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EEOC Revisions to Guidance to Employers on the Use of Criminal and Credit Background Checks Expected Soon

Last Summer, the Democratic-led EEOC made it known that it would likely revise current EEOC guidance to employers on the use of criminal (as well as credit) background checks. The reason for the revision is the belief that the use of background checks has a “disparate impact” on minorities, which can be characterized as discrimination under Title VII of the Civil Rights Act. Now, it looks like the revised guidance for both criminal and credit checks will be voted upon and released at the next scheduled EEOC meeting on April 18th.
No one outside of the EEOC has seen the revised guidance and it is not likely to made public before April 18th. This is because as federal agency “guidance” (and not a regulation or rule) it is not subject to the public notice and comment requirements of the Administrative Procedures Act. While this also means that such guidance does not have the legal weight of federal rules and regulation; nonetheless, it could severely limit the use of background checks by employers (possibly in contravention to existing workplace safety requirements and other laws) by increasing the likelihood of lawsuits from rejected applicants and EEOC investigations.

Fortunately, a GOP EEOC Commissioner who has seen a draft of the criminal check guidance has described it as “not bad.” On the other hand, the revised EEOC guidance to employers on the use of credit checks was described as an “unmitigated disaster.”

Supposedly, if the revised credit check guidance is approved without changes, it will find that (1) credit checks have a discriminatory impact on protected classes, (2) there will almost never a business necessity to use credit for employment (even if otherwise required by law), and (3) costly and time-consuming validation studies would likely be required by consumers in nearly every instance where credit is a factor in making employment decisions. and quite possibly going forward an employer would essentially be required to conduct a “validation study” to justify the use of credits for employment. The issuance of the new credit guidance could though be put off further.

As to the revised criminal check guidance, it allegedly maintains the structure of the current guidance. The current guidance, released in 1987,says that an adverse decision not to employ someone based on a criminal conviction must be a “business necessity” based on the consideration of three factors: (1) The nature and gravity of the offense or offenses; (2) The time that has passed since the conviction and/or completion of the sentence; and (3) The nature of the job held or sought. The guidance can be found HERE.

The new criminal check guidance “puts meat on the bones of the existing guidance” and may even include examples of “business necessity.” A continuing concern though with the new guidance is that it will include a limit on how far back criminal records can be checked (“look back period”) such as the widely cited (and widely debated) seven year period. As mentioned, one issue that has been raised is possible conflict between the revised guidance and state requirements to conduct employee criminal background checks. Could the federal guidance (indirectly linked to federal civil rights law) “pre-empt” the state law? Generally the feeling is that a state criminal background checks requirement will be considered a “business necessity” and can overcome “disparate impact” concerns.


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