared that on the whole the statistical analysis was sloppy. The conclusion of the opinion included this summary: “The story of the present action has been that of a theory in search of facts to support it.”
The second problem seemed to be that this particular company did not use criminal convictions and credit histories as a blunt tool to weed out a portion of the population. Instead, the company looked at credit for certain classes of jobs involving the handling of money. It asked about convictions on the application form, but limited the use of conviction records to the last seven years, and, perhaps most importantly, did not complete any such background checks until after the applicant had a job offer.
The EEOC is likely to pursue similar cases, but will have to draw a clearer line between the background check policies and unreasonable exclusions of minority candidates from the applicant pool.