Hired and Fired: Employers Face New Litigation Concerns: New Equal Employment Opportunity Commission Regulations Have Increased the Legal Challenges for Employers at Both Ends of the Employment Process. How Can Employers Avoid These New Potential Pitfalls?

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You're Hired

Part 1

Avoiding liability when conducting pre-employment background checks

by Mike Farnan and Jessica Milko

In December 2011, a CareerBuilder/Harris Interactive survey revealed that more than two-thirds of companies were affected by a bad hire in the past year. For 41% of those companies, the mistake cost them at least $25,000. Given this, it is no surprise that the expense of a bad hire is making employers increasingly conscious of how they make hiring decisions. In addition, the growth of negligent hiring claims, fraud, workplace violence, tort liability and the negative publicity that can accompany any of these have heightened the importance of making sure the candidate a company hires is the right one.

Many companies already conduct cursory background checks: they do an online criminal history search and make a quick call to employee-supplied references. But this is largely as an exercise in formality rather than a true effort to gain an understanding of the candidate's background, activities and character. And this approach usually fails to compile a clear and detailed picture of a person.

Considering the expense and hassle associated with hiring, training and firing a bad employee, it is surprising that so many remain reticent to conduct more thorough pre-employment background checks. For some, cost could be a factor. For others, it could be that laws and policies issued by the federal government have caused employers to think twice before checking backgrounds. But if proper procedures are followed, this latter concern is entirely avoidable.

Updated EEOC Guidelines

New guidelines issued by the U.S. Equal Employment Opportunity Commission (EEOC) in April 2012 appear to up the ante on identifying perceived risks associated with background checks. These guidelines reiterate the EEOC's long-standing policy that criminal history checks alone are not sufficient to determine suitability for hiring.

Specifically, the EEOC indicated that while arrest records are not probative that criminal conduct has occurred, convictions are. The agency has also stressed that criminal record exclusions have a "disparate impact" based on race, sex and national origin. And most importantly, it has noted that a policy of excluding all applicants with a criminal history--particularly when the issue is not "job-related or consistent with business necessity"--should be avoided (unless required, as it is in certain professions, by other federal laws).

But rather than causing employers to turn away from using any background check, these guidelines should empower employers to gain a clearer picture by conducting more in-depth investigations.

Disparate Impact

Title VII of the Civil Rights Act of 1964 prohibits discrimination on the basis of race, color, religion, sex or national origin. To treat members of certain racial, ethnic or gender groups differently than others who have a similar history--criminal or otherwise-is discriminatory and thus illegal. The more difficult issue is to discern cases where blanket criminal history checks may unjustifiably and disproportionately exclude from employment individuals of a particular race, sex or national origin. These cases are known as "disparate impact" discrimination cases.

The reason is that certain racial or ethnic groups tend to have more contact with law enforcement, often based on factors such as the communities where they live. To make hiring decisions based solely on contact with law enforcement would disproportionately impact members of that community. The EEOC understandably opposes "disparate impact" discrimination.

To avoid the problem of disparate impact, the EEOC guidelines encourage employers to conduct a more in-depth investigation to establish aggravating and mitigating factors surrounding any criminal history. …


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