Navigating the EEOC s Recent Guidance on Arrest and Conviction Records

Transcription

1 Navigating the EEOC s Recent Guidance on Arrest and Conviction Records Cristina Portela Solomon Megan Jennings Batchelor Presented to the Houston Paralegal Association May 3, 2013

2 Introduction April 25, 2012 EEOC issued its Enforcement Guidance on Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (the Updated Guidance ) Comes months AFTER EEOC s announcement of a $3.1 million settlement with an employer following EEOC s finding that employer unlawfully screened out more than 300 African-American applicants due to criminal records. Heightened scrutiny by the EEOC regarding employers screening / hiring policies across all industries. Increase in EEOC Charges and investigations regarding hiring policies; expect more. Employers need to develop consistent policies and practices now to avoid creating Title VII claims, while still accomplishing their legitimate hiring objectives.

3 Why Now? Significant increase in percent of population with past contact with the criminal justice system (arrests, charges, indictments, convictions, incarcerations, probations, parole), and thus an increase in the number of people with criminal records Disproportionate arrest and incarceration rates among races (focus is on African-Americans and Hispanics) New court opinions, including El. v. Southeastern Pennsylvania Transportation Authority (encouraging the EEOC to offer new guidance for employers and discussing what evidence may be considered in a disparate impact case) Increased employer access to and use of criminal history information: see statistics reported by SHRM on slide 5

4 Criminal History Records: Data Sources and the EEOC s Concerns Abundance of resources Court records Specialized registries FBI s Interstate Identification Index The EEOC s concerns over the accuracy of criminal history records include: Final dispositions not reported Sealings/expunctions not documented by private companies Accidental and intentional search errors

5 2010 SHRM Statistics Regarding Employer Use of Criminal Background Records Reasons given for why criminal record checks are conducted: To ensure a safe work environment for employees (61%); To reduce legal liability for negligent hiring (55%); To reduce/prevent theft and embezzlement, or other criminal activity (39%); To comply with applicable state law requiring a background check (e.g., day care teachers, licensed medical practitioners, etc.) for a particular position (20%); To assess the overall trustworthiness of the job candidate (12%); and Other (4%). Scope of criminal background checks: 73% conducted criminal background checks for all positions; 19% conducted criminal background checks for selected job candidates; and 7% did not conduct criminal background checks for any of its candidates.

6 2010 SHRM Statistics Regarding Employer Use of Criminal Background Records Positions for which criminal background screenings are implemented: Job candidates for positions with fiduciary and financial responsibility (e.g., handling cash, banking, accounting, compliance, technology) (78%); Job candidates who will have access to highly confidential employee information (e.g., salary, benefits, medical information or other personal information about employees, etc.) (68%); Job candidates who will have access to company or other people s property or otherwise placed in a position of financial trust (e.g., information technology, administrative services, etc.) (60%); Job candidates for senior executive positions (e.g., CEO, CFO, CHRO, etc.) (55%); Job candidates who will be employed in safety-sensitive positions (including operating heavy equipment, transportation, etc.) (48%);

7 2010 SHRM Statistics Regarding Employer Use of Criminal Background Records Positions for which criminal background screenings are implemented (continued): Job candidates who will have security responsibilities (e.g., security guards, etc.) (43%); Job candidates for position for which state law requires a background check (e.g., day care, teachers, licensed medical practitioners, etc.) (40%); Job candidates who will work with children, the elderly, the disabled and other vulnerable populations (33%); Job candidates who will work in health care or with access to drugs (e.g., hospitals, nursing homes, clinics, pharmacies, rehabilitation centers, etc.) (32%); Job candidates for positions involving national defense or homeland security (25%); and Other (15%)

8 What s New? Disparate treatment analysis remains the same (i.e., you cannot treat an individual in a protected group differently based on a comparable criminal record) Disparate impact standard whether the policy is job related and consistent with business necessity remains the same, but the recommended framework has changed to include individualized assessments and targeted screenings. Specific guidance on how Title VII interacts with other regulations Employers need to consider Title VII if their requirements go beyond an applicable federal regulation. Title VII preempts conflicting state law. EEOC identifies employer best practices

9 The Legal Issue Under the Updated Guidance An employer s use of an individual s criminal history in making employment decisions may, in some instances, violate the prohibition against employment discrimination under Title VII of the Civil Rights Act of 1964, as amended.

10 Disparate Treatment When an individual is treated differently because of his/her protected category For example, if a Jewish applicant is rejected based on his criminal record but a Catholic with a comparable criminal record is hired. Specific EEOC concerns for employer decisions driven by: Animosity (rejecting a job applicant based on prejudice toward the individual s protected characteristic) Stereotyped thinking (rejecting a job applicant based on racial or ethnic stereotypes about criminality rather than qualifications and suitability for the position) Evidence of discriminatory conduct may include: Biased statements ( direct evidence ) Hiring inconsistencies (favoritism toward applicants in non-protected category) Comparators ( similarly situated ) Employment testing (i.e., testers) Statistical evidence (demonstrating the employer weighs criminal records more heavily against members of a protected group)

11 Disparate Impact Griggs v. Duke Power Company (1977): the U.S. Supreme Court recognizes disparate impact claims. Framework for a Disparate Impact Claim: 1. Was there a disparate impact? What is the employer s policy? What was the effect of the policy? Evidence may include: National data on exclusions based on criminal records Employer data showing there was no disparate impact Applicant data showing the pool has been affected by the policy 2. Is the policy job-related and consistent with business necessity? 3. Was there a less discriminatory alternative employment practice that serves the employer s legitimate goals but that was not adopted by the employer?

12 Job-Related and Consistent with Business Necessity: Basic Considerations The policy must have a relationship to the individual s successful performance of the specific job in question. For example, a conviction for credit card fraud would likely have a relationship to a position with access to clients financial data. The employer will need to show that the policy operates to effectively link specific criminal conduct and its dangers with the risks inherent in the duties of a particular job. The analysis must measure the actual individual in relation to the position, not the person in the abstract. Thus, the EEOC now suggest an individualized assessment so the employer can obtain an explanation of the applicant s record. Arrests versus convictions use arrests with caution! Arrests are not proof of criminal conduct, although convictions are (because there are more procedural safeguards for convictions than arrests). The underlying conduct may justify an adverse employment action, but not simply the fact of an arrest.

13 Job-Related and Consistent with Business Necessity: the Green Factors 1. The nature and gravity of the offense or conduct; What was the harm of the crime (for example, property loss)? What type of conduct was engaged in (for example, was it a crime of deception?) Was it a misdemeanoror a felony? 2. The time that has passed since the offense, conduct, and/or completion of the sentence; and No specific timeframe endorsed by the EEOC But can t have a permanent exclusion for all offenses 3. The nature of the job held or sought. What are the job duties and essential functions? What are the circumstances of the job (supervision, environment)? Can an employer make a targeted exclusion based on only the Green factors?

14 Job-Related and Consistent with Business Necessity: The EEOC s Three-Step Process for Individualized Assessments 1. The individual is informed of the exclusion based on past criminal conduct, 2. The individual is given an opportunity to demonstrate he/she should not be excluded, which may involve the following considerations: Facts / circumstances surrounding conduct in question, Similar work performed post-conviction without incident, References, Rehabilitation efforts, and 3. The employer considers whether the additional information shows the policy, as applied, is not job-related and consistent with business necessity.

15 Job-Related and Consistent with Business Necessity: Individualized Assessments The good news for employers The Updated Guidance is not one-size-fits-all; it allows each employer to tailor the process to meet its needs and concerns. Provides valuable guidance after over twenty years. The Catch-22: compliance versus cost Do you want to incur the costs of compliance and know your position is more defensible in the event of a lawsuit? Or do you want to risk an EEOC finding and/or an adverse judgment, but avoid the up-front costs of implementing the Updated Guidance?

16 EEOC v. Freeman (August 9, 2013) A federal district court in Maryland dismissed via summary judgment the EEOC s Title VII disparate impact against an employer based on its use of criminal background checks in its hiring practices. The company s practices appeared consistent with the EEOC s guidance: The company did not have a blanket prohibition on hiring applicants with criminal convictions (and stated so on its job applications). The application also stated that the circumstances and age of a conviction would be considered in determining an applicant s eligibility. Applicants were encouraged to provide facts surrounding any conviction Arrests were not considered Only conviction records from the last seven years were considered. 16

17 EEOC v. Freeman (August 9, 2013) The employer also used a multi-step process: Dishonesty on the application regarding the disclosure of prior convictions was an automatic disqualification. Applicants with outstanding warrants were give the opportunity to resolve the warrant. An evaluation was made whether a particular conviction made an applicant unsuitable for employment. The company articulated five goals: Avoid exposure to negligent hiring / retention lawsuits, Increase security of company s assets and employees; Reduce liability from inconsistent hiring or screening practices; Reduce the risk of employee-related loss; and Mitigate the likelihood of an incident occurring on company property that could jeopardize customer or employee confidence. 17

18 EEOC v. Freeman (August 9, 2013) The EEOC filed suit, alleging that the employer had discriminated against African- Americans, Hispanics, and male applicants based on its consideration of criminal histories. The company moved to dismiss the case, arguing that the EEOC could not win because it had no reliable statistical evidence of a disparate impact. The Court agreed with the employer because: The EEOC s expert testimony was unreliable (inappropriate sampling, improper time period, incomplete data, many errors), and The EEOC s expert testimony failed to attribute any disparate impact to a specific employment practice (the EEOC s attempt to indict the company s overall consideration of background checks was ruled inappropriate). 18

19 EEOC v. Freeman (August 9, 2013) By bringing actions of this nature, the EEOC has placed many employers in the Hobson s choice of ignoring criminal history and credit background, thus exposing themselves to potential liability for criminal and fraudulent acts committed by employees, on the one hand, or incurring the wrath of the EEOC for having utilized information deemed fundamental by most employers. Something more, far more than what is relied upon by the EEOC in this case must be utilized to justify a disparate impact claim based upon criminal history and credit checks. To require less, would be to condemn the use of common sense, and this is simply not what the discrimination laws of this country require. For many employers, conducting a criminal history or credit record background check on a potential employee is a rational and legitimate component of a reasonable hiring process. The reasons for conducting such checks are obvious. Employers have a clear incentive to avoid hiring employees who have a proven tendency to defraud or steal from their employers, engage in workplace violence, or who otherwise appear to be untrustworthy and unreliable. 19

20 EEOC v. Freeman (August 9, 2013) Lessons from EEOCv. Freeman: The EEOC must make an initial showing of disparate impact to continue with these types of lawsuits. The EEOC can t necessarily rely on nationwide statistics. The EEOC s expert must be qualified and have reliable data. When the employer does not have a single-step, across-the-board screening process, the EEOC can t challenge that process as a whole it must demonstrate that disparate impact results from a specific element of that process A costly victory: the lawsuit was filed in October of 2009 and involved contentious discovery and a flurry of motions and discovery related to nearly 59,000 applicants. 20

21 Other Post-Guidance Opinions & Actions EEOC v. Peoplemark (W.D. Michigan): Case dismissed by the EEOC in March 2010 (while a summary judgment motion was pending) after the EEOC failed to produce evidence of a statistically significant racial disparity in the employer s use of conviction records. On October 7, 2013, the 6th Circuit affirmed the court s award of attorneys fees ($250,000) and costs, including expert fees ($500,000), to the employer. EEOC v. Kaplan Higher Education Corp. (N.D. Ohio): The court dismissed via summary judgment in January 2013 the EEOC s disparate impact lawsuit, which was based on the employer s credit history screening policies. The court concluded the EEOC had failed to provide reliable statistical evidence of discrimination(disparate impact). June 11, 2013: The EEOC filed two lawsuits in South Carolina and Illinois against BMW and Dollar General. July 2013: Attorneys general from nine states wrote a letter to the EEOC urging it to dismiss these two lawsuits and rescind the Guidance.

22 State Laws and Other Federal Regulations Various complementary federal restrictions may apply to: Hiring in certain industries (e.g., airport security screeners) Occupational licenses(e.g., the financial industry) Waivers for occupational restrictions (employers may, but are not required to seek these) Security clearances (federal employees and contractors) State Restrictions Compliance with state law does not shield employers from liability under federal anti-discrimination laws.

23 State Laws and Other Federal Regulations Texas s H.B (effective September 1, 2013): A cause of action may not be brought against an employer, general contractor, premises owner, or third party solely for negligently hiring or failing to adequately supervise an employee, based on evidence that the employee has been convicted of an offense, unless the employer knew or should have known of the conviction and the conviction was for: An offense committed while performing duties similar to those expected to be performed in employment, A sexually violent offense, Murder, indecency with a child, aggravated kidnapping, sexual assault, or robbery, or A crime involving fraud or misuse of funds or property.

24 The Other Side of the Legal Coin Not addressed in the EEOC Updated Guidance: Fair Credit Reporting Act same requirements as before the Updated Guidance Liability for negligent hiring training your employees to review background checks carefully is crucial Other states laws may impose greater restrictions compliance with federal law does not excuse non-compliance with state law (see Appendix)

25 The EEOC s Best Practices General Eliminate policies or practices that exclude people from employment based on any criminal record. Train managers, hiring officials, and decision-makers about Title VII and its prohibition on employment discrimination. Developing a Policy Develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct. Identify essential job requirements and the actual circumstances under which the jobs are performed. Determine the specific offenses that may demonstrate unfitness for performing such jobs. Identify the criminal offenses based on all available evidence. Determine the duration of exclusions for criminal conduct based on all available evidence. Include an individualized assessment.

26 The EEOC s Best Practices Developing a Policy(continued) Record the justification for the policy and procedures. Note and keep a record of consultations and research considered in crafting the policy and procedures. Train managers, hiring officials, and decision-makers on how to implement the policy and procedures consistent with Title VII. Questions about Criminal Records When asking questions about criminal records, limit inquiries to records for which exclusion would be job-related for the position in question and consistent with business necessity. Confidentiality Keep information about applicants and employees criminal records confidential. Only use it for the purpose for which it was intended.

27 Recommended Best Practices Documentation of the entire process information submitted by applicant, details of position, analysis, and conclusion. Consistency in decisions based on criminal history screenings Adjudication matrices Inconsistent with individualized assessments Different jurisdictions, different legal terms used in records Does not account for evolving nature of positions Risks of relying on a third party Possible indemnification Bright-line rules are they ever possible? Documenting other reasons for the employment decision prepare your defense

28 Frequently Asked Questions Is the EEOC s Updated Guidance now the law? Does the Updated Guidance prohibit employers from relying on a decision matrix? Is the EEOC now prohibiting employers from asking about criminal records on employment applications or early in the hiring process? Are there any black-and-white rules regarding the use of older criminal history information?

29 Frequently Asked Questions Is the EEOC going to presume disparate impact in its investigations? Does the EEOC require a formal validation of a criminal record screening policy in order to satisfy the business necessity standard? Can an employer still use a consumer reporting agency or background screening company to gather and report criminal history information? Does it matter whether an employer is subject to regulatory requirements?

30 Appendix: States with Generally Applicable Laws Regarding Criminal History Records Some states have legislation affecting the ability of employers to obtain or use criminal history information from applicants and/or employees, including: California Connecticut District of Columbia Georgia Hawaii Illinois Massachusetts Massachusetts Nebraska Nevada New York Pennsylvania Washington Wisconsin

31 Gardere Wynne Sewell LLP Cristina Portela Solomon Megan Jennings Batchelor 1000 Louisiana, Suite 3400 Houston, Texas Phone: Fax: