On August 9, 2013, the EEOC suffered its second defeat of the involving employer use of criminal and credit background checks for employment screening.  
 
Background Checks: “Rational And Legitimate” 
The court began its decision by stating that “[e]mployers have a clear incentive to avoid hiring employees who have a proven tendency to defraud or steal from their employers, engage in workplace violence, or who otherwise appear to be untrustworthy and unreliable.”  
 
The defendant, the Freeman Companies conducted both criminal and credit background checks to screen applicants and used a narrowly-tailored approach, applying the credit background check to particular “credit-sensitive” positions, and limiting its consideration of criminal history to convictions within the past seven years and outstanding warrants.  The company also conducted these checks after a conditional offer of employment.  
 
Freeman designed its background screens with five goals in mind: 
 
     1.Avoid exposure to negligent hiring/retention lawsuits; 
     2. Increase the security of its assets and employees; 
     3. Reduce liability from inconsistent hiring or screening practices; 
     4. Proactively reduce the risk of employee-related loss; and 
     5. Mitigate the likelihood of an adverse incident occurring on company property that could jeopardize customer or employee confidence. 
 
The court noted that “careful and appropriate use of criminal history information is an important, and in many cases essential part of the employment process of employers throughout the United States.”

  
    The court further stated that:  
 
On its face, Defendant’s policy appears reasonable and suitably tailored to its purpose of ensuring an honest work force.  Defendant does not unnecessarily intrude into applicants’ prior brushes with the law, looking only seven years back for possible convictions, and ignoring any arrests that did not result in a conviction or guilty plea. 
 
Interestingly, the court also took note that “the EEOC conducts criminal background investigations as a condition of employment for all employees, and conducts credit background checks on approximately 90 percent of its positions.”  This apparent hypocrisy is understandably frustrating to employers attempting to protect their companies from the same threats the EEOC is presumably concerned about by implementing its criminal and credit background check policies. 
 
Finally, the court found that the EEOC failed to identify specific employment practices that allegedly cause a disparate impact.  The court noted that the company’s criminal and credit background check policies had multiple elements and that “the EEOC has failed to demonstrate which such factor is the alleged culprit.” 
 
The Kaplan Decision:  
 
Earlier this year, the EEOC suffered a similar loss in its credit-check litigation against Kaplan Higher Learning Education Corp.  
 
The EEOC failed to demonstrate in Kaplan that the Company’s credit background check policy had a statistically-significant adverse impact on minority candidates because Kaplan did not maintain race data for its applicants.  The EEOC’s attempt to discern candidate race from DMV photos and names was deemed insufficient and unreliable by the Court.  Therefore, the EEOC’s case was dismissed, although it is currently on appeal. 
 
Lessons For The Future:  
 
These cases highlight that the EEOC will continue to push its enforcement agenda, which includes aggressively pursuing claims that criminal and/or credit background checks violate Title VII.