Key Takeaways
- The EEOC’s rescission of its background check guidance does not materially change employers’ obligations.
- Employers should continue conducting individualized assessments when considering an applicant’s criminal history.
- Employers must still comply with federal, state and local laws governing background checks and hiring decisions.
The Equal Employment Opportunity Commission (EEOC) has rescinded its long-standing guidance on criminal background checks. But does this action change how employers should conduct background checks? Not at all.
What was in the guidance?
The rescinded guidance focused mainly on compliance with Title VII’s antidiscrimination provisions. Criminal history, of course, is not a protected class under Title VII. But the guidance largely conflated criminal history with race and national origin.
Relying on a disparate impact theory, the guidance argued that racial minorities had a higher rate of criminal convictions and arrests than whites. Therefore, the argument went, excluding applicants based on criminal history has a disparate impact against Title VII-protected minorities and is unlawful – unless the exclusion is job-related and based on business necessity. The guidance opined that a policy of automatically excluding applicants with criminal histories would violate Title VII, based on the policy’s disparate impact against minorities. (There are limited exceptions, such as where a federal or state law prohibits people with certain types of convictions from holding certain jobs.)
The guidance directed employers to conduct an individualized inquiry to assess whether the decision to disqualify someone would be job-related and consistent with business necessity. The individualized inquiry would require consideration of three factors:
- The nature and gravity of the offense or conduct
- The time that has passed since the offense or conduct and/or completion of the sentence
- The nature of the job held or sought
The guidance also recognized the possibility of disparate treatment between two applicants of different races with similar criminal history. But that scenario is the kind of basic, textbook discrimination that needed no special guidance. The real focus of the guidance was disparate impact theory.
How does the rescission affect disparate impact claims?
The most direct impact of the rescission is that the EEOC will no longer pursue disparate impact claims based on criminal history. That isn’t news. The Trump administration and the EEOC had already announced they would not be pursuing disparate impact claims. So in that sense, the rescission is just a formal reiteration of what we already knew.
But disparate impact claims are still recognized by the courts. Title VII prohibits neutral-sounding policies that have a disparate impact against members of a protected class.
Aggrieved employees may still pursue civil claims alleging disparate impact under Title VII. In other words, private litigants can still pursue the same claims under the same theories, even if the EEOC has lost interest.
Employers that automatically exclude candidates with criminal histories, without conducting individualized analyses, therefore remain at risk of facing a disparate impact claim.
Even after the rescission, employers should continue to conduct individualized analyses when reviewing criminal histories.
But disparate impact claims are not the only risk employers would face if they were to adopt a policy of excluding all applicants with criminal histories.
At least 24 states and localities have their own laws that require individualized inquiries. In many instances, these laws require employers to consider a specific list of factors or to reach a specific conclusion about an individual before disqualifying that person based on criminal history.
State and local laws impose a variety of other requirements too. These include, for example, filling out a specific form to document the individualized analysis, notifying applicants which convictions might be disqualifying and providing additional information along with pre- and post-adverse action notices. Failing to follow these requirements is, by itself, a violation of state or local law, even if there is no disparate impact. These laws impose procedural requirements.
Employers must also keep in mind the Fair Credit Reporting Act, a federal law that imposes procedural requirements for conducting employment-related background checks. Despite the name, the law covers much more than credit reporting. Its requirements extend to background checks that contain criminal history, employment or education information, civil lawsuits, motor vehicle records, bankruptcies, social media history and even personal references, if the information is gathered by a third-party consumer reporting agency (a background check company).
As a practical matter, employers should view the rescission of this guidance as nothing more than the EEOC saying that it, as an agency, will no longer bring disparate impact claims based on background check results. (It didn’t bring many of these claims anyway.) The recission should not be viewed by employers as an invitation to soften background check policies or to impose blanket criminal history bans.
Rather, employers should remain vigilant about complying with the many technical and procedural requirements that are mandated by federal, state and local laws, even after recission of the EEOC guidance.
