Avoiding discrimination in employee background checks

Denying candidates with criminal histories a fair shot at a job can cost employers big time — both in fines and lost talent, employer groups say.

Dollar General discovered this the hard way: the discount retailer was ordered to pay $6 million after the U.S. District Court for the Northern District of Illinois in Chicago ruled this week that its criminal background check policies discriminated against African Americans — a violation of Title VII of the Civil Rights Act of 1964.

A lawsuit, brought by the Equal Employment Opportunity Commission, alleges Dollar General denied employment to African American candidates at a significantly higher rate than white applicants based on criminal background checks. The monies will be distributed to African American applicants who were denied a position at Dollar General because of past convictions, the agency says. Dollar General issued a statement following the lawsuit.

"Although Dollar General continues to believe the EEOC’s allegations are unfounded, the company is pleased to have reached a resolution that reinforces its core value of respecting the dignity and differences of others and allows the company to continue to take reasonable steps to protect both its property and the safety of its customers and employees," according to the company's public relations department.

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Legal experts say employers should reexamine their own background check practices.

“Any time the EEOC issues this type of announcement, it's a good reminder for employers to review whether their criminal background check policies and procedures would automatically disqualify candidates based on specific previous convictions,” says Joseph Mulherin, partner at McDermott, Will & Emery, a Chicago-based labor law firm.

Title VII requires employers to prove past criminal behavior would directly impede a candidate’s ability to perform a job before rejecting their application. Most drug convictions, for example, don’t relate to a candidate’s ability to work as a janitor, Mulherin says.

The EEOC’s guidelines recommend employers “eliminate policies or practices that exclude people from employment based on any criminal record,” to avoid compliance issues. While 35 states currently prohibit employers from using criminal background checks during the application process, there’s no federal mandate enforcing this practice, according to the National Employment Law Project, a nonprofit New York law firm.

Aside from ensuring compliance, the Society for Human Resource Management says it behooves employers to give this demographic a fair chance. During its March conference, the HR organization announced its Getting Talent Back to Work pledge — an initiative which encourages employers to hire the formerly incarcerated. Since January, about 2,000 individuals and 600 businesses — including JP Morgan, Uber and Butterball Farms — have taken SHRM’s pledge, the organization says.

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“SHRM has taken a special interest in this issue and strongly adheres to the proposition that a criminal background should never be an automatic barrier to employment,” says Johnny C. Taylor Jr., president and CEO of SHRM.

Taylor agrees the Dollar General ruling highlights why it’s fiscally responsible for employers to review their criminal background check policies to ensure Title VII compliance. But given the talent shortage refocusing on hiring talent with criminal backgrounds is an even better strategy.

“It is important to acknowledge the movement in our country to provide second chances for those with criminal records,” Taylor says.