Pre-Employment Criminal Background Checks: Learning from Pepsi's $3,000,000 Mistake

Pepsi.jpgOn January 11, 2012, the Equal Employment Opportunity Commission (EEOC) reported that Pepsi Beverages agreed to pay $3.13 million and provide job offers and training to resolve a charge of race discrimination. This EEOC charge is a reminder that employers considering or presently using criminal background checks in hiring must tailor the program to meet 

The EEOC Investigation

The EEOC’s investigation determined that there was reasonable cause to believe that the criminal background check policy formerly used by Pepsi discriminated against African Americans in violation of Title VII of the Civil Rights Act of 1964. 

Specifically, that investigation revealed that more than 300 African Americans were adversely affected when Pepsi applied a criminal background check policy that disproportionately excluded black applicants from permanent employment. 

Two aspects of Pepsi’s criminal background check policy were particularly damning:

  • Job applicants who had been arrested pending prosecution were not hired for a permanent job even if they had never been convicted of any offense; and 
  • Pepsi’s former policy denied employment to applicants from employment who had been arrested or convicted of certain minor offenses.

The EEOC's Policy on Using Arrest and Conviction Records in Hiring Decisions

The EEOC has long standing guidance and policy statements on the use of arrest and conviction records in employment. In fact, the EEOC issued its first written policy guidance regarding the use of arrest and conviction records in employment in the 1980s. There are also additional restrictions and requirements that employers using criminal background checks must comply with. See What Employers and Employees Should Understand About Conducting Background Checks.  

The Take Away for Employers

The use of arrest and conviction records to deny employment can be illegal under Title VII of the Civil Rights Act of 1964 if it is not relevant for the job. This is because the EEOC has determined that these arrest and conviction records can limit the employment opportunities of applicants or workers based on their race or ethnicity.

It is, therefore, important for employers to examine or re-examine their criminal background check policy to confirm the policy does not create an adverse impact based on race in violation of Title VII and the EEOC’s prohibitions against unwarranted roadblocks to employment.

Specific points under a criminal background check policy that employers should evaluate include the following:   

  • The nature and severity of the offense;
  • The time that has passed since the conviction or completion of the sentence; and
  • The nature of the job sought in order to be sure that the exclusion is important for the particular position.  

For more information about the use of criminal background checks in pre-employment inquiries see the EEOC's Pre-Employment Inquiries and Arrest & Conviction guidelines or contact Jason Shinn.    

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