Criminal Background Screening, Investigations & EEOC Regulatory Compliance

. Thomas L. McCally, Esq Equity Member Carr Maloney P.C. Steve Kroloff Walgreens Loss Prevention Director – Special Investigations

EEOC CRACKDOWN ON CRIMINAL BACKGROUND CHECKS

Press Release - April 25, 2012 EEOC Issues Enforcement Guidance Commission Updates Guidance on Employer Use of Arrest and Conviction Records

EEOC Focuses on Cases Involving Discriminatory Policies Impacting Multiple Employees • The EEOC recently unleashed its four-year plan to bolster efforts against discriminatory policies that impact multiple employees – such as employment screening policies. • Under the new plan, the agency will set a baseline number of “systemic” cases that must be maintained in the litigation docket. • That number will increase by a certain percentage each year until 2016. • Under this new quota system, the EEOC will prioritize cases involving policies that impact multiple employees when choosing which cases to litigate.

Failure to comply with EEOC guidelines = Exposure

U.S. Equal Employment Opportunity Commission Press Release - January 11, 2012 • Pepsi to Pay $3.13 Million and Made Major Policy Changes to Resolve EEOC Finding of Nationwide Hiring Discrimination Against African Americans • Company’s Former Use of Criminal Background Checks Discriminated Based On Race, Agency Found

Office of Federal Contract Compliance Programs (OFCCP) News Release - June 25, 2012

• Baldor Electric to Pay $2 Million to Settle Hiring Discrimination Case with U.S. Labor Department • Agreement Includes Back Wages and Interest, Some Job Offers, for 795 Female and Minority Applicants Denied Positions at Fort Smith, Arkansas, Facility

Weighing the Risks

Weighing the Risks If You Don’t Conduct Background Checks: • Potential exposure to negligent hiring/retention claims • Potential exposure to negligence claims based on known risks associated with job • Duty to provide safe workplace • Potential increased risk of workplace violence

Weighing the Risks If You Don’t Conduct Background Checks: • Potential harm to business (theft, embezzlement, misuse of proprietary information) if employee engages in criminal activity on the job • Damage to reputation • Economic loss due to theft • Bad working environment In light of these risks, many employers elect to use criminal background checks as a screening and investigative tool.

RECENT DEVELOPMENTS E.E.O.C. v. Freeman 2013 WL 4464553 (D.Md.,2013) • EEOC brought action against Employer based upon criminal background and/or credit history checks claiming they had a discriminatory effect on African-American and male applicants. • Court struck EEOC expert and granted Summary Judgment in favor of Employer

RECENT DEVELOPMENTS EEOC v. PeopleMark: A Tale of Regulatory Overreach • USDC for the Western District of Michigan sanctioned the EEOC and required the EEOC to pay more than $750,000 in attorney’s fees, expert witness fees and other costs to PeopleMark Inc., a staffing company accused of violating Title VII by refusing to hire anyone with a criminal record. • Court found that the EEOC’s claims “were without foundation from the beginning” and that the EEOC continued to pursue its claims against PeopleMark long after the EEOC “knew it would not be able to prove its case.” 2011

NABPS Journal -April-May

Attorney Generals Unite Attorney Generals of at least 9 states’ letter to the EEOC asking it to rescind the EEOC's 2012 Guidance regarding criminal background checks: MAIN POINTS RAISED: • the EEOC is improperly attempting to expand Title VII coverage to "former criminals", a group that Title VII is not intended to cover; • employers have legitimate, job-related concerns, consistent with business necessity, to apply criminal conviction policies noting that criminal backgrounds can be indicative of a lack of dependability, reliability, and/or trustworthiness;

Attorney Generals Unite • the "individual analysis" of each conviction will unduly burden businesses with costs and regulations, and could arguably create more opportunity for racial discrimination; and • “the EEOC is improperly intruding into states' rights.”

http://www.employmentlawspotlight.com/files/2013/07/E EOC-Letter-Final-07-29-2013.pdf

Time to Check up on Your Criminal Background Check Policies

New Guidelines: The EEOC’s Position Arrests Should Not Be Considered According to the recent EEOC Guidelines: • In most cases, employers cannot consider the arrest record of a job applicant. However, the one exception is that employers can look at the underlying conduct that caused the arrest. For example, if an applicant is arrested for sexually assaulting a child, a day care center can consider the underlying context of the arrest in making hiring decisions.

New Guidelines: The EEOC’s Position According to the recent EEOC Guidelines: • The arrest itself may not be considered, as the EEOC points out that being arrested does not make one guilty of criminal behavior. The focus must be on the events that occurred and how the employee’s behavior impacts the employee’s qualifications for the job. • The EEOC also notes that due to racial profiling, many lawabiding citizens may well be arrested without cause and thus arrest records often say more about the racial demographic of job applicants than whether they are qualified for the job.

New Guidelines: The EEOC’s Position Convictions • “As a best practice, and consistent with applicable laws, the EEOC recommends that employers not ask about convictions on job applications and that, if and when they make such inquiries, the inquiries be limited to convictions for which exclusion would be job related for the position in question and consistent with business necessity.”

New Guidelines: The EEOC’s Position Consideration of Convictions • Employers can consider convictions in the hiring process – with caution. The EEOC’s updated guidance provides that criminal records that warrant exclusion should be limited to convictions: − related to the position in question, and − consistent with business necessity.

Criminal Background Check Policy Exclusion for Criminal Conviction Must Be Job Related and Consistent with Business Necessity • Title VII shifts the burdens to the employer to “demonstrate that the challenged practice is job related for the position in question and consistent with business necessity.” • Based on disparate impact theory of discrimination • Griggs v. Duke Power Company, 401 U.S. 424 (1971) “bear[s] a demonstrable relationship to successful performance of the jobs for which it was used” and “measures the person for the job and not the person in the abstract.”

Convictions Determining Whether a Criminal Conduct Exclusion Is Job Related and Consistent with Business Necessity To establish that a criminal conduct exclusion that has a disparate impact is job related and consistent with business necessity, the employer needs to show: • the policy operates to effectively link specific criminal conduct, and its dangers, with the risks inherent in the duties of a particular position.

Convictions Two circumstances in which the Commission believes employers will consistently meet the “job related and consistent with business necessity” defense are as follows: Validated Statistical Evaluation: 1. The employer validates the criminal conduct screen for the position in question per the Uniform Guidelines on Employee Selection Procedures (Uniform Guidelines) standards; or 2. The employer develops a targeted screen considering at least the nature of the crime, time elapsed, and nature of the job (the three Green factors) = Individualized Assessment.

Convictions Individualized Assessment (Green* Factors) The employer can show that a hiring decision is consistent with business necessity by demonstrating that, in screening applicants for criminal conduct, it 1. Considers at least the 1) nature of the crime, 2) time elapsed since the criminal conduct occurred, and 3) nature of the specific job in question; and 2. Gives an applicant who is excluded by the screen the opportunity to show why he should not be excluded (Individualized Assessment). *Green v. Missouri Pacific Railroad, 549 F.2d 1158 (8th Cir. 1977)

Green Factors and Criminal Conduct Screens A. The Nature and Gravity of the Offense or Conduct • Careful consideration of the nature and gravity of the offense or conduct is the first step in determining whether a specific crime may be relevant to concerns about risks in a particular position. The nature of the offense or conduct may be assessed with reference to the harm caused by the crime (e.g., theft causes property loss).

Green Factors and Criminal Conduct Screens B. The Time that Has Passed Since the Offense, Conduct and/or Completion of the Sentence • Employer policies typically specify the duration of a criminal conduct exclusion. While the Green court did not endorse a specific timeframe for criminal conduct exclusions, it did acknowledge that permanent exclusions from all employment based on any and all offenses were not consistent with the business necessity standard.

Green Factors and Criminal Conduct Screens C. The Nature of the Job Held or Sought • While a factual inquiry may begin with identifying the job title, it also encompasses the 1. Nature of the job’s duties (e.g., data entry, lifting boxes, security); 2. Identification of the job’s essential functions, the circumstances under which the job is performed (e.g., the level of supervision, oversight, and interaction with coworkers or vulnerable individuals); and 3. The environment in which the job’s duties are performed (e.g., office, working alone or with others, out of doors, in a warehouse, in a private home).

Individualized Assessment Best Defense If Using Criminal Background Screens Individualized assessment generally means: • Employer informs the individual that he may be excluded because of past criminal conduct; • Provides an opportunity to the individual to demonstrate that the exclusion does not properly apply to him; and • Considers whether the individual’s additional information shows that the policy as applied is not job related and consistent with business necessity.

Individualized Assessment The individual’s showing may include information that: • The individual was not correctly identified in the criminal record, or that the record is otherwise inaccurate; • The facts or circumstances surrounding the offense or conduct; • The number of offenses for which the individual was convicted; • Older age than at the time of conviction, or release from prison;

Individualized Assessment The individual’s showing may include information that: • Evidence that the individual performed the same type of work, post conviction, with the same or a different employer, with no known incidents of criminal conduct; • The length and consistency of employment history before and after the offense or conduct; • Rehabilitation efforts, e.g., education/training; • Employment or character references and any other information regarding fitness for the particular position; and • Whether the individual is bonded under a federal, state, or local bonding program.

Individualized Assessment Employers Can Also Use It As a Defense

Individual must be given an opportunity to explain the criminal conviction • Written explanation from individual − If not truthful then independent reason not to hire and could help to limit damages in litigation − Failure to provide information could be used as reason to exclude

Individualized Assessment Individual must be given an opportunity to explain the criminal conviction • Have individuals obtain certified records if they dispute findings of the background check investigation or provide written explanation as to why the conviction would not impact ability to perform the job − Failure to obtain records or to explain their position could be a reason to exclude and help limit damages • Link facts of criminal acts to reason not hired: facts of conviction to risks associated with the job • Job related and business necessity

How Can Individual Assessment Work to Employer’s Advantage? • Key Point: EEOC Guidelines specifically state: If the individual does not respond to the employer’s attempt to gather additional information about his background, the employer may make its employment decision without the information. • Key Point: Policy must be based on objective factual data that an employer can point to − EEOC will consider − Jury might consider

Employer Best Practices According to the EEOC The following are examples of best practices for employers who are considering criminal record information when making employment decisions: • Eliminate policies or practices that exclude people from employment based on any criminal record. • Train managers, hiring personnel, and decision makers.

Employer Best Practices According to the EEOC • Develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct. − Identify essential job requirements and the actual circumstances under which the jobs are performed (job description). − Determine the specific offenses that may demonstrate unfitness for performing such jobs. − Identify the criminal offenses based on all available evidence. − Determine the duration of exclusions for criminal conduct based on all available evidence.

Employer Best Practices According to the EEOC • Develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct. − Include an individualized assessment. (Key Point: Required in almost all circumstances.) − Record the justification for the policy and procedures. − Note and keep a record of consultations and research considered in crafting the policy and procedures. − Be consistent.

What You Should Do: Review Applications • Consider removing questions regarding arrests. • Consider removing general questions regarding convictions. • If asking general questions about convictions, include a statement on the application indicating that a conviction is not an automatic bar to employment, then subsequently conduct an individualized assessment.

Be Aware of Other Laws

Criminal Background Check Program • Walgreens Loss Prevention conducts a review “post-offer”. • This review considers 3 factors: – The nature and gravity of the offense or conduct – The time that has passed since the offense/conduct and/or completion of the sentence – The nature of the job held and/or sought *A criminal conviction does not bar an applicant from employment.

EEOC Guidance • Do not be deterred from conducting criminal background checks • Remain focused in relevance of criminal convictions to position applying for

EEOC Guidance • EEOC urges employers to take a much more individualized approach • Avoid broad and exclusionary polices and practices that fail to consider any candidates with criminal convictions

What are the stages of the review process? 1. What happens after an application is complete? -

Tier I – Name, SSN, and Address History Tier II – National Crim Search Tier III – County of Residence

2. Grading Phase -

No criminal history results in a passing grade Any convictions denoting a criminal history will prompt a review

3. Individualized review process initiated

What does the individualized review entail? A Misdemeanor or Felony Does Not Automatically Bar an Applicant from Employment

1. Fact gathering phase - Read the disposition - Determine the offense that resulted in a conviction - Research the state and federal criminal code to determine how the code defines the crime - If necessary, reach out to the applicant, probation officer, or other individuals to gather more information

What does the individualized review entail? 2. Determination Phase - Consider the following: - when the offense took place - the severity of the offense - age of applicant at the time offense was committed - position applicant is seeking Crimes of dishonesty are viewed as the most serious across all positions

EEOC Guidance • Job related and consistent with business necessity • Consistency is important • Compliance with other federal laws and/or regulations that conflict with Title VII is a defense to a charge of discrimination under Title VII

EEOC Guidance • This process may delay the hiring process. • A majority of people pass. • FCRA – Third parties – Individuals

• Regulations – Federal – State – Local

Why adhere to the EEOC guidance? • Prevent government investigations • Prevent fines • Prevent perception of disparate impact/treatment

Best Practice • Anyone with an issue or concern regarding a criminal background check will get the quickest response by emailing or calling the following: The shared email The general background check line * The Special Investigations team monitors these lines throughout the day

Who would pass or fail upon review? • Matthew McConaughey has applied to be service clerk. – Criminal conviction history of possession of marijuana

What about Michael Vick? • Applying to be a photo tech. – Convicted in 2007 on state and federal dog fighting charges.

What about Winona Ryder? • She wants to work as a shift leader. • After being arrested for shoplifting more than $5500 worth of merchandise, Ryder was convicted in 2002 for grand theft, shoplifting, and vandalism.

What about OJ Simpson? • Applying to be a service clerk – Convicted of armed robbery, kidnapping, and theft among other crimes in 2008 – Due only to his 2008 convictions…

QUESTIONS? If you have further questions, please email our presenters and reference the RILA Webinar Steve Kroloff: [email protected] Tom McCally: [email protected]

Thank You