Federal District Court Rules that Freeman Co. Did Not Discriminate by Using Criminal Background Checks to Screening Employment Applicants

A lawsuit by Equal Employment Opportunity Commission (EEOC) against a Dallas event-marketing company Freeman Co. was dismissed on August 9th.  EEOC claimed that Freeman Co. was discriminating against black applicants by using criminal-background checks or credit checks in hiring.  However, U.S. District Judge Roger W. Titus denied EEOC’s motion in his decision stating that EEOC did not provide any evidence of discrimination: “Something more, far more, than what is relied upon by the EEOC in this case must be utilized to justify a disparate impact claim, based upon criminal history and credit checks.” Moreover, Judge Titus ruled that by filing actions of this nature, EEOC has placed many employers in the situation where they need to make a choice between ignoring credit background and criminal history, and as a result exposing themselves to potential liability for their employees’ criminal and fraudulent acts, or “incurring wrath of the EEOC for having utilized information deemed fundamental by most employers”.

This lawsuit filed in 2009, was one of the first filed by EEOC in its effort to regulate the use of background checks.  Recently, EEOC filed two other suits of similar nature accusing Dollar General Corp. and a U.S. unit of BMW of discriminating against black applicants by using criminal histories checks.  Both of these cases are pending.

According to a 2012 survey by the Society for Human Resource Management, approximately 87% of employers use criminal background checks during hiring.  Interestingly enough, EEOC itself is among these employers based on Judge Titus’s opinion.

EEOC and civil-rights activist believe that background checks can be discriminatory since blacks have higher rates of being convicted in crimes than whites.  In 2012, EEOC issued guidance that urges employers to consider the crime and its relation to an applicant’s potential job as well as the amount of time that has passed since the conviction.

Employers should be pleased with Judge Titus’ decision, which applies a common sense approach to this important matter problem involving employment hiring decisions.  The EEOC, on the other hand, is no doubt disappointed.  Time will tell whether the decision will influence agency’s efforts on background checks.

See the following links for related information.