EEOC Must pay Nearly $1M in Fees for Background Check Case

The EEOC has recently been pursuing cases against companies for allegedly discriminating in its use of background checks.  In the recent case of EEOC v. Freeman, 2015 BL 288334, D. Md., No. 8:09-cv-02573, 9/4/15, the EEOC pushed its position too far.  The Court in Freeman summarized the facts of the case as follows:

Freeman, as a regular part of its hiring process, conducted criminal background checks on all applicants who were offered a position, and conducted credit background checks on applicants who were offered financially sensitive positions. EEOC v. Freeman, 961 F. Supp. 2d 783 , 787 (D. Md. 2013). Importantly, applicants were not turned away for any negative information. Rather, Freeman limited in scope the type of negative information that would disqualify an applicant. For example, as to the criminal background check, Freeman generally did not consider arrests, but only convictions that had occurred within the past seven years. Id. at 788 . Furthermore, Freeman did not consider all convictions, but only those for certain crimes. Id . Similarly, with regard to credit checks, only certain negative items would exclude an applicant from being hired. Id. at 789 .

Freeman rejected a job applicant for a position based on information on her credit report and the applicant then filed a charge of discrimination with the EEOC.  The EEOC took the position that Freeman’s use of background checks had a disparate impact on Arica-American, Hispanic, and male applicants. In support of this claim, the EEOC relied on statistical evidence from an “expert.”  The court found that the expert’s statistical analysis was “inexplicably shoddy,” and dismissed the case for lack of any evidence of disparate treatment.  Freemen then moved for attorneys fees against the EEOC.  The Court found that the EEOC statistics were “divorced from any reference to” the allegations against Freeman and therefore required the EEOC to pay Freeman’s attorneys fees for defending the case.  Freeman was awarded nearly a million dollars in fees.

The EEOC has had issues with its statistical analysis before.  In EEOC v. Kaplan Higher Education Corp., 748 F.3d 749, (6th Cir. 2014), the Sixth Circuit upheld the exclusion of EEOC expert statistics as well.

But, the EEOC has also had success in pursuing litigation based on background checks.  The EEOC recently settled a case against BMW for $1.6 million and is continuing to litigate against Dollar General.  Employers should contact their employment counsel to review their credit and criminal background check policies.