On April 25, 2012, the U.S. Equal Employment Opportunity Commission issued an updated Enforcement Guidance on employer use of arrest and conviction records in employment decisions under Title VII of the Civil Rights Act of 1964, as amended (Title VII). The EEOC also issued a Question and Answer (Q&A) document regarding this guidance. According to the EEOC’s press release, the guidance “clarifies and updates” the agency’s position on employer use of criminal records in light of federal court precedent issued since the passage of the Civil Rights Act of 1991. While the guidance may incorporate such existing court precedent, it also reflects the EEOC’s focused enforcement agenda with respect to “disparate impact” claims of race and national origin discrimination under Title VII. This guidance should therefore be considered by any employer covered by Title VII before utilizing criminal history to screen job applicants or making other employment decisions based upon such history.

A covered employer can be held liable for discrimination under Title VII based upon either of two theories: disparate treatment and disparate impact. Disparate treatment claims can arise where the employer intentionally treats an employee differently because of a protected classification (e.g., race, national origin, etc). In the context of a pre-employment screen, intentional disparate treatment could be established if, for example, an employer rejects an Hispanic applicant for a position based on his criminal record but hires a similarly-situated White applicant with a comparable criminal record. By contrast, a disparate impact claim does not require evidence of discriminatory intent. Rather, the employer can be liable where even a neutral policy or practice (that is applied to everyone) has the effect of treating individuals disproportionately on the basis of a protected category. According to the EEOC’s Q&A document, “national data supports a finding that criminal record exclusions have a disparate impact based on race and national origin.” Thus, even if an employer’s policy of excluding job applicants based on criminal history is applied consistently to all applicants, the EEOC may still conclude that the policy has an unlawful disparate impact if its results in a disproportionate rate of African-American or Hispanic applicants being rejected from employment.

An employer’s principal defense to a disparate impact claim is proof that its policy or practice is “job related and consistent with business necessity.” The EEOC’s Enforcement Guidance states that an employer may establish this defense with respect to its policy of using criminal history to make employment decisions if: 1) the employer “validates” the policy’s exclusion of applicants for the particular position in question per the “Uniform Guidelines on Employee Selection Procedures” standards referenced in the Guidance; or 2) the employer has developed a “targeted screen” considering at least the nature of the crime, the time elapsed since the crime, and the nature of the job for which the individual is being considered. As an additional component to this targeted screen, the EEOC states that the employer should also provide an opportunity for an “individualized assessment” of people excluded by the screen. Such an individualized assessment would consist of notice to the individual that he/she has been screened out due to criminal history, an opportunity for that person to demonstrate that the exclusion should not be applied due to his/her particular circumstances, and consideration by the employer as to whether this additional information warrants an exception to the criminal history screening policy.

The Enforcement Guidance also makes clear the EEOC’s position that employers cannot rely merely on arrest records as a basis for excluding a job applicant from employment or taking some other form of adverse employment action. Rather, according the EEOC, an employer’s ability to assert the “job related and consistent with business necessity” defense appears to be limited to cases involving criminal conviction records. Moreover, the EEOC makes a sweeping recommendation that employers should not ask about criminal convictions on job applications. The EEOC suggests that, if employers make such inquiries, they should be limited specifically to “convictions for which exclusion would be job related for the position in question and consistent with business necessity.” It remains to be seen how the EEOC will apply this broad recommendation to employers which have routinely included criminal conviction inquiries in their applications. Suffice it to say, however, that employers will now have to defend such inquiries by demonstrating, at a minimum, that an applicant answering “yes” to such an inquiry is not automatically excluded from employment – and that a targeted screen and individualized assessment are still being applied by the employer with regard to any criminal record disclosed by the applicant or otherwise discovered by the employer during a background check.

Employers should expect that this new Enforcement Guidance will trigger more charges of disparate impact and investigations by the EEOC with respect to the use of criminal history as part of employers’ pre-employment screening policies. Employers should therefore carefully review their policies and consult with employment counsel regarding best practices for compliance with the Enforcement Guidance and strategies for avoiding these potential claims.