Employer Triumphs Over EEOC In Background Check Lawsuit

Randi Klein Hyatt
Randi Klein Hyatt
09/16/2013

A Maryland federal court recently skewered the Equal Employment Opportunity Commission in its disparate impact lawsuit challenging a nationwide employer’s use of background checks on applicants.  EEOC v. Freeman, No. RWT 09cv2573 (D. Md. Aug. 9, 2013).  The U.S. District Court for the District of Maryland granted summary judgment in favor of the employer, heavily criticizing the EEOC’s shoddy assemblage of statistical data used in its attempt to prove disparate impact.

The lawsuit stemmed from a single discrimination complaint filed with the EEOC in 2008, where an applicant complained that she was denied employment based upon her credit history.  The EEOC filed suit against Freeman, a provider of integrated event services with more than 28,000 full-time and part-time employees, alleging that Freeman engaged in a “pattern or practice” of discrimination against certain minority applicants by using credit and criminal history as hiring criteria.

Like many cautious and practical employers, Freeman instituted its policy to conduct background criminal and credit checks after experiencing problems with embezzlement, theft, drug use, and workplace violence by its employees.  The extent of Freeman’s background checks depended on the nature of the position sought, and company’s policy involved multiple steps in evaluating whether an applicant was qualified to work.

In rejecting the EEOC’s claim of disparate impact, the court found the EEOC’s statistical data to be wholly unreliable and inaccurate.  Even after Freeman provided extensive discovery to the EEOC, the EEOC’s designated expert created a database using outdated information produced prior to litigation.  The expert’s database was rife with material coding errors, duplicates, and double-counting, and only included a very small fraction of applicants from just half of Freeman’s branch offices.  Much of the data was also largely irrelevant to the disposition of the case, as it contained data from outside of the time period identified in the EEOC’s claims.  Most troubling was that the EEOC’s expert cherry-picked data from outside the relevant time period in an attempt to enhance the number of applicant “fails” – and the court characterized this as “an egregious example of scientific dishonesty.”

The Freeman case is a blow to the EEOC’s recent attempts to challenge employers’ use of background checks, and is well worth a read for those curious to know how not to prove a disparate impact discrimination claim.  For employers desiring to conduct background checks, the case serves as a reminder to implement policies that are reasonable and tailored to legitimate business needs, just in case the EEOC threatens a lawsuit.

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