Court OKs credit history and past convictions as employment criteria
The U.S. District Court for Maryland made it even harder for workers with poor credit histories and past criminal convictions to secure employment when it dismissed a federal lawsuit brought by the federal Equal Employment Opportunity Commission (EEOC) against Freeman, a privately held event management company.
The lawsuit charges Freeman with violating Title VII of the Civil Rights Act. According to the EEOC, the employer's hiring practice of performing detailed inquiries into applicant's credit histories and criminal backgrounds amounted to discrimination because it disproportionately impacted African-American and male job applicants.
Any applicant meeting any of 12 different categories of reported credit-unworthiness were excluded from certain positions. The Freeman court joined a number of other employers praising what some consider a “common sense” practice of performing credit and criminal background checks. Supporters of this practice ignore studies demonstrating that credit problems do not predict employee performance, as well as studies documenting atrocious error rates on credit checks. A report released by the Federal Trade Commission earlier this year found that a quarter of consumers identified errors (that might impact credit scores) on their credit report.
In 2011, California limited the use of credit checks in employment. The law also established broad exceptions to the “prohibition” on employment-related credit checks, essentially blessing the use of credit checks across jobs and industries where the necessity had previously never been demonstrated.
Employment Application: Have you ever pleaded guilty to, or been convicted of, a criminal offense?
Freeman's standard employment application form also asked, “Have you ever pleaded guilty to, or been convicted of, a criminal offense?” Applicants were told certain convictions would not be considered in the hiring process. However, the company acknowledged a “bright-line rule” that disqualified any applicant who “failed to disclose a conviction, seriously misrepresented the circumstances of a criminal offense, or made any other materially dishonest statement on the application.”
These types of cases, often called “disparate impact” cases, stand or fall on the persuasiveness of the presented statistical evidence. In the EEOC v. Freeman case, the court let loose on the EEOC's expert, criticizing his methodology and ultimately calling his findings “an egregious example of scientific dishonesty.”
These cases are being watched closely by consumer and civil rights advocates, who hope the EEOC's oversight of these employment policies will reduce the use of background checks to screen out applicants. The decision nonetheless reinforces misconceptions and legal standards that are hostile to anyone applying to join the workforce.