In April of 2012, the Equal Employment Opportunity Commission [EEOC] published new Enforcement Guidance on the extent to which, under Title VII of the 1964 Civil Rights Act,1 employers may consider arrest and conviction records in making employment decisions.2 After several false starts, and by a 4-1 vote of its members, the EEOC acted in recognition of the fact that, aided by the internet, most employers now examine the criminal history of applicants and need updated assistance in this area. This is especially true given the EEOC's announcement in early 2012 of a $3.13 million settlement with Pepsi involving charges of discrimination in its criminal background check policies.3 The Guidance represents the EEOC's first comprehensive policy statement in over 20 years and supersedes all prior statements. It focuses on race and national origin discrimination, the Title VII protected classes that the EEOC has decided are most often implicated in the use of criminal history in employment decisions.
No sooner had the Guidance appeared than interest groups began protesting it. The main complaint is that it puts employers in a Catch-22. Not only do they potentially face losses via theft, fraud, etc. if they hire someone with a criminal past, but they risk being sued for negligent hiring if that person harms a third party and it is later revealed that a background check would have alerted the employer to this possibility; they also face liability if they fail to conduct a check required by state or local law. The problem is exacerbated by the fact that resume fraud - lying about one's background, including whether one has a criminal history - has reached epidemic proportions; this gives employers a greater incentive to do independent checks.
For an employer to disqualify someone based on a check may, however, open the door to a Title VII discrimination claim. Under the disparate treatment theory, an employer can be liable for treating people differently based on a protected trait, e.g. hiring a white person but not a Hispanic with comparable criminal histories. The disparate impact theory prohibits policies that have a disproportionate impact on a protected group and are not justified by business necessity. Because African- Americans and Hispanics are arrested and convicted more often than whites, a policy of excluding applicants with a criminal history could run afoul of this theory.
This paper discusses the EEOC Guidance. Parts one and two discuss legal difficulties that an employer may face if it does or does not conduct a criminal history check. Part three focuses on the main features of the Guidance and objections that have been leveled against it.
II. Legal Issues Raised by the Failure to Conduct a Check
A. Negligent hiring
Although it has been recognized since the early 1900's, the negligent hiring doctrine has become a hot topic in the last quarter century.4 People injured by an employee may regard it as a way to hold the employer - the deep pocket - liable for the conduct or getting a settlement offer. Negligent hiring claims have proliferated to the point that one observer has said they are "as popular as hot-selling pancakes"; employers lose 72% of the time and the compensation awarded may exceed a million dollars.5 Potential areas of vulnerability include all stages of employment from recruiting to hiring, applicant screening to performance evaluations, and employee assistant programs to post-employment references. Lawsuits may involve independent contractors and paid, volunteer, or part-time workers as well as full-time employees.6
Two closely related torts are negligent entrustment and negligent retention. The former occurs if an employee harms someone while performing a task that the employer knew or should have known she was ill-equipped to handle.7 The upshot of the negligent retention doctrine is that the duty of the employer does not end when an employee is hired, but instead extends to retaining fit help. …