On August 9, 2013, a federal district judge in Maryland struck down the Equal Employment Opportunity Commission’s (EEOC) claims against an employer that considered criminal and credit histories as part of its hiring process. EEOC v. Freeman, Case No. RWT 09cv2573 (D. Md. 2013). The Freeman case illustrates the extent to which the EEOC will go to challenge the use of criminal and credit histories as part of the hiring process and steps that employers can take to reduce their risk.

Over the past few years, the EEOC has aggressively opposed the use of criminal and credit histories in an employer's initial consideration of applicants for employment. In fact, several State Attorneys General recently sent a letter to the EEOC challenging lawsuits it had filed against BMW in South Carolina and Dollar General in Chicago. In those lawsuits, the EEOC claimed that the companies' allegedly used "bright-line" standards to deny employment to applicants based upon certain criminal convictions and that such policies adversely affected African-Americans, who have higher conviction rates than whites. In other words, the EEOC was alleging that the companies automatically disqualified candidates from consideration for employment if they had a criminal record or a particular type of conviction.

Freeman employed over 3,500 full-time employees and many more part-time employees who provided services for expositions, conventions and similar events. The EEOC claimed that Freeman engaged in a "pattern or practice" of discrimination against African-American applicants by using poor credit histories and against African-Americans, Hispanics and male job applicants by using criminal records. The EEOC relied upon statistical experts to support its claims that Freeman's policies had an adverse impact on the foregoing groups.

Most of the court's decision focused on shredding the data and analysis the EEOC's experts used. Indeed, the court characterized the case as "a theory in search of facts to support it."

The Freeman case is significant for two reasons. First, the case illustrates how far the EEOC will go to challenge the use of criminal and credit histories, even in the absence of any direct evidence that the information is being used to discriminate. Second, the case is instructive of "best practices" employers can follow when conducting criminal and credit histories to make decisions, which include:

  • Freeman’s application only asked about convictions and then gave a short explanation of the factors that would be considered in deciding whether the conviction could affect employment.
  • Freeman divided its jobs into three categories: general positions for whom only a criminal background check would be conducted; credit-sensitive positions for which a credit history would also be required; and management-level positions for which education and work history would be checked, in addition to the two foregoing categories.
  • Freeman conducted background checks only after the applicant was given an offer of employment.
  • Freeman examined the individual circumstances of an applicant's criminal or credit history before making a decision on whether to reject the applicant on that basis.
  • The only "bright-line" standard was for those applicants who lied or seriously misrepresented the facts. Those applicants were immediately disqualified.

Rather than being challenged by the EEOC, this is the exact type of individual, case-by-case examination which the EEOC has said, in other circumstances, employers should follow.