Keeping Background Checks in Check

Criminal background checks are a critical toolfor keeping the workplace safe. Above all, the process reduces employee theft and prevents negligent hiring claims.

But while employers have a legitimate business interest in conducting criminal background checks, constructing legally defensible background screening criteria can be challenging.

In recent years, federal regulatory agencies — including the U.S. Equal Employment Opportunity Commission and the U.S. Labor Department’s Office of Federal Contract Compliance Programs, or OFCCP — have updated enforcement guidance on the use of arrest and conviction records to make employment decisions under Title VII of the Civil Rights Act.

The EEOC guidance reflects renewed focus in this area as evidenced by a recent string of discrimination lawsuits brought by the agency, as does the OFCCP’s increased review of criminal background check policies as part of its audit process.

Donald Livingston, management attorney and former EEOC general counsel of law firm Akin Gump Strauss Hauer & Feld in Washington, D.C., said federal lawsrelated to background checks haven’t changed; regulatory agencies’ enforcement guidance has. Nevertheless, given theincreased scrutiny, a careful review of criminal background check criteria is needed to avoid legal exposure.

National crime statistics published by the U.S. Bureau of Justice Statistics show that a screen based on criminal convictions will likely have an adverse effect against black and Latino people (Figure 1).

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Because black and Latino people make up a disproportionately large percentage of individuals charged with felonies relative to their representation in the U.S. population, criminal record exclusions that are not closely tied to job requirements or consistent with business necessity may be judged discriminatory and in violation of Title VII.

The EEOC guidance describes two approaches to compliance. The first approach is a targeted assessment using the “Green factors” — named after Green v. Missouri Pacific Railroad Co.,8th Circuit, 1975. Under Green, employers must consider the nature and gravity of the offense; the time passed since the offense, conviction or completion of sentence; and the nature of the job.

The second approach is formal validation of background screening criteria as outlined in the federal Uniform Guidelines on Employee Selection Procedures. The EEOC guidance also requires employers to conduct an individualized assessment when an applicant is excluded because of a criminal conviction. Individualized assessment provides the applicant an opportunity to submit evidence that may change the employer’s mind prior to hiring.

Difficulties Implementing

While employers should use a well-qualified background screening firm to ensure accurate screening, John Lawrence, vice president of marketing and business development at General Information Services Inc., a criminal background screening firm in Chapin, South Carolina, said screening guidelines are the responsibility of the employer, not the background check firm.

There are two major decisions employers face when developing background check criteria: determining which crimes are job-related and identifying the exclusionary time period for each crime.

Most employers use a set of rules that specify which crimes will exclude applicants from being hired for a position and how far back in time that exclusion should apply. For example, an employer might exclude an applicant up to three years post-conviction for a driving under the influence offense and up to seven years post-conviction for assault.

It is difficult for employers to determine if the risk associated with a given crime is job-related. Adam Klein, an employee advocate and plaintiffs’ lawyer who is a partner at the law firm Outten & Golden in New York, said “many employers perceive the risk of hiring any applicant with a criminal history record — even well-qualified ones — as unacceptable.” Furthermore, a 2011 report by the National Employment Law Project revealed that some of the nation’s largest employers are using overly broad exclusion criteria (for example, no convictions or no felonies).

Companies’ desire to avoid negligent hiring claims, safeguard customers and employees and reduce employee theft may inadvertently result in criteria too broad for the position in question — which could consequently invite complaints. 

“When employers have exclusions that say they will not hire any ex-convicts, I get concerned,” said David Fortney, management attorney and co-founder of Washington, D.C., law firm Fortney & Scott, “because that is what the EEOC and private litigants are looking for when bringing a case.”

Typically, companies have attempted to demonstrate business necessity using the Green factors. Still, pitfalls remain. While the intention of the Green factors is clear, there is no standard process for determining the relevant crimes and appropriate exclusionary periods. The required assessment of the nature and gravity of the offense, the nature of the job sought and time passed is difficult for employers and their human resources departments to implement.

In many cases, employers don’t understand the specific behavior underlying a given crime well enough to determine the risks associated with it. This is complicated by the fact that crime definitions vary by state, as do the severity of the crimes classified as felonies and misdemeanors.

Moreover, as Al Sparaco of Connecticut-based background screening firm Baker St. Associates points out, many charges have misleading or ambiguous names. He notes that in New Jersey the terroristic threats statute refers not to terrorism but to threatening behavior that frightens or “terrorizes” its recipient.

Additionally, the EEOC provides no guidance on how much time must pass before an employer should disregard an applicant’s criminal record. The agency directs employers to criminology research data on the risk of reoffending, which may be difficult for the layperson to read and interpret. Many employers rely on time periods that are unrelated to actual re-offending risk, but are instead based on subjective judgments about what time period “feels right.”Employers, for instance, often adopt a standard of seven years out of convenience since a seven-year period is regularly used on credit reports.

Excluding applicants for offenses that occurred in the distant past can invite legal challenges — even if the crimes were job-related. In a 2014 ruling from the U.S. District Court for the Southern District of New York against the U.S. Census Bureau, the court states, “The fact that some named plaintiffs may have, at one point in their history, committed ‘job-related offenses’ does not weaken their claim that they were excluded for reasons that would have no effect on their job qualifications.”

Regardless of its approach to compliance, anemployer must also conduct an individualized assessment for any applicant screened out by the company’s criminal background check policy. Individualized assessment can be time-consuming, resource-intensive and slow down the hiring process. It also opens the door for inconsistent treatment of applicants and increases the odds of a disparate treatment claim. 

A Data-Driven Approach

The approach notwithstanding, the EEOC’s guidance dictates that disqualifying crimes have a clear relationship to major job duties. Forexample, a DUI conviction is clearly related to driving a school bus, whereas marijuana possession is less obviously related to a job stocking shelves at a big box retailer. Employers face more difficult decisions and greater risk of having their policies challenged when disqualifying crimes are not clearly related to job duties.

Recent court cases demonstrate that the EEOC and private litigants are not afraid to bring litigation when a close fit between the job and the crime is not demonstrated.

Employers should use a structured and well-documented process for establishing the job-relatedness of disqualifying crimes and exclusionary time periods. Outten & Golden’s Klein said companies should stress the importance of “evidence-based” rational approaches to developing background screening criteria. He suggests employers conduct a job analysis and then develop and validate criteria that are consistent with the requirements of the job. Formal validation methods have traditionally been limited to tests and assessments, but much of the same logic applies to criminal background screenings.

A formal validation study — collecting data to ensure that criminal background check criteria are job-related — is particularly desirable for high-volume jobs or jobs where there’s considerable risk to security or safety.

Such a process should:

• Ensure employees and other individuals who are providing input into the development of exclusion criteria are appropriately qualified.

• Identify the risks posed by prior convictions for specific crimes.

• Consider the opportunities provided by the job to engage in criminal behavior.

• Rely on data on the risk of re-offending (recidivism research).

• Document evidence for each job or group of similar jobs.

• Adhere to the principles in the Uniform Guidelines on Employee Selection Procedures, which establish standards for legally defensible employment practices and are often relied upon by courts.

As part of the validation study, it’s advisable to make use of experts like criminologists and attorneys who may be familiar with recidivism research and knowledgeable about crime definitions and statutes.

Ensuring Job-Relatedness

While establishing job-related background checks is crucial to avoiding liability, it also makes good business sense. The goal of any selection procedure is to identify applicants who have the skills, abilities and experience required to perform the job. A rigorous process for developing criminal background screenings ensures that the bar to employment is set at the appropriate level.

Just as one would not administer an accounting test to an applicant for a cashier job, criminal background exclusions should not be so restrictive that they go beyond job requirements. A criminal background check policy that is overly restrictive will exclude applicants who are qualified for the job. Klein argues that tailoring background check criteria narrowly to the job expands the pool of qualified applicants while increasing racial diversity for the employer.

“Background checks are a powerful tool for mitigating employer risk, but they can also be extremely damaging to employers and many segments of the U.S. workforce if they are not handled responsibly,” said General Information Services’ Lawrence. “We all know someone with a criminal record, and we can imagine what a disaster it would be if none of them could find gainful employment.”

To learn more about criminal background check best practices, read the sidebar that accompanies this feature here.