More on Convictions And Hiring, Wisconsin Style

A very troubling recent decision out of the Wisconsin Labor and Industry Review Commission should give pause to any employer that does criminal background checks for its Wisconsin employees.  The case is a very clear representation of how state employment commissions are working to undercut employers’ ability to minimize risk to their work force and customer base.

In this case, the Commission was faced with a claim of discrimination by Walmart when it fired one of its forklift drivers after discovering that he had been convicted of sexual assault, first degree reckless endangerment, and false imprisonment, stemming from a domestic incident with his then girlfriend.  The employee’s girlfriend tried to breakup with him and in response, the employee threatened her with a gun and a knife, threatened to commit suicide, and forced her to have sex with him against her will.  When it discovered these facts, Walmart terminated the employee from his warehouse forklift driver position.

Under Wisconsin law, an employer cannot discriminate against an employee because of a criminal conviction unless the crimes are “substantially related” to the particular requirements of the employee's job.  Amazingly, the Commission determined that because the crimes were committed at home, and not at the workplace, and occurred in response to a dating relationship, there was little danger of a repeat occurrence on the job.  The Commission also found that Walmart’s strict oversight of its warehouse operations would likely deter any sexual assaults by the employee in the future.  The Commissions reasoning is, shall we say, sparse – it does not explain why someone who sexually assaults a person in their home is not likely to do it at work, particularly when the evidence presented showed that the employee would be left unsupervised in the warehouse for extended periods of time.

I don’t have a good response to the Commission’s very troubling decision.  Walmart presented the evidence required under the statute and older case decisions to justify its action.  The Commission simply rejected the evidence and precedents.  As a result, employers contemplating taking an adverse action based on a conviction record in Wisconsin should carefully articulate all possible connections between that conviction, and the job in question.  Perhaps if Walmart had demonstrated that the warehouse was opened to customers, or that the employee would be dealing with significant numbers of female employees, the result might have been different.

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.”

Ex-Felons and College Coaching

I noted below that the EEOC is now attacking broadly worded employment policies that prohibit the hiring of convicted felons.  The Commission's enforcement guidance is, at least in my opinion, badly thought out and will make it impossible for employers to maintain control over their hiring standards by using and enforcing criminal background checks.


An example of how this silly policy is going to play out arose recently in the college athletics context.  Up until 2011, the NCAA allowed people with nonviolent felony convictions more than seven years old to coach at NCAA-sanctioned youth basketball tournaments. The rule changed, and the NCAA now bars all individuals with felony conviction from coaching in these tournaments.

The rule change had an immediate impact on several youth and high school coaches with nonviolent drug convictions in their pasts. In this latest case, a girls high school basketball coach is suing because the NCAA rule prohibits him from taking his high school teams to NCAA sanctioned tournaments. These tournaments are important because they are frequently the only way that college coaches can see high school kids playing during the summer, a prime scouting period for basketball.

I'm thinking that the NCAA will be able to at least articulate a reason why it does not want felons associating with junior athletes in its sanctioned programs.  The potential liability issue is all too obvious to those of us who have dealt with employers that hired people with felony convictions, only to have that come back and bite the company on a negligent hire or negligent supervision lawsuit. Although not employment cases, how these lawsuits play out may provide some important help for the rest of us struggling with the EEOC guidance.