Is your business required to hire job applicants with felony convictions? And, would your business be violating federal law by implementing a strict criminal background check policy? Under a 2012 Enforcement Guidance issued by the federal Equal Employment Opportunity Commission, the startling answer to both of the above questions just might be “yes.”
 

Federal law prohibits employers from discriminating against employees and job applicants on the basis of protected characteristics, including race. While the common perception is that unlawful discrimination only occurs when the employer intentionally discriminates against a particular individual, neutral employer policies that have a disparate impact on protected classes also are unlawful.

According to the EEOC, criminal background checks can have exactly the type of disparate impact prohibited by Title VII. The EEOC relies on national statistics showing that individuals from certain racial groups are disproportionately incarcerated to their representation in the general population. As such, barring individuals from employment due to their criminal backgrounds can negatively impact a disproportionate number of applicants from those racial groups.

The EEOC’s Guidance suggests that nearly every criminal background check policy has a disparate impact. But, that does not necessarily mean that every background check policy violates Title VII. Instead, the Enforcement Guidance suggests that employers can conduct background checks under limited circumstances. Employers must be aware, however, that they proceed at their own peril and the EEOC may find that a violation of Title VII has occurred.

The limited circumstances under which a hiring decision based on a criminal background check is permitted, even where the employer’s policy has a disparate impact on individuals within a protected class, is a situation in which the decision is job-related for the position in question and consistent with business necessity. The EEOC has pointed to three factors — known as “the Green Factors” after the case from which they are derived — that can provide a framework for determining whether the decision is job-related and consistent with business necessity: (1) the nature and gravity of the offense; (2) the time that has passed since the offense and/or completion of the sentence; and (3) the nature of the job at issue.

Cautious employers should take the following steps if they choose to implement a criminal background check policy:

• Do not question applicants about their criminal background until after a conditional job offer has been extended;

• Do not implement an absolute bar on the hiring of applicants with criminal convictions;

• Employ a fact-based, case-by-case analysis of those applicants with criminal convictions, applying the Green Factors identified above;

• Document each resulting decision and the justifications for that decision, clarifying why the decision was job-related and consistent with business necessity.

Even when an employer adheres to these best practices, there is no guarantee that the EEOC will not find and prosecute an alleged violation of Title VII. The EEOC has been aggressively enforcing its position, filing class action lawsuits against employers in situations where convicted felons were denied employment for positions involving daily contact with cash or valuable employer assets. The Texas Attorney General recently filed suit against the EEOC, asserting that the EEOC’s position on this issue unreasonably restrains employers’ hiring decisions.

Despite the EEOC guidance, states treat the issue of criminal background checks differently. Idaho employers are fortunate in that there are no state laws prohibiting criminal background checks, nor has there been a concerted movement in Idaho to ban such policies. The EEOC has taken the position that Title VII preempts each state’s approach to criminal background checks, even under circumstances where background checks are mandated by state law. To the extent the state law may go beyond the scope of any corresponding federal requirements, the EEOC asserts that such requirements do not immunize the employer from prosecution under Title VII.

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James Dale is a partner in Stoel’s Boise office. He advises and represents some of Idaho’s largest private employers on virtually every aspect of labor and employment law and litigation, including discrimination, harassment, wrongful termination, contract, and wage and hour class and collective actions. Karin Jones is a labor & employment associate in the firm’s Seattle office, and former Deputy Attorney General in the Civil Litigation Division of the Office of the Idaho Attorney General.