In January, Pepsi Beverages agreed to pay a hefty fine -- $3.13 million -- and make policy changes to resolve a charge of race discrimination. The charge stemmed from the company's former policy on criminal background checks, which the Equal Employment Opportunity Commission claimed discriminated against African Americans in violation of Title VII of the Civil Rights Act of 1964.
The EEOC said that under the policy, job applicants who had been arrested pending prosecution were not hired for a permanent job, even if they had never been convicted of an offense. The policy disproportionately excluded black applicants, the agency said.
It was a costly misstep for the company. In April, the EEOC updated its guidance on the use of arrest and conviction records in employment decisions, the very policy in which Pepsi got entangled. For any company that employs background checks, it's an update worth reviewing.
What hasn't changed in the updated guidance, says Barry A. Hartstein, a lawyer with Littler Mendelson and co-chair of its hiring and background check practice, is the EEOC's long-standing belief with regard to arrest records.
"The EEOC continues to take a very hard line in consideration of arrest records, taking the view that an arrest record standing alone may not be used to deny an employment opportunity, and the employer must examine the conduct underlying the arrest in making any employment decision," he says.
Convictions Bring Nuances
More nuanced is the agency's position on criminal convictions. The commission recommends employers not ask about convictions on job applications, and if and when they do, limit the inquiries to "convictions for which exclusion would be job-related to the position in question and consistent with business necessity."
Assuming an employment policy has a disparate impact (it disproportionately impacts a protected group under Title VII), Hartstein says "a critical new focus is underscoring the importance of an 'individualized assessment' before disqualifying an applicant based on a criminal conviction record."
The EEOC's updated guidance was expected following a public hearing last summer held by the commission and the receipt of several hundred written comments. However, it was issued without a public comment period once the guidance was drafted, a move that angered several organizations, including the U.S. Chamber of Commerce, which in early April shared its concerns with the Office of Management and Budget.
The EEOC also is expected to issue guidance soon on the use of credit histories in employment decisions.