You're Hired? Balancing The Risks And Benefits Of Criminal Background Checks In Hiring Is More Crucial Than Ever For Government Contractors

Friday, September 21, 2012 - 17:03

The Equal Employment Opportunity Commission (EEOC) is warning employers against using criminal records to screen employment candidates in ways that disfavor candidates with protected statuses. See Consideration of Arrest and Conviction Records in Employment Decisions under Title VII of the Civil Rights Act of 1964. New EEOC guidelines, which were released April 25, emphasize that employers who regularly use criminal background checks to screen potential employees, which is often a necessity for government contractors, should avoid blanket rules concerning the criminal histories of job candidates. For large companies attempting to comply with the new EEOC guidelines and numerous other applicable rules and regulations that affect hiring, developing a practical screening process that guards against discrimination is now more important than ever.

The EEOC's new guidelines outline best practices for complying with Title VII in using criminal records in employment decisions, cautioning that an employer's use of criminal records can violate Title VII, which prohibits employment discrimination based on race, color, religion, sex and national origin. Specifically, an employer may face disparate treatment liability if it rejects a member of a protected group on the basis of his/her criminal record, then hires another candidate with comparable qualifications and criminal history who is not part of a protected group. Using criminal records to screen potential employees can also put an employer at risk for liability for disparate impact discrimination under Title VII, even if the employer institutes facially neutral policies that exclude potential employees solely on the basis of criminal conduct, if the use of such records disproportionately impacts a protected group and is not tailored to the position in question and consistent with business necessity.

To avoid potential liability, the EEOC guidelines recommend that employers make individualized assessments of candidates' criminal records and that screening procedures be narrowly tailored to the specific position in question. They emphasize longstanding law that blanket policies excluding from employment anyone with a criminal record are per se discriminatory under Title VII. Instead, the guidelines recommend that if employers choose to use prospective employees' criminal records in their employment decisions, they weigh multiple factors to assess how specific criminal conduct relates to a candidate's fitness for a position, including: 1) the nature and gravity of the conduct; 2) the time that has passed since the conduct or completion of the sentence; and 3) the nature of the job.

Yet the EEOC guidelines, while helpful, are just one of many considerations surrounding an employer's decision to use criminal records in employment decisions. Many employers face myriad, often competing policies with which they must comply in connection with their hiring policies. As a result, hiring policies must be adapted to each individual company, with consideration given to issues including but not limited to the company's size, the fields in which it is operating and the types of positions it is seeking to fill.

For example, domestic employers in some industries must comply with federal laws that prohibit individuals with criminal records from working in certain positions. At the opposite extreme, many state laws limit, to varying degrees, the use of criminal records by employers. Some states outright forbid employers from discriminating against prospective employees on the basis of their criminal records, while others limit the extent to which employers may inquire about, or base employment decisions on, criminal records. Indeed, some states prohibit employers from requesting information about arrests in which no conviction resulted. Other states permit only certain types of employers -- the government, for instance -- to consult criminal records in making employment decisions. Employers should be cautious to comply with state law while bearing in mind that Title VII is generally controlling, and compliance with state law does not shield an employer from Title VII liability.  

Employers that contract with the federal government face even more challenges when trying to navigate these requirements. For example, the Department of Defense Personnel Security Program identifies a variety of factors to consider in deciding whether an individual's past conduct is prohibitive of retention in sensitive duties or access to classified information, and presumes that an individual with a felony conviction is not eligible for a security clearance absent clear and convincing evidence of mitigating factors. See 32 C.F.R. Part 154, App. H (2012). In addition, the Federal Acquisition Regulation rule regarding "Contractor Code of Business Ethics and Conduct" requires all covered contractors to take "[r]easonable efforts not to include an individual as a principal, whom due diligence would have exposed as having engaged in conduct that is in conflict with the Contractor's code of business ethics and conduct." Therefore, government contractors must be especially sensitive to balancing the need to implement fair and impartial hiring procedures with their obligations to comply with applicable security restrictions, ethics considerations and other screening requirements.

Thus, while the EEOC guidelines provide suggestions on complying with Title VII in using criminal records in employment decisions, employers must remember that there are many sources of potential restrictions on their hiring practices. For large companies in which completely individualized hiring decisions are not feasible, employers should consider setting benchmarks for which kinds of offenses are prohibitive of employment in certain positions. For instance, an employer might decide as a matter of policy not to hire individuals with felony convictions within a specific period of time for certain high-risk positions, but could apply reduced standards for other positions. The benchmarks an employer chooses should be tied to the risks inherent in the position in question, and should be applied in an individualized manner to the greatest extent practicable.

As with all corporate compliance measures, hiring guidelines may be scrutinized by a variety of entities, and instituting strong, well-documented policies at the outset may prevent long-term headaches when a hiring decision goes wrong. While employers certainly do not want to implement hiring policies that could expose them to allegations of discrimination, that goal must be balanced against the risks of hiring candidates with potentially troubled pasts.

As chair of the White Collar Defense Practice, Roderick L. Thomas specializes in government investigations, criminal allegations and civil fraud allegations. He served more than 10 years in the U.S. Attorney's Office in Washington, DC and was lead counsel on numerous criminal and civil trials. As part of his extensive background in federal investigations and prosecutions, he routinely represents clients in internal investigations, subpoena matters, False Claims Act and qui tam matters, criminal investigations, Foreign Corrupt Practices Act (FCPA) matters, civil investigative demands, congressional investigations and parallel civil and criminal proceedings. He can be reached at (202) 719-7035.

Erin K. Nord represents corporate and individual clients in government and internal investigations, civil enforcement matters and other litigation. She conducts internal investigations in response to government subpoenas, shareholder suits and whistleblower fraud allegations to assess potential exposure and any appropriate disclosures or corrective actions. Ms. Nord can be reached at (202) 719-7183.

Dylan Hix assists clients with a variety of matters related to government and internal investigations and litigation in federal and state courts including responding to government investigations. He has also conducted internal investigations to assess allegations of misconduct and potential exposure and advises on disclosure obligations and corrective actions. Mr. Hix can be reached at (202) 719-7557 or dhix@wileyrein.com. 

Please email the authors at rthomas@wileyrein.com, enord@wileyrein.com or dhix@wileyrein.com with questions about this article.