EEOC Update: BMW Criminal Records Settlement & Freeman’s Attorneys’ Fees Victory
Posted: August 09, 2015
Over the past several years, the Equal Employment Opportunity Commission (EEOC) has pursued litigation against employers alleging that the use of criminal and credit history in employment decisions leads to disparate impact discrimination. This article provides updates on two long-standing cases – EEOC v. BMW and EEOC v. Freeman.
EEOC v. BMW BMW to pay $1.6 million to settle racial discrimination charges
In June 2013, the EEOC filed suit against BMW alleging that the employer’s criminal background check policy disproportionately impacted African American applicants and employees without proof of a legitimate business need. BMW’s criminal history hiring policy had been in place since 1994 and did not include time limit restrictions in terms of how far back it would consider criminal history. However, until 2008 BMW relied on a contractor – that used its own criminal history criteria – to screen individuals that worked in BMW’s facilities.
Following a change in the contractor company in 2008, BMW conducted a re-screen of long-standing contractors who re-applied to continue working in BMW’s facilities. During this process, BMW’s criminal history policy was applied which resulted in the termination of numerous individuals from their positions. Based on this practice, the EEOC claimed that BMW’s policies led to a “blanket exclusion”, without an opportunity for an individualized assessment, which ultimately resulted in a violation of Title VII of the Civil Rights Act of 1964.
After several years of contentious back and forth discovery, the EEOC announced on September 8, 2015 that BMW agreed to settle the charges for $1.6 million and to “provide job opportunities to alleged victims of race discrimination.”
According to the Consent Decree – which applies to BMW’s facility in Spartanburg County, South Carolina – BMW may no longer apply its previous criminal background check guidelines at issue. Instead, BMW must adhere to the following principles:
Individuals may not be declined employment based on an arrest or other charge that did not result in a conviction.
If a charge is pending, an employment decision may be postponed until final resolution of the charge.
Before an individual may be denied employment based on criminal history, BMW (and its logistics provider) must:
Exercise due diligence to evaluate all relevant information.
Provide written notice to the individual that includes:
Statement that the individual is being evaluated for a position.
Verbatim description of the criminal history information forming the potential decision to not hire the individual.
Invitation to the individual to provide further information orally or in writing about the conviction, circumstances, rehabilitative efforts, etc.
Identification of the name, title and contact information of the person to whom the individual should communicate regarding the above.
The notice must be delivered by “reasonable means” and the individual must have at least twenty-one (21) days to contact BMW or the logistics provider before an employment decision is final.
BMW must also retain all documentation relevant to the hiring of individuals for the duration of the Consent Decree and an additional one (1) year following. BMW must also submit an electronic copy of a database listing each individual denied employment based on criminal history every 180 days to the EEOC. Further, BMW must provide training to all staff with decision-making authority in hiring decisions.
The Consent Decree is effective for a period of three (3) years, and BMW denied liability and any wrongdoing.
EEOC v. Freeman Nearly $1 million in attorneys’ and expert fees awarded to Freeman
Following an investigation, in 2009 the EEOC filed suit claiming that Freeman’s use of credit and criminal checks violated Title VII of the Civil Rights Act of 1964. During the course of discovery, the EEOC’s experts produced reports (that were subsequently amended) that claimed to prove Freeman committed discrimination. Freeman in turn filed a motion seeking to preclude the expert testimony claiming there were inaccuracies and “troublesome errors that rendered [the data] unreliable.”
Agreeing with Freeman, the District Court granted summary judgment and excluded the EEOC’s expert testimony finding it was “rife with analytical errors” and “completely unreliable.” Throughout its unforgiving opinion, the District Court opined that “conducting a criminal history or credit record background check…is a rational and legitimate component of a reasonable hiring process” and also cited the fact that the EEOC itself conducts criminal and credit background checks for its positions.
Upon appeal, the Fourth Circuit denied the EEOC’s arguments based on “an alarming number of errors and analytical fallacies” associated with expert testimony. Citing this “‘mind-boggling’ number of errors and unexplained discrepancies”, the Fourth Circuit affirmed the District Court’s judgment in favor of Freeman.
Following this ruling, Freeman sought recovery of $1.7 million in attorneys’ fees which the EEOC opposed. The District Court began its September 3, 2015 opinion citing advice from Kenny Rogers that “You’ve got to know when to hold ‘em. Know when to fold ‘em. Know when to walk away.” Putting the quote into context, the District Court noted that a plaintiff who wants to avoid paying the defendant’s attorneys’ fees should know when a case has become “so groundless that continuing to litigate is unreasonable, i.e. once it is clear it cannot have a winning hand.” Continuing its poker analogy, the District Court found that while “Freeman held a royal flush…the EEOC held nothing” but “instead of folding, the EEOC went all in” and “[l]ike the unwise gambler, it did so at its peril.” The District Court cited the EEOC’s inability to produce reliable statistics and analysis that would prove that Freeman’s use of criminal and credit background checks resulted in disparate impact discrimination. Further, the EEOC failed to take into account Freeman’s hiring policy which afforded individuals who “failed” a background check an opportunity to explain the circumstances and obtain employment.
Finding the EEOC’s poker strategy (i.e., reliance on general population statistics and flawed expert testimony) wholly insufficient, the District Court awarded Freeman $938,771.50 in attorneys’ and expert fees.
The EEOC still has several pending cases related to the above matters including its lawsuit against Dollar General (alleging criminal background checks led to racial discrimination) and Crothall Services Group, Inc. (alleging the employer failed to maintain records related to criminal background checks and criminal history assessments that the employer conducts as part of its hiring process).