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Are Your Background Checks a Lawsuit Waiting to Happen?

BMW and Dollar General Corp. (NYSE: DG) have been in the news recently because of their background screening policies. Like many other companies, they have faced huge fines for allegedly violating Equal Employment Opportunity Commission rules – and your company may be doing the very same thing.


In April 2012, the EEOC announced its strategic plan for the next four years, and employment background screening was a key focus. The government contends that such screening has had a disparate effect on members of certain minority groups. Screening programs typically look for ex-offenders, and larger percentages of people in those groups have criminal and prison records.


Companies pursued by the EEOC face more than just the prospect of hefty fines. When allegations are announced, their public image suffers, because the implication is that the companies are using unfair and potentially racist policies.


Even if your company isn’t quite as large as any of the EEOC’s high-profile targets, you could face the same liability if your background screening policies are similar. If your policies are highly restrictive or include “zero-tolerance” elements (such as a refusal to consider anyone with a past felony), you could be setting yourself up for a legal fight you’ll probably lose.


The EEOC does not object to pre-employment background screening itself. Their focus has been on what you do with what you learn about applicants. When you discover that your applicant has had a criminal conviction in the past, the EEOC believes that you need to consider three questions. First, how long ago did the crime happen? Second, how does the criminal record or conviction impact the position with your company? Finally, what’s the nature of the crime?


Suppose your applicant was convicted of residential burglary when he was 18. Today, he’s 37, and hasn’t had so much as a parking ticket in the meantime. You discover that he was accused of stealing a TV by an ex-girlfriend after a contentious breakup. Is that the same as an armed robbery? Will that affect how he serves your customers today?


On the other hand, you may run a bank, and you discover that a teller applicant served a year for felony counterfeiting and check kiting. Even if that happened five years ago, you could probably make a solid case that he shouldn’t handle your customers’ money. Or, if you run a school district and discover that a bus driver applicant was a convicted sex offender, you have a legitimate reason for refusing to hire her.


The basic idea is to avoid using background screening to draw lines in the sand. You need to consider each case individually, and approach what you learn about an applicant within the context of the situation and the position.


Another element of EEOC’s plan is the requirement that any candidate whom you refuse to hire because of a background check have an opportunity to respond to the information. It’s similar to consumer-protection laws that give you a chance to respond if you’re denied credit. We recommend that our clients include a line in their adverse action letter saying “if you would like to discuss anything in this report, please let us know.” The downside is that it’s hard to validate whether the candidate’s version of the story is truthful. However, that’s not the issue here. What is important from a compliance standpoint is that you provide that opportunity to respond, even if you don’t change your mind.


Some employers also look at arrest information, but that can create additional issues. While the EEOC doesn’t prohibit the use of arrest information, it will expect you to be able to articulate how you correlate that information with the nature of the position, if you use it to deny employment. The concern again arises because research shows that minorities tend to be arrested at dramatically higher rates than non-minorities.


One final point the EEOC expects you to consider is how previous employers were influenced by a criminal record. For example, if someone had a misdemeanor conviction several years ago, was subsequently hired by a bank, and there were no further problems, you should put more weight on the successful employment experience than on the earlier conviction. Be sure that you document your policy, too. That way, if a rejected candidate complains to the EEOC, you can prove that your background screening policy meets their expectations.

Written by: Mike McCarty, CEO

Safe Hiring Solutions






New Focus HR is a human resources consulting and training company that services all organizations. Our expert team collaborates with businesses to attract, motivate, retrain and retain their biggest assets, employees. While engaged with an organization, our focus is to find solutions that improve the company’s internal HR-related practices while increasing results at the same time! Our focus. Your results.