EEOC Gets Rebuked By Federal Court on Criminal Background Check Allegations

As I have noted previously, the EEOC is all hot and bothered about employers using criminal background checks to screen potential new hires. The cynical side of me says this is simply a political ploy to generate votes out of the traditional Democratic population, but it has significant ramifications for employers.

At least one federal judge has noted the “Catch 22” that the EEOC’s position creates for employers, namely that the EEOC is suing employers for conduct that prevents other people from suing these same employers and the employer is heavily penalized either way.

The most recent case comes out of the federal court in Maryland, and involves a “pattern or practice” case brought by the EEOC against a company that provides services for expositions, conventions, corporate events, meetings and exhibit programs. The very nature of the business means that some employees often handle significant amounts of money, as well as come in frequent contact with customers and their guests.  Under these circumstances, and given the fact the company operates across the United States, it would be inconceivable for its management not to require background checks, including criminal and credit background checks, for its employees. That is exactly what the company did, although it was quite specific and careful in the way that it did so. For example, general employees who did not hold credit sensitive jobs were subject only to a criminal history investigation and social security verification. Employees in credit sensitive positions also passed a credit history review. For company officers, general managers and department heads, the employer performed an education and certification verification. Overall, the company ran credit checks for 44 job titles out of 153 positions that it identified in its policies.

Nor was there a blanket hiring exclusion for criminal convictions – the company offered the opportunity for an applicant to explain a criminal conviction, did not consider any criminal convictions that occurred more than seven years before the application date, and used a multi-step procedure to deal with convictions, arrest warrants, and other criminal record issues. Any initial decision by an office manager not to hire an applicant because of a conviction record was reviewed and approved by the senior vice president for human resources before becoming final.

With respect to credit checks, the company used 12 separate standards for exclusion of an applicant from a credit sensitive position, ranging from accounts of $300 or more that were more than 90 days past due to unsatisfied liens and delinquency in paying child support.

In fact, the company did not use a blanket hiring exclusion based on any single criterion, with the notable exception of a false statement on the application.

Nevertheless, the EEOC filed suit against the employer, claiming a pattern or practice of discrimination against African American job applicants by using credit history as a hiring criterion, and against African American, Hispanic and male job applicants by using criminal history as a criterion. As is typical in these cases, the Commission alleged that the company’s use of these criteria had a disparate impact on protected classes of employees.

Unfortunately for the Commission, in trying to prove its case that the company was discriminating in use of these background checks, it used expert testimony that was highly suspect, and ultimately thrown out by the trial court. The court's review of the Commission's sloppy analysis, which was based on equally bad data (the court demonstrated that the EEOC’s expert had cherry-picked information provided by the company to make the determination decisions look as bad as possible) is noteworthy, but the real focus of my concern is the burden of proof that the Commission had to sustain in these kinds of cases. Specifically, a plaintiff in a disparate impact claim has to not only show a general statistical disparity, but must point to a particular employment practice as the cause  of the statistical difference in hiring. Where a hiring process has multiple elements, as in this case, a plaintiff has to identify the elements that it is challenging and demonstrate that each particular challenged employment practice causes a disparate impact. This is a significant burden indeed, and one that the Commission absolutely failed to establish in the case.

A key lesson for employers – do not make your review of background check criteria a one-step process. The court determined that by using different types of criteria depending on a specific job, and simultaneous consideration of both subjective and objective criteria for hiring, an employer created a long list of factors, each one of which had to be assessed and evaluated by the plaintiff to cull out the problematic element. This creates several evidentiary problems for any plaintiff, among them the need to conduct an extremely thorough and competent regression analysis that analyzes each key hiring qualification, while at the same time zeroing out the influence of the other factors. Moreover, the analysis has to be performed on a population that is comparable to the population that applies for these positions, or is at least qualified for these positions.

So the lesson for the employers is fairly straight forward – do not put in place a broad spectrum disqualification criterion based on whether an individual has a bad credit record or conviction history. Rather, the employer should match various types of credit issues, and conviction records, to specific jobs and develop a rational explanation for how it weights each factor. Doing so will go a long way in convincing a trial court that the employer is trying to live within the limits of the Title VII and the antidiscrimination statutes. Doing so also presents a potential plaintiff with a significant evidentiary burden.

Faced with an employer that carefully assesses credit and conviction records, courts will usually hold plaintiffs to a high standard on these disparate impact cases. As the trial court in this case put it, anything less, " would be to condemn the use of common sense, and this is simply not what the discrimination laws of this country require.”

The Pernicious Impact of Long-Term Unemployment

A hallmark of the current awful economy (I know, I know, the President keeps saying things are getting better, but the short answer is that without full-time jobs becoming available, things are getting worse for much of working America, not better) is the number of people who have been unemployed for an extended period, in some cases dropping out of the workforce altogether. Economists have long known that the longer you are not working, the harder it is to find a job. But now there's some hard data that quantifies just how difficult it is for the long-term unemployed to get back in the game.

In an article entitled "Out of Work over Nine Months? Good Luck Finding a Job", the WSJ notes that more than 3 million Americans have been out of work for more than a year, and that doesn't even include the numbers who have simply stopped looking. Many of them will likely never work again, in fact.

Part of the reason for that depressing conclusion is that people who've been out of work for a long time are stigmatized by companies, to the extent that even qualified candidates with a long jobless stretch are rejected by employers.

The article cites a study by two Swedish economists who applied for more than 3500 jobs using some 8500 fictitious resumes. Some of the phantom applicants had uninterrupted employment histories, some had unemployment histories previously, some were currently unemployed, and the lengths of unemployment for the applicants varied.

The study showed that short-term spells of unemployment (six months or less) didn't really affect job seekers' prospects, and might even have been an advantage for low-skilled positions. But for low- or medium-skilled positions (which didn't require a college degree), being unemployed for nine months or more caused a precipitous drop in the callback rate. The pattern wasn't nearly so bad for college degree positions--another reason you should tell your kids to finish college. And even for long-term unemployed, once they started working, the stigma of being jobless virtually disappeared when they applied for their next position.

How does the Swedish study apply to United States? Although the job markets are relatively similar, there's at least some evidence that US employers take a harsher view of long spells of unemployment.

The lesson here-employers need see passed unemployment histories and try to determine if the individual reflected in the resume actually has a desirable skill set. As usual, focus on specifics that relate to a particular position, look for explanations for the unemployment, and assess the actual qualifications of the potential hire. Notwithstanding the concern that long unemployment raises with most employers, companies are likely passing up what are effectively bargains if they allow a visceral reaction to unemployment to affect their analysis.

Do Not Use This as a Defense--Just Sayin'

One of the reasons why I like employment law is that no matter how many types of cases you see, there is always something even more bizarre around the next corner. So let's turn the corner and our attention to Bob Filner, the Mayor of San Diego, a 70 year-old Democrat who apparently never met a woman he didn't try to grope or sexually harass. In fact, things were so bad that his honor's staff apparently had a rule that women were not allowed in to see him without an escort, under any circumstances. At last count, there were at least 10 women who have come forward indicating that Filner inappropriately touched them or propositioned them. And he has only been the mayor since November.

All of this would be bizarre enough, but Filner’s lawyer rolled out a legal defense, or at least a way of paying for a legal defense, that is almost as insulting as the actual harassment itself. Filner’s counsel alleged that the City of San Diego should have to pay for the mayor’s lawsuit defense (Filner’s former director of communications has filed a harassment lawsuit) because Filner never received mandatory sexual harassment training from the City. This is the functional equivalent of somewhat defending a murder claim by saying that they should be given a break because no one ever told them that it was illegal to kill people.

For those of you who are confused about whether this is an intelligent strategy – please refer to headline at the top of this article and let's hope the taxpayers of California’s second largest city not only reject this silly claim but also boot this guy out of office

UPDATE:  I seriously can't make this stuff up.

“But He was so Good Last Season”

I am always astounded to read about major league sports team owners, or even management (who should know better), and their unwavering belief that certain older star athletes will be the saviors of the organization, notwithstanding the inexorable decline that sets in after a certain age.

In fact, banking on older athletes, especially in the NFL, where the physical wear and tear means an average player’s career is less than 4 years, seems like even more than a crap shoot than the rookie draft. Its certainly more expensive; older players usually command huge compensation even as their physical skills start an often precipitous decline.

A classic example is taking place in California this year, where the California Angels shelled out truly monster numbers for players Albert Puljos and Josh Hamilton, only to see them perform at a level well below their previous career highs. Puljos is in his 12th season of a career that has been truly remarkable. Hamilton, although a year younger than Puljos, has also had a stellar career, although its been marred by incidents of drug and alcohol abuse. But, as this article notes, most baseball players peak before their 30th birthdays. Guessing on which player is likely to have longevity passed 30 is an art, not a science. This is particularly true once you factor in the lingering affect of the injuries incurred after 30, and how frequently players who were productive up to that point are unable to overcome them.

As I noted, the stakes on gambling with older players are even higher in the NFL because of the shortened playing careers, the increased chance of catastrophic and career ending injury, especially for older players, and the extremely limited season (16 games, versus 162 in baseball and 82 in the NBA) in which the players have a chance to make an impact.  Here's a nice breakdown of terrible NFL contracts, along with a useful methodology for assessing, from one of my favorite publications, Grantland.  For my money, the category for most of the aging players is "Falling in love with a player they shouldn't have".

Sports management is rapidly moving towards a more metric based kind of system – this is one metric that should be embraced with more regularity.

Age Matters

Here’s an interesting article regarding a study about people’s perceptions of older people and their attitudes, and how it might affect the workplace. Age discrimination cases are notoriously difficult to prove not only because of the higher standard of proof (an age discrimination plaintiff has to show that his age was the “but for” cause of the adverse employment decision; plaintiffs with Title VII discrimination claims only have to show that the protected factor “motivated” the employment decision), but the evidence of age bias is usually not nearly as direct as it is in other forms of discrimination cases.

The study revolved around the reaction of 137 Princeton University undergraduates, who were shown a video of someone who would be their partner in a trivia contest talking about themselves. These potential partners were all white males, but were either 25, 45, or 75 years old. Each one adhered to the same script in talking about himself, except that half the time the person indicated that he was the kind of person who shared his wealth with relatives (a "compliant" personality), and the other half of the time he said he had no obligation to share with relatives. For the 25 or 45 year old subject, it made no difference whether he was generous or not, but the 75 year-old who indicated he was not generous (this was characterized as being “assertive” by the researchers) received a very high negative rating from the undergrads.

The lesson- if you are an older worker, and you want to speak your mind to your manager, you should expect some fall out. Does this equate to age bias? Unquestionably, but it appears to be something that is fairly subtle, although strongly ingrained.  Per my standard advice, the key to combating this type of bias is to focus on performance specifics, rather than some unspecified type of gut reaction to a particular individual. My guess is that it's easier for people to recognize visceral reactions triggered by race or gender, but it's clear from this study that age can generate just has negative a response.

There is a lot more research developing on the this type of bias, since these age discrimination claims are the fastest increasing type over the last few years. That trend should continue as Boomers move into the Social Security zone, but find it increasingly necessary to work.

Bad Boss Stories

In truth, the descriptions of these bosses don't seem that bad, at least compared to some of the cases with which I am familiar. The guy who knocks over furniture and throws things around in the office is pretty bad, and probably should be fired, along with the supervisor who hit whiffle balls at people when she got angry. What I find particularly interesting about most of these stories is that after the affected employees were either fired or quit, their outlook on life improved immeasurably. They became productive and successful, which makes me think that in fact they were being managed by incompetents.

Incompetent, bullying, ego-maniacal managers can wreak havoc in an organization well beyond their area of immediate oversight. Given America’s “bottom line” business culture, it's easy for management to either overlook or simply miss the methods being used by a "productive" supervisor to get results from her people. In fact, my experience is that high level bullying goes virtually unreported or reviewed because of the assumption that everyone at that level knows how to do their job. That’s why I am a big fan of so-called 360 degree job performance reviews, in which a supervisor is rated not only by her supervisors, but by her peers and her subordinates. Companies can learn a lot of information about what’s really going on by listening to co-workers.