On July 12, Governor Cuomo signed a bill amending the New York Human Rights Law to prohibit employment discrimination based on "traits historically associated with race, including, but not limited to, hair texture and protective hairstyles." The term "protective hairstyles" includes, but is not limited to, "such hairstyles as braids, locks, and twists." This amendment took effect immediately upon the Governor's signature.
As previously reported, the elimination of barriers in recruitment and hiring was identified as one of the Equal Employment Opportunity Commission’s six priorities in its 2013-2016 Strategic Enforcement Plan (“SEP”). Accordingly, the EEOC is focusing its enforcement efforts and resources on eradicating both class-based intentional discrimination, as well as facially-neutral recruitment and hiring practices that have a discriminatory effect on particular groups. To this end, the EEOC has been aggressively challenging employers’ use of criminal and credit background checks in recruitment and hiring, alleging that such practices have a disparate impact on certain applicants in protected classes. However, in a significant victory for employers, the EEOC’s efforts were recently thwarted in a decision issued by the United States District Court for the District of Maryland.
In EEOC v. Freeman, the EEOC challenged the defendant’s use of criminal background and credit checks, alleging that, although facially-neutral, the practice had a discriminatory effect on African-American and male applicants. In granting the defendant’s summary judgment motion dismissing the complaint, the court held that the EEOC and their experts failed to identify a specific policy causing an alleged disparate impact and “something more, far more, than what is relied upon by the EEOC in this case must be utilized to justify a disparate impact claim based upon criminal history and credit checks.” The court further admonished the EEOC’s lack of factual support, stating that:
[b]y bringing actions of this nature, the EEOC has placed many employers in the "Hobson’s choice" of ignoring criminal history and credit background, thus exposing themselves to potential liability for criminal and fraudulent acts committed by employees, on the one hand, or incurring the wrath of the EEOC for having utilized information deemed fundamental by most employers.
To further underscore the importance of background checks to employers, the court pointed out that ironically, even the EEOC conducts criminal background investigations as a condition of employment for all employees, and conducts credit background checks on approximately 90% of its positions.
The Freeman court explained that it is not the “mere use” of background checks that presents Title VII concerns, but rather “what specific information is used and how it is used.” Here, Freeman’s use of criminal and credit checks were not used as automatic exclusions and were conducted only for specific types of jobs. The Freeman court held that the use of these screening tools is a “rational and legitimate component of a reasonable hiring process.”
Although this decision is an important victory for employers defending their right to refuse to hire applicants whose backgrounds call into question their character and qualifications for employment, it is unlikely to stop the EEOC’s enforcement efforts completely. The SEP, together with the EEOC’s April 2012 Enforcement Guidance on criminal background checks, make clear that the EEOC is determined to seriously limit the use of background checks, if not prohibit their use altogether. Therefore, employers should consult with legal counsel to ensure that any use of background checks is both job-related and consistent with business necessity, and that such use does not result in automatic exclusions. Background checks should also be limited only to those positions where there is a direct correlation between the background check and the job involved.
Employers can rest assured that the EEOC’s guidance does not make it a per se violation of Title VII to consider criminal history information. It does, however, send a clear signal that the agency intends to scrutinize employment decisions that are based on an individual’s criminal past. The EEOC stresses that criminal history information may be relevant to both “disparate treatment” claims (where people with the same criminal history are treated differently because of a legally protected characteristic) and “disparate impact” claims (where an employer’s facially neutral policy has a disproportionately adverse impact on a specific protected group).
In the disparate impact context, an employer can avoid liability by showing that the policy at issue is job related for the position and consistent with business necessity. Under the new EEOC guidance, however, an employer will not typically satisfy this showing by merely tying its policy of considering prior criminal backgrounds to its general concern for property or safety. Rather, employers are now expected to conduct a multi-factor analysis to confirm that the underlying policy is appropriately applied to a specific individual.
"Targeted Screens" and "Individualized Assessments"
In its guidance, the EEOC makes clear its position that a policy excluding everyone with a criminal background from employment will violate Title VII because it is not job related and consistent with business necessity. The EEOC states that, at the very least, a policy must be rooted in a genuine nexus between a position and a particular crime. To be valid, such a “targeted screen” must take into account the nature of the crime, the time elapsed, and the nature of the job in question. The EEOC also emphasizes, however, that a targeted screen alone may be inadequate to avoid a disparate impact claim in many situations. It therefore suggests that employers also conduct what it terms an “individualized assessment.”
To complete an individualized assessment in accordance with the new EEOC guidance, an employer must: (1) notify the individual that he or she has been targeted for exclusion because of past criminal conduct; (2) give the individual an opportunity to explain why he or she should not be excluded; and (3) consider any information supplied by the individual to assess whether the practice or policy, as applied, is job related and consistent with business necessity. The EEOC lists several examples of potentially relevant information that should be considered during the individualized assessment, including: possible inaccuracies in the criminal history report; the applicant/employee’s age at the time of the offense; the number of offenses committed; whether similar work has been performed without incident; the applicant/employee’s employment history; rehabilitation efforts; and employment or character references.
Although the EEOC’s new guidance does not go so far as to prohibit employers from considering an individual’s criminal history when making employment decisions, it should serve as a reminder that this screening method is rife with potential legal pitfalls. The EEOC’s emphasis on the national conviction rates for certain minority groups suggests that it is predisposed to litigating claims under a disparate impact theory. The EEOC will consider whether the employer followed the several steps described in the new guidance to assess whether a screening policy is truly job related for a particular position and consistent with business necessity.
In addition, it is important for employers to remember that several states and municipalities have passed laws to prohibit discrimination on the basis of an individual’s criminal history. For instance, the New York Human Rights Law and Corrections Law make it unlawful to base employment decisions on prior arrests or criminal convictions. An exception exists that allows an employer to deny employment when the underlying conviction directly relates to the job or when employment would pose an unreasonable risk to property or the safety or welfare of specific individuals or the general public. Before relying on this exception, however, employers must consider a variety of factors, including:
the public policy of New York State to encourage employment of persons with criminal records;
the specific duties and responsibilities of the position;
the bearing the underlying offense will have on the person's fitness or ability to perform those duties and responsibilities;
the time elapsed;
the age of the person when the offense was committed;
the seriousness of the offense;
any information concerning the person's rehabilitation and good conduct; and
the legitimate interest of the employer in protecting property or safety or welfare of individuals or the public.
By conducting this analysis, New York employers will also very likely be able to satisfy the EEOC’s expectations as stated in its new guidance. To better insure compliance, however, it is strongly recommended that employers contact labor and employment counsel when assessing internal policies relating to the use of criminal history information in connection with employment decisions.
Recent complaints filed by the Office of Federal Contract Compliance Programs ("OFCCP") and the Equal Employment Opportunity Commission ("EEOC") against employers suggest that those federal agencies are aggressively pursuing allegations of discriminatory hiring practices.
On November 29, the OFCCP filed an administrative complaint against Cargill Meat Solutions, a federal contractor, alleging that the company violated Executive Order 11246, by favoring Asian and Pacific Islander applicants over applicants of other races and by favoring male applicants over female applicants. In the complaint, the OFCCP alleges that over 4,000 qualified applicants were unlawfully rejected based only on their race or sex. Significantly, the OFCCP seeks cancellation of the company's government contracts worth more than $550 million.
In the last several months, the EEOC has also filed two high-profile lawsuits against employers for alleged discriminatory hiring practices. In September, the EEOC filed a lawsuit against Bass Pro Shops in the U.S. District Court, District of Massachusetts, alleging that the company engaged in a pattern or practice of failing to hire African-American and Hispanic applicants. In the lawsuit, the EEOC alleges that managers made overt racist comments acknowledging the company's discriminatory hiring practices, and stated that African-American applicants did not fit their corporate profile.
In October, the EEOC filed a lawsuit against Texas Roadhouse in the U.S. District Court, Southern District of Texas, alleging that the company systematically failed to hire individuals over 40 years of age for "front of the house" positions. In the lawsuit, the EEOC alleges that only 1.9% of the "front of the house" employees are over 40 years of age (which the EEOC believes is a statistically significant disparity when compared to the general population, industry statistics, and the applicant pool) and that the company instructed managers to hire younger employees by emphasizing youth in its hiring training.
At this point, these enforcement actions by the OFCCP and EEOC have not resulted in any final determinations or judgments. Nevertheless, these enforcement actions serve as a useful reminder for employers of all sizes to continually monitor their hiring practices and periodically train managers who have hiring responsibilities to ensure compliance with federal, state, and local laws.
On June 29, 2009, the Supreme Court issued its decision in the case of Ricci v. DeStefano (see June 15, 2009 blog post for an explanation of the case and the positions of the parties). In a 5-4 decision, the Supreme Court reversed the Second Circuit Court of Appeals, holding that the City of New Haven violated Title VII of the Civil Rights Act by refusing to certify the results of firefighter promotional examinations because too few minority candidates passed.
The Supreme Court agreed with the plaintiffs that an employer must have a "strong basis in evidence" to believe it will be subject to disparate impact liability in order to make a race-conscious decision such as the one made by the City of New Haven. The Supreme Court rejected the position of the City of New Haven (and the position taken by the U.S. Government in its amicus brief) that an employer need only have a "reasonable basis" for believing it might be liable under a disparate impact theory. In prior decisions (such as Richmond v. J.A. Croson Co., 488 U.S. 469 (1989)), the Supreme Court has applied this same "strong basis in evidence" standard in determining whether certain types of race-conscious government actions to remedy past racial discrimination are justified under the Equal Protection Clause of the U.S. Constitution. Therefore, it appears that the Supreme Court's decision is consistent with, rather than a deviation from, the current legal standards.
Upon examining the record, the Supreme Court held that the City of New Haven did not have a strong basis in evidence to believe it would have been subject to disparate impact liability. The Supreme Court found that the City of New Haven's decision to throw out the results of the promotional examinations was based only on the statistical disparity in the number of white and minority candidates who passed. The Supreme Court held that the statistical disparity alone was insufficient to justify the City of New Haven's race-based decision to reject the results of the examinations. The City of New Haven would only have been liable under a disparate impact theory if the examinations were not job-related and consistent with business necessity, or if there existed a less discriminatory alternative that the City refused to adopt. The Supreme Court found that there was no evidence that the examinations were not job-related and consistent with business necessity, or that there were less discriminatory alternatives available. The Supreme Court held that "fear of litigation alone cannot justify an employer's reliance on race to the detriment of individuals who passed the examinations and qualified for promotions."
The lesson of the Ricci v. DeStefano case is that employers must be extremely cautious about making race-based employment decisions (or employment decisions based on any protected category) simply to avoid a disparate impact lawsuit. Employers that find themselves in the difficult position faced by the City of New Haven should do a thorough analysis in order to determine whether there is a strong basis in evidence to support a disparate impact theory of liability, and should not make race-based employment decisions in the absence of such evidence.
On April 22, 2009, the Supreme Court heard oral arguments from both parties in the case of Ricci v. DeStefano. In the Ricci case, 17 white firefighters and one Hispanic firefighter who passed promotional examinations filed claims under Title VII of the Civil Rights Act and the Equal Protection Clause of the U.S. Constitution that the City of New Haven discriminated against them based on their race by refusing to certify the results of the exam because too few minority candidates passed. The Supreme Court granted certiorari after the U.S. District Court granted summary judgment to the City of New Haven, and the Second Circuit Court of Appeals affirmed. Circuit Judge Sonia Sotomayor, who was recently nominated by President Obama to serve on the Supreme Court, was on the three-member Second Circuit panel that affirmed the District Court's decision.
The facts of the case are fairly simple. In late 2003, 118 applicants took a written and oral exam administered by the New Haven Fire Department for promotion to the positions of Captain and Lieutenant. Of the 118 applicants, 68 were white, 27 were African-American, and 23 were Hispanic. Based on the results of the exam, no African-American or Hispanic candidates were eligible for promotion to the Lieutenant position. Only two Hispanic candidates and no African-American candidates were eligible for promotion to the Captain position. The City of New Haven refused to certify the results of the exam, and did not grant any promotions based on the results of the exam, due to its stated fear that it would face a disparate impact lawsuit from non-white applicants.
The fundamental legal issue is whether a municipal employer’s fear of a disparate impact race discrimination lawsuit is a valid basis to disregard the results of a promotional exam that would make disproportionately more white applicants eligible for promotion than minority applicants. In other words, can a municipal employer engage in disparate treatment based on race, due to a fear of a disparate impact lawsuit? The plaintiffs contend that the City of New Haven’s fear of a disparate impact lawsuit was not sufficient to justify making the decision to disregard the results of the exam. The plaintiffs urged the Supreme Court to hold that an employer must have a “strong basis in evidence” for believing that an exam violates the law, and argued that the City of New Haven did not make such a showing.
The City of New Haven contends that an employer need only have a reasonable basis for believing that it could lose a disparate impact lawsuit if it makes promotions based on the results of an exam. The City of New Haven argued that the District Court correctly held that its belief that it could lose a disparate impact lawsuit was reasonable, based on the disproportionate percentage of white applicants who passed the exam, concerns about the validity of the exam, and the possibility of alternate exams.
The U.S. Government filed an amicus brief in this case, and also presented its argument to the Supreme Court. The Government essentially supports the City of New Haven’s argument that an employer need only have a reasonable belief that it could be liable under a disparate impact theory, but asked the Supreme Court to remand the case back to the District Court for further consideration of whether the City of New Haven’s belief in this case was reasonable. The Government noted during oral argument that the District Court found that there were several motivations for the City’s decision to disregard the results of the exam, which included not only the disparate impact concern, but also a desire to promote diversity within the Fire Department and to develop managerial role models for aspiring firefighters. The Government’s counsel stated during oral argument that promoting diversity and developing managerial role models “do not fit into complying with the Title VII disparate impact test,” and that the District Court therefore needed to re-examine whether the disparate impact concern alone was reasonable.
The Supreme Court's decision in the case is expected to be issued before the end of its term in June.