New EEOC rules on criminal histories may affect small-business hiring

Posted: June 26, 2012

In April, the Equal Employment Opportunity Commission (EEOC) signaled a crackdown on employers that use criminal histories to discriminate against job applicants illegally.

But to judge from conversations with business owners, labor lawyers, and human-resources consultants, many small businesses had no idea there was anything wrong with practices like a blanket ban on hiring anybody with a criminal record.

"Many companies that size don't have an HR person and get minimal education about compliance issues," said Laurence E. Stuart, a labor lawyer in Houston.

Brian Hamilton, who owns four car dealerships in Nebraska that employ about 160 people, said: "We have tests that all of our managers take that keep them up to date on labor rules. But I was not aware of that one."

The notion that using criminal records in employment decisions could constitute discrimination has been government policy since at least the 1970s. The EEOC has in the past issued policy statements about how employers may use criminal records without running afoul of the Civil Rights Act, but in April the agency published new enforcement guidance.

Though the underlying theory appears unchanged, labor lawyers say the new policy requires companies to establish procedures to show they are not using criminal records to discriminate by race or national origin.

Employment-discrimination provisions of the Civil Rights Act apply to companies with more than 15 employees and define two broad types of discrimination: disparate treatment and disparate impact. Disparate treatment is fairly straightforward: It is illegal to treat someone differently on the basis of race or national origin.

Disparate impact is more complicated. It essentially means that practices that disproportionately harm racial or ethnic groups protected by the law can be considered discriminatory even if there is no obvious intent to discriminate. In fact, according to the guidance, "evidence of a racially balanced workforce will not be enough to disprove disparate impact."

As the EEOC establishes in its guidance, members of some minority groups are much more likely to be arrested and convicted than whites. From the commission's perspective, the Civil Rights Act serves to make certain that disparity is not compounded in the workplace.

In its guidance, the commission warns employers not to use arrest records at all in hiring decisions. Because "arrests are not proof of criminal conduct" — they often do not result in charges, and charges often do not lead to convictions — basing a hiring decision on an arrest record is presumptively discriminatory.

A conviction, on the other hand, "will usually serve as sufficient evidence that a person engaged in particular conduct, given the procedural safeguards associated with trials and guilty pleas," according to the guidance.

But convictions put EEOC in a bind. "The underlying assumption is that there's disproportionate enforcement of the law in minority communities," said Stuart.

Under the guidelines, an employer can exclude applicants with criminal convictions if it can demonstrate it is "job-related for the position in question and consistent with business necessity."

Ideally, Stuart said, employers would prefer hard-and-fast criteria and a simple yes-or-no answer to a hiring decision. Instead, he said, EEOC wants employers to determine what criminal convictions might rule applicants out, then judge applicants against the job in question.

If an employer concludes that, based on the nature of the crime, the time elapsed, and the nature of the job, an applicant is ineligible, said Chicago attorney Pamela Q. Devata, "the employer has to … at least give the individual an opportunity to provide a response."

Andrea Herran, a human-resources consultant, said the new procedures would subject small businesses to legal cross-fire, especially those whose employees work in clients' homes or offices.

"If somebody's making them nervous with their criminal history, and they're worried about getting sued on the other side, what's a business owner supposed to do? Most business owners are going to want to play it safe."

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