Over the past two years, the EEOC has placed a great deal of emphasis upon challenging employer policies that bar applicants based upon criminal history. In August, the Commission suffered a major setback on this front when a federal court in Maryland dismissed a lawsuit brought by the EEOC because the statistical analysis it relied upon was severely flawed. On October 7, 2013, the EEOC suffered another setback when the United States Court of Appeals for the Sixth Circuit upheld the District Court’s award of $751,940.48 against the EEOC in the case of EEOC v. Peoplemark, Inc.
The case arose when the EEOC alleged that Peoplemark (a temporary employment agency) had a policy of not hiring persons with criminal records. If the company had such a policy, it arguably could have a disparate impact upon African-American and Hispanic applicants. The problem with the EEOC’s theory was a very basic one — Peoplemark did not have a blanket “no-hire” policy.. In fact, 22% of the 286 persons in the class of “denied applicants” that the EEOC purported to represent had been hired by Peoplemark!!
The District Court found that, once the EEOC became aware that the employer did not have the no-hire policy, the litigation between frivolous. Therefore, the court awarded Peoplemark over $750,000, which included more than $219,000 in attorneys fees and more than $500,000 in expert witness fees.
The decision from the Court of Appeals for the Sixth Circuit is another important victory for employers in the ongoing effort to retain the latitude to conduct background checks on applicants. Between the strong rebuke issued in the Freeman case in August and the very large fee award in the Peoplemark case, the EEOC will need to think long and hard (once it reopens it shuttered doors) about litigating challenges against employer use of criminal background checks.