June 22, 2021

Volume XI, Number 173


June 21, 2021

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‘Disparate Impact’ Impacts Fortune 500 Company: Think Twice Before You Use Criminal History Information

Dollar General is the latest employer to settle with the Equal Employment Opportunity Commission (EEOC) over its use of criminal background information in the hiring process. The EEOC’s lawsuit argued that Dollar General’s hiring and screening procedures, even though facially neutral, had a disproportionately negative effect on African American applicants as compared to white applicants. Equal Employment Opportunity Commission v. Dolgencorp, LLC, d/b/a Dollar General, 1:13-CV-04307 (N.D. Ill. June 11, 2013).

The consent decree memorializing the settlement requires Dollar General to pay $6 million to aggrieved applicants. It also prohibits the company from considering criminal history when hiring unless it engages a criminology consultant to reevaluate its practices. The purpose of this requirement is to ensure Dollar General’s consideration of criminal history in hiring is job-related and consistent with business necessity.

This outcome sends a strong message to employers that the EEOC has no plans to back down on its stance that background checks can be unlawful under a disparate impact theory. Even if a policy is not discriminatory on its face, it can still be unlawful under federal and state anti-discrimination laws if it has a disproportionate impact on a protected class. Employers that consider criminal histories while hiring should ensure there is a valid job-related reason and business need for doing so. In addition, while not specifically at issue in this case, employers must be aware of applicable state and local “ban the box” laws, which may restrict what employers can ask applicants about criminal histories.

Further, employers that use consumer reports (like background checks) when making employment decisions must also comply with the Fair Credit Reporting Act (FCRA) and any state fair credit reporting laws. The FCRA sets forth certain steps employers must take before obtaining a consumer report and when taking any adverse action based on information in the report. To help navigate this process, consult your employment counsel to ensure your screening policies are compliant with all applicable laws.

© 2021 Jones Walker LLPNational Law Review, Volume X, Number 21



About this Author

Mary Margaret Spell, Employment lawyer, Jones Walker

Maggie focuses her practice on cases brought under federal, state, and local employment laws, including Title VII of the Civil Rights Act, the Americans with Disabilities Act, and the Age Discrimination in Employment Act. She regularly offers wage and hour compliance advice and has represented employers in numerous Fair Labor Standards Act collective actions and state-law wage and hour class actions.

Maggie’s litigation experience also includes defending employers in breach of contract and employment-related tort claims. She regularly defends employers and...

Minia Bremenstul Associate Labor & Employment Practice Group.

Minia represents companies across various industries in all aspects of labor and employment law, including single-plaintiff, multi-plaintiff, and class and collective action matters. She litigates cases in federal and state courts involving employment discrimination, harassment, and retaliation claims in addition to wage and hour disputes under federal and state law. Minia also defends employers against charges filed with administrative agencies, such as the Equal Employment Opportunity Commission and Louisiana Commission on Human Rights.

Prior to joining the firm, Minia was a law...