This summer, the Equal Employment Opportunity Commission (EEOC) signaled that it was planning to revisit its longstanding Guidance (found at http://www.eeoc.gov/policy/docs/arrest_records.html) which explains when employers can use arrest and conviction records as a pre-employment screening criteria. The EEOC also said it was contemplating issuing new Guidance on when credit history checks can be used as part of the hiring process. To date, no new Guidance on these topics has been forthcoming from the EEOC.

On September 30, 2009, the EEOC filed a nationwide action lawsuit alleging that a company had unlawfully discriminated against African American, Hispanic and male job applicants by using credit history and criminal background checks as selection criteria. The suit claims that Freeman rejected job applicants based on their credit history and whether they had one or more of various types of criminal charges or convictions which were neither job-related nor justified by business necessity. The EEOC claimed that the rejection and those bases resulted in an unlawful discriminatory impact because of race, national origin, and sex.

The lawsuit EEOC v. Freeman, No. 90cv02573, is pending in the federal district of Maryland. The EEOC's Complaint alleges that the use of those screening tools deprived a class of black, Hispanic and male job applicants of equal employment opportunities because of their race, national origin, and sex. The EEOC also alleges that the use of these screening criteria is not job related or consistent with business necessity and that other less discriminatory procedures are available for use as selection criteria.

The EEOC's position in Freeman is consistent with the informal guidance the EEOC issued on December 1, 2005. In its informal discussion letter, the EEOC said that an employer who uses a "blanket" policy of not hiring any applicant who has a history of arrest or convictions violates Title VII of the Civil Rights Act because such a policy "disproportionately excludes members of certain racial and ethnic groups, unless the employer can demonstrate a business need for use of this criteria."

The EEOC's recent lawsuit raises important questions for employers who perform pre-employment background checks utilizing these screening tools. Although the EEOC does not contend that this employer intentionally set out to discriminate against minorities and men, it argues that the use of these screening criteria is not required or consistent with business necessity for the type of jobs being filled.

This case is a reminder that all employers need to periodically review their selection criteria and the selection criteria that clients impose on your staffing company. Both your company and the client need to be able to validate the criteria used as consistent with a genuine business need. Further, while it may be permissible to request information regarding conviction records, generally it is not advisable to adopt a blanket rule that excludes all applicants if they have a criminal conviction. Instead, where a criminal conviction might be a disqualifying criteria, employers should consider the nature and gravity of the offense, the time elapsed since the conviction, and the nature of the job sought before acting on the information. While staffing companies may want or are required to verify the applicant's background prior to placing or sending them on a job interview, there are legal limitations on the information that can be used. Some of the criteria and limitations are as follows:

• Employer may not ask about or consider information about arrests or detentions that did not result in convictions. Only convictions and pending cases can be considered.
• Employer may not consider crimes that have been sealed or expunged or where the applicant participated in a special pretrial alternative program. Juvenile activity may also be restricted in reporting.
• There are limits concerning misdemeanors.

Further within the complex web of regulations that limit employers’ use of background check information, federal and state requirements may contradict each other. A federal law may allow the use of certain information, while a state law bars it altogether.

Oftentimes in reviewing the reports and making the hiring (or referral) decision, the employer is walking a proverbial legal tightrope in reviewing the report and making a hiring decision.

Though it’s not uncommon to hear of felony-free workplace policies, under the Equal Employment Opportunity Commissions (EEOC) guidance on arrest and conviction records, this type of blanket policy is illegal. However, conviction information can be used if certain conditions are met.

If a background report shows the subject was found guilty or convicted of a charge, he or she cannot automatically be eliminated from consideration for employment.

The EEOC does permit employers to use convictions on the basis of business necessity that can be justified if the conduct that led to the conviction is particularly egregious or related to the position in question. Employers can establish business necessity through examination of the following factors:

• The nature and gravity of the offense.
• The time that has passed since the conviction and/or completion of the sentence.
• The nature of the job held or sought.
• If examination of these factors reveals the applicant to be unsuitable for employment, the EEOC states that the conviction record can be cause for rejection. This position also has been adopted by numerous federal courts.

When it comes to using non-conviction information in the hiring decision, the legal picture for employers gets a bit murkier.

First, non-convictions are not simply arrests. There are numerous situations where a person can plead guilty but not be convicted of a crime. One example is deferred adjudication (or adjudication withheld), in which a case is dismissed based on the defendants compliance with certain terms set by the judge. Most laws relating to the use of criminal information don’t address how employers should handle this gray area.

To help manage instances where non-conviction/arrest information comes up on a background report, employers should clearly ask on the employment application: “Have you ever pled guilty, no contest or been convicted of a crime?” This question will capture a wide range of conviction and non-conviction criminal scenarios and, if not answered accurately, can provide the employer with the legal means to deny employment.

The majority of laws pertaining to the use of non-conviction information focus on arrest records, and these laws can create more hiring complexities for employers than those relating to conviction information.

Lastly, as part of your policy it is critical to

• Obtain the individual’s consent.
• Selecting a screening firm.
• Limit access to criminal records and mistaken identity.
• Obtain reliable information.
• Create a record of the background checking process.
• Evaluate the information obtained in a nondiscriminatory fashion.
• Retain background checking records for the time required by law.