Employers’ use of criminal background checks in the hiring process is creating growing exposure to liability on several fronts. The Equal Employment Opportunity Commission (EEOC) is pursuing the issue aggressively as a centerpiece of its enforcement initiatives, asserting that the practice has a disparate impact on minority applicants, which violates Title VII of the Civil Rights Act of 1964. Through our tenure as the leader in business and legal compliance, CT has amassed an unsurpassed wealth of knowledge. We share this institutional expertise with you with our live seminars and webinars.

1. Criminal Background Checks in the
Hiring Process: The Escalating Risks
Kevin J. White
Lindsay B. Velarde
December 9, 2015

2. 2
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WELCOME

3. • Title VII, EEOC Enforcement, Ban the Box
Kevin J. White
(Washington, D.C., Houston)
• Fair Credit Reporting Act, State and Local
Equivalents
Lindsay B. Velarde
(Washington, D.C.)
• Q&A
3
OVERVIEW

4. Title VII, EEOC Enforcement, Ban the Box
Kevin J. White
Partner, Labor & Employment
Washington, D.C.
4

5. Key Background Information
5
• Being a criminal is not a protected category under Title
VII.
• EEOC relies on national conviction data and the
disparate impact theory to bring the criminal conviction
issue within Title VII.

6. Key Background Information (cont.)
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• Disparate Impact
– An employer’s neutral policy or practice may not
disproportionately screen out a protected group unless the
policy or practice is job related for the position in question
and consistent with business necessity.
• Neutral Policy or Practice:
– High school diploma/GED
– Number of years of experience
• Job related
• Consistent with business necessity

7. How Disparate Impact Theory Should Work:
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• Plaintiff’s prima facie case: employer’s policy or practice
causes a disparate impact on the basis of the individual’s
race, color, religion, sex, or national origin.
• Burden shifts to the employer to demonstrate that the
challenged practice or policy is job-related for the
position in question and consistent with business
necessity.
• Burden shifts back to the Plaintiff to determine whether
an alternative, less discriminatory policy exists that
would satisfy the employer’s business necessity without
the disparate impact.

8. Key Background Information
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• 1975 – Green v. Missouri Pacific RR Co., 523 F.2d 1290 (8th
Cir. 1975).
– 8th Circuit later affirmed injunction that allowed the use of criminal
convictions as a factor as long as the employer also considered:
• The nature and gravity of the offense(s)
• The amount of time since conviction or completion of sentence
• Nature of the position
• 1987 – EEOC incorporates the Green factors into its policy
guidance.
• 2007 – El v. SEPTA, 479 F.3d 232 (3d Cir. 2007) Rejected the
Green test and the EEOC’s formulation of the business necessity
defense in the criminal conviction context
• 2012 – EEOC issues revised guidance. Tries to address
SEPTA.

9. 2012 Guidance
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• Restatement of existing guidance
• Confirms rebuttable presumption of disparate impact
• Employers will satisfy the business necessity defense
(and may rebut presumption) if they either:
– Validate the policy per the Uniform Guidelines on
Employee Selection Procedures (“UGESP”) or
– Apply for the Green factors and engage in an
“individualized assessment” of rejected applicants to
determine whether the policy is, in fact, job related and
consistent with the business necessity

10. 2012 Guidance (cont.)
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• Presumption of disparate impact that employer may
rebut
• The employer may rebut presumption with its own data.
For example, an employer may cite to regional or state
conviction data for African American and Hispanic men
or an employer may refer to its own applicant data.
• EEOC will probe whether applicant data is unreliable
because the employer has a reputation in the community
for excluding applicants with criminal convictions.

11. Green factors + “individualized assessment”
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• Notice to applicant
• Opportunity to rebut, and
• Consideration of:
– whether exception warranted, and
– Business Necessity considerations

12. Green factors + “individualized assessment” (cont.)
12
• First two individualized steps are standard action for
third-party background checks (FCRA)
• Issues raised by “individualized assessment”:
– Inaccuracies in criminal record
– Number of offenses
– Facts/circumstances
– Age at conviction or release
– Employment history
– Rehabilitation efforts
– References, etc.
• If applicant fails to respond to the individualized assessment,
employer can proceed with decision

13. Employer’s Other Defenses
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• Federal laws that prohibit hiring convicted criminals
are a valid defense
• State laws are preempted by Title VII → no defense

14. 14
EEOC v. Pepsi Bottling Group – January 2012
 Pepsi paid $3.13M and agreed to make “major” policy changes;
 Approximately 300 African American employees were affected;
 Pepsi’s criminal background checks policy excluded job applicants
(i) who had been arrested pending prosecution even if they had
never been convicted of any offense, and (ii) who had been
arrested or convicted of “minor offenses.”
EEOC v. J.B. Hunt Transport, Inc. – June 2013
 Settlement amount not disclosed;
 The EEOC estimates 14,000 employees were affected;
 J.B. Hunt’s policy was a “blanket prohibition” that excluded drivers
based on criminal convictions unrelated to the duties of the job.
EEOC Enforcement Litigation – Settlements

15. EEOC Enforcement Litigation – Settlements
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EEOC v. BMW Manufacturing Co. (D.S.C.) – Sept. 2015
 EEOC challenged criminal conviction background check
policy that made applicants having “any convictions of a
violent nature” subject to employment rejection, noting
“there is no statute of limitations for any of the crimes,” and
the policy “makes no distinction between felony and
misdemeanor convictions.”
 Settlement announced Sept. 8. BMW will pay $1.6 million
and provide job opportunities to applicants and discharged
employees

16. 16
EEOC v. Freeman
• D. Md. August 2013 (“careful and appropriate use of criminal history
information is an important, and in many cases essential, part of the
employment process of employers”)
• 4th Cir. 2015 (affirmed summary judgment to employer; stated EEOC’s
expert analysis had a “mind-boggling number of errors” and was “utterly
unreliable”)
EEOC v. Peoplemark
• W.D. Mich. 2011 (awarding fees and costs to Peoplemark; “the complaint
turned out to be without foundation from the beginning”)
• 6th Cir. October 2013 (“The [EEOC] [alleged] that Peoplemark had a
blanket, companywide policy of denying employment opportunities to
persons with felony records and that this companywide policy had a
disparate impact on African Americans. As it turned out, the alleged
companywide policy did not exist.”)
EEOC Enforcement Litigation – Decisions

17. EEOC Enforcement Litigation – Decisions
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EEOC v. Kaplan Higher Education Corp.
• D. Ohio January 2013 (“Because [EEOC] fails to present
admissible evidence showing that the use of credit
reports ‘caused the exclusion of applicants ... because of
their membership in a protected group,’ plaintiff cannot
set forth a prima facie case of disparate impact
discrimination.”)
• 6th Cir. 2014 (affirmed dismissal; EEOC brought this
case on the basis of a “homemade methodology”)

18. 18
EEOC v. Dollar General (N.D. Ill.) – June 2013
 EEOC alleges nationwide pattern or practice claims due to use of
criminal background check “matrix” criteria that the EEOC alleges
are not job-related or consistent with business necessity and do not
provide for individualized assessments.
 Dollar General ordered to turn over the contact information of its job
applicants, even though that information did not contain any
information about the race or criminal background of the job
applicants.
 Court denied request for disclosure of EEOC’s policies on
background checks finding such policies would not be relevant to
Dollar General’s defenses because it had not shown that “the
functions performed by its employees are in any way comparable to
those undertaken by the EEOC’s employees.”
EEOC Enforcement Litigation – Recent Cases

19. State Challenges to the EEOC’s Guidance
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State Attorneys General Letter – July 2013
 Nine state attorneys general sent a letter to the EEOC to express
concern over recent lawsuits filed by the EEOC concerning
employers using criminal background checks
 The state attorneys general call the EEOC’s lawsuits “misguided
and a quintessential example of gross federal overreach.”
State of Texas v. EEOC (N.D. Tex.) – November 2013
 Claims the EEOC overstepped its statutory authority under Title
VII and is using its guidance to encroach on state rights to
maintain and enforce laws and policies that place absolute bars
on hiring felons by state agencies.
 District court found guidance was not a final action that was
judicially reviewable
 Appealed to Fifth Circuit; oral argument heard in July

20. Best Practices – Criminal Background Checks
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• Evaluate your policy – avoid “stigmatizing” language (“ex-felons,” etc.).
• Don’t implement blanket prohibitions for arrests.
• Don’t implement blanket prohibitions for all criminal convictions.
• Evaluate the job duties, the physical environment of the job, and the
accessibility of the job to those who are vulnerable.
• Consider the amount of time that passed after conviction or release,
recidivism, gravity of the crime, mitigating factors, and age at time of
crime.
• Seek information about the candidate’s conduct, employment history,
and rehabilitation following conviction or release.
• Document the hiring or rejection rationale without mention of protected
categories.
• If an applicant is rejected because of a criminal record, inform the
applicant, and provide a reasonable chance to verify or challenge.

21. The Basics of “Banning the Box”
• “Ban the box” refers to a movement by civil rights advocacy groups
seeking to have employers remove from hiring applications the “check
box” that asks if applicants have a criminal record.
• The stated purpose is to enable ex-offenders to display their
qualifications in the hiring process before being asked about their
criminal records.
• The basic premise underlying the movement is that anything that
makes it harder for ex-offenders to find a job makes it likelier that they
will re-offend, which is bad for society.
• Most “ban the box” laws only apply to the initial job application and
sometimes the initial job interview.
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22. “Ban the Box” at the State Level
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At the present time, nineteen states (including D.C.) have
adopted “ban the box” laws, with seven (*) applying to private
employers:
 California (2012, 2013), Colorado (2012), Connecticut (2010),
Delaware (2014), Hawaii (1998),* Illinois (2013, 2014),*
Maryland (2013), Massachusetts (2010),* Minnesota (2009 and
2013),* Nebraska (2014), New Jersey (2014),* New Mexico
(2010), New York (2015), Ohio (2015), Oregon (2015)*, Rhode
Island (2013),* Vermont (2015), Virginia (2015), and Washington
D.C. (2014).
Some states have limited how and under what circumstances an
employer may consider an applicant’s criminal record and make
it illegal for employers to discriminate against applicants with
conviction records, including:
 New York,* Pennsylvania,* Washington, D.C.,* and Wisconsin.*

23. “Ban the Box” at the City and Local Level
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Nearly 150 cities and counties have adopted “ban the
box” laws, including:
 California (Berkeley, Oakland, San Francisco*), Connecticut
(Bridgeport, Hartford,* New Haven*), Delaware (Wilmington),
Florida (Jacksonville, Tampa), Georgia (Atlanta), Illinois
(Chicago*), Indiana (Indianapolis*), Kentucky (Louisville*),
Louisiana (New Orleans), Maryland (Baltimore*, Montgomery
County*, Prince George’s County*), Massachusetts (Boston,*
Cambridge*), Michigan (Detroit*), Minnesota (Minneapolis, St.
Paul), Missouri (Columbia*, Kansas City), New Jersey (Atlantic
City,* Newark*), New York (Buffalo,* New York,* Rochester*),
North Carolina (Charlotte), Ohio (Canton, Cincinnati, Cleveland),
Oregon (Portland*), Pennsylvania (Philadelphia,* Pittsburgh*),
Tennessee (Memphis), Texas (Austin), Virginia (Alexandria,
Norfolk, Richmond*), Washington (Seattle*).

24. “Ban the Box” and Major U.S. Corporations
24
Target Corp. – removed criminal history box from applications in 2014
• Target’s General Counsel stated “We’re interested in a safe workplace and shopping
environment, and we do want to take the appropriate steps to do that,” and noted it
made sense to craft a uniform and consistent process nationwide, “given the number
of people Target interviews and hires across the country.”
Bed, Bath & Beyond – removed criminal history box from applications
in 2014
• BBB’s Spokesperson stated “We are in agreement with the attorney general that
employment opportunities should remain open to individuals with criminal histories
that have been rehabilitated.”
Wal-Mart – removed criminal history box from applications in 2010
• Wal-Mart’s Spokesperson stated “The removal does not eliminate the background
check or drug test, but it offers those who’ve been previously incarcerated a chance
to get their foot in the door.”

25. Best Practices – Employment Applications
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• Monitor “ban the box” developments and evaluate your application.
• Consider removing inquiries about criminal convictions from the initial
job application.
• Consider delaying inquiries into convictions (written forms, verbal
interviews) until after a conditional offer of employment.
• Train Human Resources, hiring staff, and employee interviewers not to
make blanket statements (“no criminal convictions”) in job postings or
during the hiring process.
• When you administer background checks, or alternatively criminal
conviction inquiries, make decisions in accordance with criminal
background check best practices.
• If an applicant is rejected because of a criminal record, inform the
applicant, and provide a reasonable chance to verify or challenge.

26. Fair Credit Reporting Act
State and Local Equivalents
Lindsay B. Velarde
Associate, Labor & Employment
Washington, D.C.
26

27. Fair Credit Reporting Act (“FCRA”)
• Applies when a “consumer reporting agency” conducts
the background check.
• Ensures individuals are aware that consumer reports
may be used for employment purposes and agree to
such use.
• Ensures individuals are notified promptly if information in
a consumer report may result in a negative employment
decision and if that information does in fact result in a
negative employment decision.
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28. Consumer Reporting Agency Defined
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A Consumer Reporting Agency (“CRA”) is an organization
that collects information, compiles it in a Consumer Report
and provides the Consumer Report to other people.
• A criminal background check may be a consumer report.

29. “Hot” Area of Litigation
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• FCRA sets out numerous procedural steps and
the plaintiffs’ bar is capitalizing on employer and
CRA mistakes in ways similar to wage and hour
lawsuits.
• In 2015, courts have approved settlements
ranging from a total of over $800,000 to over $4
million.

30. Disclosure and Authorization
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• Disclose that applicant’s/employee’s report might be
used for employment-related decisions.
• Disclosure must be clear and conspicuous in a stand-
alone document.
• Employer needs written authorization from the
applicant/employee that the employer may request the
report.
• Ensure authorization is clear that employer will run
background checks throughout employment.

31. Pre-Adverse Action Notice
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• Adverse action includes failure to hire or promote.
• Before adverse action is taken, employer must:
– Notify the employee that the employer intends to take the
adverse action;
– Provide copy of consumer report to employee;
– Provide a summary of consumer’s rights under the FCRA
to the employee (FTC website); and
– Wait a reasonable time before taking the adverse action.

32. Post-Adverse Action Notice
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• After the adverse action, the employer must give a post-
adverse action notice that contains
– Notice of the adverse action.
– Information about the CRA, including name, address,
and telephone number.
– Information about the individual’s right to dispute
directly with the CRA the accuracy or completeness of
any information provided by the CRA.

33. Post-Adverse Action Notice (cont.)
33
– A statement that the CRA did not make the adverse
decision and is not able to explain why the decision
was made.
– A statement setting forth the individual’s right to obtain
a free copy of the report from the CRA if the individual
requests it within 60 days of the notice.

34. Penalties for FCRA Violations
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• Private right of action
– Actual damages or $100 to $1K per violation
– Punitive damages
– Court costs and attorney fees
• Criminal Enforcement
– Willfully obtaining information under false pretenses
– Fined
– Imprisonment up to two years

35. Exposure Variables
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Whether the violation is “willful” greatly affects the
scope of damages. A plaintiff must prove that the
employer “knowingly” or “recklessly” violated the
FCRA.

36. Recent Settlements
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• In July 2015, court approved nearly $3 million settlement of claims
on behalf of nearly 60,000 class members that the defendant
retailer failed to provide proper disclosures or pre-adverse action
notifications.
• In November 2014, court approved nearly $7 million settlement of
claims on behalf of about 90,000 class members that defendant
retailer failed to provide proper disclosures.
• In October 2014, court approved over $5 million settlement of
claims on behalf of over 180,000 class members that the defendant
transportation company failed to provide proper disclosures.
• In June 2014, court approved a $18.6 million settlement of claims
on behalf of nearly 550,000 class members that CRAs provided
inaccurate criminal background reports to employers that caused
the class to suffer adverse actions, and failed to notify them at the
time defendants provided the consumer reports to prospective
employers.

37. The State and Local Twist
37
• Increasing number of state and local laws impact
FCRA-required process
• Often tag along with “ban the box” provisions
• Pay attention to scope - some apply only to
investigative reports or credit information
• Examples
– New York State
– Rochester, NY
– Buffalo, NY
– New York City, NY

38. New York State
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• Limits type of information that can be considered
• Requires disclosure and authorization
(investigative only) before obtaining consumer
report
• Requires posting and provision of copy of N.Y.
Corrections Law Art. 23-A to applicants
(investigative only)
• Must consider certain factors during evaluation
• Provide written statement of reasons for denial
upon request

39. Buffalo, Rochester, New York City
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• When inquiry can occur:
– After accepting an application - Buffalo
– After initial interview or post-offer – Rochester
– Post-offer – NYC
• When employers can consider information:
– During initial interview or thereafter – Buffalo
– After initial interview – Rochester
– Post-offer - NYC

40. New York City
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• Job advertisements cannot express any limitation
based on arrest or conviction record (e.g., no
“criminal background check required”)
• Provide copy of inquiry to applicant
• Solicit information necessary to perform analysis
under Article 23-A
• Perform analysis under Article 23-A and provide
copy to applicant
(http://www.nyc.gov/html/cchr/downloads/pdf/FairCh
ance_Form23-A_distributed.pdf)
• Allow reasonable time to respond (at least 3
business days) and hold position open

41. Best Practices
41
• Provide disclosure during hiring process
• Obtain authorization during hiring process
• Authorization should apply to hiring process and during
employment
• Provide written pre-adverse and post-adverse action
notices
• Wait a reasonable time before taking adverse action
• Maintain forms for disclosure, authorization, and pre-
and post- adverse action notices

42. Best Practices (cont.)
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• Review litigation record of CRA
• Ensure strong indemnity language in contract with CRA
• Ensure contract allows employer access to background
check data
• Ensure contract clearly outlines CRA’s responsibilities
and processes
• Separate compliance requirements for CRAs

43. Your Questions….
43

44. Please Contact Us …
Kevin J. White
Washington, D.C., Houston (202-955-1886)
Lindsay B. Velarde
Washington D.C. (202-955-1860)
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