Using criminal history. Even assuming that employers receive accurate and current criminal records that belong to the applicant, there are issues on how to properly use those records. The U.S. Equal Employment Opportunity Commission (EEOC) has issued notices warning employers that the use of a criminal record can have a disparate impact on protected groups. According to the EEOC, if an applicant is not hired due to a prior crime that had no bearing on the job being sought, the background screening can be judged discriminatory.
For example, in one such lawsuit (El v. SEPTA, U.S. Court of Appeals for the Third Circuit, 2008) an applicant claimed that a prospective employer’s background screening policy was discriminatory because it unnecessarily disqualified minorities—who were more likely to have criminal records. In the case, SEPTA, a transit company, refused to hire Douglas El because of a 40-year-old murder conviction. El had been convicted of a murder that occurred in a gang fight. He had not been the shooter and was not the only person convicted of the murder.
SEPTA requested summary judgment—a hearing based on the facts of a case without a trial—arguing that the preemployment screening program was required to keep the public safe and was a necessary business practice. The U.S. District Court for the Eastern District of Pennsylvania found in favor of SEPTA. El appealed the decision.
The appeals court also ruled in favor of SEPTA, but it raised significant issues in its discussion of the case that could have ramifications on the use of background checks. First the court refused to determine whether employers are legally allowed to establish a zero-tolerance policy to weed out applicants who might pose an unacceptable level of risk. Instead, the court noted that whether such a policy is consistent with business necessity must be resolved by courts and juries on a case-by-case basis.
In its decision, the court also pointed out that SEPTA produced expert witnesses who stated that criminals are likely to reoffend within the first three years after they are released from prison. But none of the witnesses could say whether a crime committed by an employee 40 years earlier would present a security risk, and El did not present contradictory evidence.
In the written opinion of the case, the court noted that “had El produced evidence rebutting SEPTA’s experts, this would be a different case. Had he, for example, hired an expert who testified that there is a time at which a former criminal is no longer any more likely to recidivate than the average person, then there would be a factual question for the jury to resolve.”
The EEOC has recommended that employers look at the nature and gravity of the crime, the nature of the job, and the age of the crime to determine whether there is a business justification to deny employment.
Where an arrest did not result in a conviction, employers need to be even more careful. Numerous states have laws that restrict the consideration of arrests not resulting in convictions, and the EEOC has taken the position that an arrest without more is just a police officer’s opinion.
Employers can also run into trouble when using automated scoring guidelines, where applicants are placed in categories such as “green” for no record, “red” for a disqualifying criminal record, or “orange” if the situation is not clear. The problem with an automated scoring system is that it can have the effect of being discriminatory if the “red” candidates are automatically rejected without taking into account whether there is a business justification. A best practice would be to have a trained staff member individually review each rejected applicant and document the process.
New York has taken this concept a step further in a law that became effective in February. The new law places a greater emphasis on employers analyzing a past criminal record to determine whether there is a business justification not to hire a person. Companies must consider the duties of the job being offered, the relationship between the offense and the job, how long ago the conviction occurred, the applicant’s age at the time of the conviction, how serious the offense was, and how well the applicant is following parole and rehabilitation rules.
The New York law requires that a notice of the factors an employer must consider be provided to job applicants. Employers must also provide applicants with a written notice before a check is conducted and another notice after the check if it uncovers a criminal conviction. (Federal law only requires notification of adverse action.)
Employers are also given some protection under the New York law. When a company finds that a job candidate has a prior criminal history but hires the person anyway, the company is given increased protection in negligent hiring lawsuits if the company made a reasonable and good-faith determination under the factors set out in the New York law that the person should be hired despite a criminal record. If sued, the employer is given a “rebuttable presumption” that the employer was not negligent and that the employee’s prior criminal record should not be admitted into evidence to be used against the company.
Employers must also be aware that similar issues of discrimination surround the use of credit reports. A credit score is not a standard part of an employment credit report, because there is no evidence to suggest that a credit score is a valid predictor of job performance. Much as with a criminal record, for an employer to factor in a credit history, the company should have a job-related justification.
No federal law prohibits conducting credit checks. However, the EEOC has expressed concern that credit checks—like criminal records checks—could lead to discriminatory hiring practices. In 2008, the EEOC released guidance on the use of employment tests during the application process. The agency noted that such guidance was necessary, in part, because the number of lawsuits claiming discrimination based on credit reports and other selection procedures has been on the increase. (Read the EEOC ’s report here.)
Though no states have made credit history checks illegal across the board, Washington state passed a law in 2007 that prevents an employer from considering a credit history as part of the hiring decision unless it is substantially job related and the employer’s reasons for the use of such information are disclosed to the applicant in writing.
In 2008, the California Legislature passed a bill that would have severely curtailed the use of credit reports for employment, but it was vetoed by the governor.
When might a credit history be relevant to a job? It could be legitimate to check credit history for a position where the person will handle cash. If an employer discovers that a person is saddled with debt, for example, it could be a red flag that the person would be under pressure to embezzle funds.
However, even if the law permits it and it is relevant to the job, employers should tread carefully; credit reports must be taken with a grain of salt. A credit report may contain information that is inaccurate, irrelevant, or out of date.