Freeman Inc., which has more than 3,500 full-time and 25,000 part-time workers, conducted pre-employment background checks for job applicants after the candidate was offered a job but before the person started working.
Freeman investigated criminal backgrounds and verified Social Security numbers, and for positions that entailed access to credit information, it also performed a credit check. It made case-by-case determinations regarding who was rejected for employment resulting from a background check.
The U.S. Equal Employment Opportunity Commission sued Freeman in 2009 in the U.S. District Court for the District of Maryland, alleging that it violated Title VII of the Civil Rights Act by using credit and criminal background checks in a way that discriminated against black and male applicants.
In granting summary judgment to Freeman, the court held that: 1) the EEOC’s expert reports did not establish disparate impact against any protected group because they “cherry-picked” data to support the EEOC’s theory; and 2) the EEOC did not identify a specific employment practice responsible for the alleged impact. EEOC v. Freeman, Case No. 8:09-cv-02573, (Aug. 9, 2013).
IMPACT: Although the court did not completely eliminate the possibility that certain uses of criminal history or credit information can be discriminatory, they are not inherently discriminatory. Employers should be prepared to defend any decision to reject an applicant based on the results of a pre-employment background check by appropriate justifications.