On February 20, the Fourth Circuit became the second jurisdiction to reject the EEOC’s most recent attempt to expand disparate impact race claims. In EEOC v. Freeman, the Fourth Circuit affirmed summary judgment in favor of an employer in a case involving a challenge by the EEOC to the use of criminal background and credit history checks in the hiring process. The decision marks the second time in less than a year that the EEOC’s tactic has been struck down. See EEOC v. Kaplan Higher Education Corp., 748 F.3d 749 (6th Cir. 2014) (expressing sharp disapproval of the EEOC’s statistical evidence in a racial disparate impact claim arising from an employer’s use of credit histories in hiring decisions).
Here, the employer conducted background checks on its job applicants, which the EEOC alleged had an unlawful disparate impact on African American and male applicants. District Court Judge Roger W. Titus granted summary judgment to the employer after excluding the EEOC’s expert’s (industrial/organizational psychologist Kevin Murphy) testimony as unreliable under Fed. R. Evid. 702. The testimony was excluded because it was unreliable given the sheer number of mistakes, omissions, and fallacies in the expert’s analysis. Without the expert testimony, the EEOC failed to establish a prima facie case of discrimination.
The three-judge appellate panel unanimously agreed with Judge Titus and quoted extensively from his harsh decision, noting that the “district court found a ‘mind-boggling’ number of errors and unexplained discrepancies” in the expert testimony. In comparison to the concurring opinion filed by Judge Agee, however, Judge Titus’ opinion was relatively tame.
Judge Agee stated that the EEOC’s “work of serving ‘the public interest’ is jeopardized by the kind of missteps that occurred” in this case. He was troubled “that the Commission continues to proffer expert testimony from a witness whose work has been roundly rejected in our sister circuits for similar deficiencies to those we observe here.” Specifically, Judge Agee pointed to three problems that “merit special recognition,” namely the EEOC “drawing broad conclusions from incomplete data,” as well as using expert testimony that “cherry-picks” and that contains “many obvious errors and mistakes.” He hopes “that the agency will reconsider pursuing a course that does not serve it or the public interest well.”
While many employers and attorneys have been awaiting the Freeman decision in hopes of gleaning some clarity on this issue (as the EEOC appears to have been on a disparate impact crusade over the past few years), they are likely disappointed that the Fourth Circuit stopped short of analyzing whether the employer’s background check policy was lawful. Unfortunately, the court’s ruling expresses no opinion on the EEOC’s disparate impact claim. Hopefully, Freeman and the equivalent Sixth Circuit rulings put the EEOC on notice that it must base its disparate impact claims on rigorous statistical data and analysis. Regardless though, an employer’s reliance on criminal history records in the hiring process continues to present significant risk and may, in some circumstances, be unlawful.