CWS 3.0: April 10, 2013


EEOC Guidance Complicates Background Check Process

Some staffing buyers demand criminal background checks for contingent workers. On the other hand, the U.S. Equal Employment Opportunity Commission is seeking to protect worker rights and ensure that those in protected groups more prone to incarceration aren’t unfairly treated by such checks.

The EEOC also released new guidance last year over background checks. The result was confusion, but experts say background checks are still doable as long as firms remain within the rules.

However, the staffing supplier-buyer relationship can complicate matters, and buyers need to be aware of the EEOC’s policy in this matter.

And improperly done background checks might mean big money.

A case in point is Pepsi Beverages. Although this case doesn’t appear to involve staffing, it did involve a major payout. The company agreed to pay $3.13 million and provide job offers and training to resolve a charge of race discrimination in the Minneapolis area over its use of criminal background checks, the EEOC reported in January 2012. An investigation found that more than 300 African Americans were adversely impacted when Pepsi’s criminal background check policy disproportionately excluded black applicants from permanent employment, according to the EEOC.

Pepsi did not hire job applicants who had been arrested pending prosecution even if they had never been convicted of any offense, according to the EEOC. The policy also denied employment to applicants who had been arrested or convicted of certain minor offenses.

Shortly after this case, the EEOC then came out with new guidance for criminal background checks in April 2012.

And that guidance has added hurdles and raised concerns.

“Our concern with the guidance is really the element of confusion,” said Angela Preston, a board member for the National Association of Professional Background Screeners and general counsel and vice president of compliance for EmployeeScreenIQ. Preston has been working with background screening companies for 15 years.

The EEOC had guidelines that were fairly concise, Preston said. But in April 2012, it made a decision to replace concise and workable guidelines with a 52-page long somewhat confusing document that leaves a lot of guessing room for employers.

The new guidance has all the old elements to consider when using criminal background checks including consideration of the nature and gravity of the offense, how much time has passed and the nature of the job, she said. However, it does add a new requirement of “individual assessment.”

“It basically said that if you want to avoid being investigated you should conduct an individualized assessment,” Preston said. If a firm does not provide an individual assessment, then it is more likely to come under scrutiny by the EEOC. However, there is no meaningful instruction in the guidance on how to take that step.

The concern is that if a company doesn’t follow the guidance, it puts itself at risk. On the other hand, it could put itself at risk by not doing criminal background checks.

Companies “need to rely on criminal background checks to avoid a negligent hiring lawsuit, yet the EEOC is saying if you don’t follow this guidance you’re risking an investigation or a class action lawsuit,” Preston said. There are many positions where there is a real business need for background checks, she said.

“We want to provide the information our clients need in order for them to hire the right people,” Preston said. “We believe there is a place for ex-offenders in the workplace ….The concern we have is this guidance reads as though they are discouraging employers from doing any criminal background checks.”


The guidance reports discrimination can occur under “disparate treatment” when employers treat some applications differently than others. It can also occur under “disparate impact” when all applicants are treated the same but the checks disproportionally impact a group of workers. The guidance said criminal background exclusions can have a disparate impact on some racial groups because some groups have higher rates of arrests and incarceration than others.

“The EEOC guidance suggests that to avoid disparate impact discrimination all employers take an individualized assessment of a person’s criminal history and suitability for the job,” said Stephen Dwyer, general counsel of the American Staffing Association.

Individualized assessment is nothing new on the part of the EEOC, they had issued pronouncements to that effect prior to this guidance, Dwyer said. “What is new is the level of detail they have gone into what that individualized assessment should entail.”

The guidance has prompted some staffing firms to work with buyers to educate them on what’s allowed. For example, blanket no-felon policies may be unlawful. However, the guidance can make things more difficult.

“We spend a lot of money because we do check every person we put to work,” said Bill Kasko, president and CEO of Frontline Source Group Inc. However, the new guidance has increased difficulty in some areas.

Kasko said a recommended practice with the new guidance is to not conduct a background check until there’s a conditional job offer. However, that adds time when a check ultimately turns up information that disqualifies a potential candidate. Kasko recalled a story of one person applying for a position at a financial institution, but a background check ultimately found the person had convictions for bank fraud and identity theft. The person was also currently on probation.

And especially in the staffing supplier-buyer relationship, feedback can also be a concern.

Jack Wellman, president and chief operating officer of Joulé Inc., said the EEOC requires employers to justify why they didn’t hire someone due to a conviction. However, sometimes buyers may not be willing to discuss why they chose not to hire someone. And it can become even more complicated in a managed service provider relationship when there may be no direct contact allowed between the staffing firm and a key decision maker — the client’s hiring manager. As a result it can be difficult if not impossible for a staffing firm to comply with the new guidelines due to the reality that multiple parties may determine the selection of a temporary/contract employee, yet the staffing firm is the employer in the hiring process with the obligations.

Preempts state rules

Aside from the supplier-buyer relationship, there’s also concern about guidance because it aims to preempt state law. EmployeeScreenIQ’s Preston said, for example, a company in Ohio may be required by state law to do a criminal background check on home healthcare workers, but the EEOC said its guidance overrides any state laws.

Just guidance

Another factor is that the EEOC’s guidance is just that.

“This guidance is just that, it is just guidance, it doesn’t have the force of law, it doesn’t have the force of regulation,” the ASA’s Dwyer said. And it remains to be seen what deference courts will give it as they are not bound by the guidance.

“Some will presumably follow the guidance, others may not,” he said. “It’s going to be some time before that all plays out. This will be the source of a fair amount of litigation and litigation takes time to wind its way through the courts.”

In addition to the EEOC, Dwyer also said states and cities are enacting their own legislation similar to the guidance. Examples include Philadelphia, Massachusetts and Newark, N.J.


The EEOC’s guidance includes a list of employer best practices on page 25. To download a copy of the guidance, click here.


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Jay 04/10/2013 02:00 pm

"Just guidance"?!? Tell that to Pepsi. That is terrible advice for a professional to give, but then again, he is more worried, I assume, with his company making money that following the guidelines of a federal agency.

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