Nobody likes to be proven wrong, least of all employers. In an effort to hire the perfect person for a position, a company may gather as much information as possible about an applicant, such as a quick review of a social networking page, a criminal background inquiry or a credit check.

Although such information has become more accessible in the current technological age, it should be used carefully and sparingly, attorneys cautioned.

Concerned about the potential for the checks to have a disparate impact on minorities, the Equal Employment Opportunity Commission released guidance and recently filed two suits challenging employers’ use of background checks, including a case in the 4th Circuit.

“The EEOC has been stepping up their enforcement of what the agency perceives to be the disparate impact usage of criminal background checks,” said Tysons Corner attorney Brian F. Chandler. “The onus is really on the employer to be able to justify why a conviction would potentially bar a candidate from employment.”

Individuals are also challenging employers’ research, with Roanoke-based Advance Auto Parts recently agreeing to pay $360,000 to a class of applicants who did not receive a copy of their credit reports or statutory notices when a credit check was performed, as required by the Fair Credit Reporting Act.

But don’t give up on background checks, which may be necessary to protect the company from a negligent hiring suit down the road, said Karen S. Elliott of Richmond. She noted a recent suit against a taxi company after it failed to check the driving history of one of its employees, which would have revealed a record for reckless driving.

“The employer has a tough balance between the EEOC requirements and being able to defend itself against a negligent hiring claim,” she explained.

Chandler also said he still recommends employers make use of background checks, albeit conducted within the boundaries of the law.

“Under the present circumstances, employers should not implement a categorical approach but should look individually at each applicant and be prepared to justify why a conviction relates to the position they are applying for to establish an appropriate business necessity,” he said.

Criminal checks

In 2012, the EEOC revised its guidance, “Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964.”

The update – the first since 1991 – was intended to recognize changes in technology making criminal history information more accessible, the agency said.

Michelle Rodriguez, a staff attorney for the National Employment Law Project, said the group has noticed a rise in the use of criminal background checks post-9/11 – and a parallel rise in problems for employees.

“There are a lot of problems with accuracy,” Rodriguez said. Mistakes range from a criminal record being listed for another person with the same name, for example, to missing information that makes something sound worse than it is.

“We’ve had folks calling us about issues like the same arrest reported multiple times, or an arrest listed on their record but the fact that the charges were dismissed is not listed,” Rodriguez said.

And unlike with credit reports – where there are three main companies – the proliferation of criminal background check companies means that an individual can correct one inaccurate report only to have the same mistake repeat itself with a different company.

“The assumption of an employer’s background check is that it will somehow predict how a person is as a worker,” Rodriguez said. “That is not necessarily the case.”

Some employees are unable to escape their past, particularly with all the information available online, she added. Rodriguez recently worked with a grandfather whose 40-year-old conviction was unearthed when he applied for a new job. “He made a mistake when he was young and stupid and doing things he shouldn’t have been doing,” she said.

“In the 40 year interim, he had a career, raised kids, put them through college and is now a grandfather. But this incredibly old record is still haunting him.”

The EEOC’s revised guidance makes clear that employers are not prohibited from looking at an applicant or employee’s criminal record, but the agency “wants to make sure that the background check is actually relevant to the job that is being filled,” Elliott said.

The concern: a potential violation of Title VII, as the EEOC presented social science data that documented minorities have a higher conviction rate than non-minorities. Therefore, an employer’s blanket policy on refusing to hire those with felony convictions could have a disparate impact on minority applicants and employees.

In the agency’s South Carolina federal court complaint against BMW Manufacturing, the EEOC said out of 645 employees who underwent a criminal background check, 88 had criminal convictions and 69 were African-American.

“The gross disparity in the rates at which black and non-black employees…lost their employment on account of BMW’s criminal history background check policy is statistically significant,” the agency alleged. “BMW’s policy had, and continues to have, a significant disparate impact on black employees and applicants and is not job-related and consistent with business necessity. The effect of the practice has been to deprive the claimants of equal employment opportunities.”

“If that felony conviction for a crime occurred 25 years ago and the job has no relationship to what the conviction was about, the EEOC doesn’t want a barrier to that person being considered for the job,” Elliott said. So if a law firm is hiring an accountant, a DUI from 10 years ago should not be determinative, Chandler said. A recent conviction for embezzlement may have considerable bearing on being hired as a bank teller, however.

The safest bet for employers: an individualized assessment for the position being filled.

“As long as the employer can show that the background check makes sense for the particular position being hired, that rationale will usually withstand scrutiny,” Elliott said.

If not, an employer could face a lawsuit from a denied applicant or terminated employee as well as an investigation or enforcement action from the EEOC.

Credit checks

Attorneys said the use of credit checks for employees and applicants is generally less common and different considerations apply.

For example, it is illegal to refuse to hire someone who has filed for bankruptcy, Elliott said, and federal law, the Fair Credit Reporting Act, governs how employers may review credit history.

In the case against Advance Auto Parts, John Hamilton Stinson alleged the company failed to provide the required notice provisions under the FCRA.

The statute – specifically 15 U.S.C. § 1681b(b)(3) – requires the user of a consumer report for an employment purpose to make certain specific disclosures before it uses the report for an adverse action, like hiring or firing decisions.

Stinson said Advance Auto failed to provide him with a copy of his report and a description of his rights under the FCRA as required. Because of those failures, Stinson claimed he was prevented from challenging the false information that the report returned (specifically, a conviction for someone with a similar name, “Johnny Stinson”).

Advance Auto denied the allegations.

After mediation, the parties reached a deal that was preliminarily approved by U.S. District Judge Samuel G. Wilson under which a nationwide class of approximately 2,571 members who will each receive $138 in cash.

While the EEOC has focused primarily on the issue of criminal background checks, Chandler suggested employers adhere to the agency’s individualized assessment policy for credit checks as well.

“Ask, ‘How does this credit check relate to the position the person is applying for?’” he said. “If the applicant has horrible credit and applies to be the firm accountant, that’s one thing. But if the person is going to be a truck driver, with no access to the employer’s funds, that would not be relevant.”

Who should check?

Despite the burden on employers to justify the use of background checks and the potential for overstepping the legal boundaries, some industries may actually require the use of background checks to fill positions, like child care workers and those in the health care industry, such as nursing home employees.

When it comes to performing the check itself, Elliott recommended looking to a third party to actually conduct the background check.

“A lot of employers are not aware of all of the legal requirements under the FCRA,” she said, and could run afoul of the statute.

“It’s easier and cheaper to use a third party.”

That also allows the employer to be specific about the desired information to avoid claims that it knew too much.

Having a third party cast a quick eye over an applicant’s Facebook page to look for criminal behavior, for example, would protect the employer from learning the applicant was pregnant after viewing her profile picture. The employer would then be insulated if it later decided not to hire her and a discrimination claim resulted.