Criminal Background Checks - Damned If You Do and Damned If You Don’t

There are a great deal of regulatory guidelines, publicity, and confusion, about the need for criminal background checks of job applicants. A recent federal appeals court case indicates that in at least some circumstances, an employer may be sued in a negligent hiring claim based on a company’s failure to conduct a criminal background check. Keen v. Miller Environmental Group, Inc., 702 F. 3d 239 (CA 5 2012). In that case, an applicant had not informed the employer of his criminal history and indeed stated he had no criminal history on his application. Although the applicant had consented to a background check as part of the employment application, the employer did not do a background check. Later, this job applicant raped a co-worker, and the plaintiff sued for negligent hiring contending that a criminal background check should have been performed.

The court cited general law in Restatement (Second) of Agency Section 213, that “One can normally assume that another who offers to perform simple work is competent. If, however, the work is likely to subject third persons to serious risk of great harm, there is a special duty of investigation.” In this case, the court found that there was nothing in the nature of the work, which was to remove tar balls from the Gulf Coast, suggesting that the applicant was likely to subject his co-workers to the risk of assault, noting that if a criminal background check were necessary to screen for the possibility that a manual laborer might assault a co-worker, it is difficult to envision a fact pattern in which a background check would not be necessary.

However, if criminal background checks are conducted, there both accuracy issues as well as legal issues. Accuracy issues relate to the fact that relying solely on “national” database information results in receiving only partial information, as most state-level and municipal courts are not represented in such databases. Further, a national database is composed of material from many different sources, each updated at different times, and thus accuracy is questionable.

The legal issues relate first, to the requirements of the Fair Credit Reporting Act (FCRA), and second, the guidelines issued by the Equal Employment Opportunity Commission (EEOC). The use of a third party to conduct such criminal background checks even using commercial data bases, requires meeting the specific requirements of the FCRA, including consent, notice, and an opportunity to make corrections.

The EEOC guidelines are particularly concerned about the fact that the rates of conviction are much higher for African American and Hispanic persons than for Caucasians. Thus, disparate impact discrimination claims can occur that allege that an employer’s facially neutral policy or practice disproportionately screens outs out a Title VII - protected group, like African Americans or Hispanics, without any business justification. A discrimination claim can also occur alleging that the employer rejected, for example, an African American applicant based on his criminal record, but hired a similarly situated white applicant with a comparable criminal record.

The Labor Department’s Office of Federal Contract Compliance Programs (OFCCP), has also issued a directive on similar issues. The agency recommends that government contractors engage in individualized assessments if they have policies and procedures that use criminal conduct as a screening tool for applicants and employees. “Such policies and procedures should be narrowly tailored to the essential job requirements and actual circumstances under which the jobs are performed; to the specific offenses that may demonstrate unfitness for performing such jobs; and to the appropriate duration of exclusions for criminal conduct, based on all available evidence.” Although neither the OFCCP or the EEOC favors contractors including questions about applicants’ criminal convictions on their employment applications, they do indicate that if a contractor makes such a request, the inquiry should be “limited to convictions for which the exclusion would be job-related for the position in question and consistent with business necessity.”

In spite of the legal issues, a 2010 survey by the Society for Human Resource Management (SHRM) found that 73% of responding employers conduct criminal background checks on all of their job candidates and 9% conduct them on selected job candidates. Only 7% do not conduct them at all.

So what should an employer do in light of this dilemma? First, in the case of those employers that have questions about criminal records on job applications, disclaimers should be added to indicate that an affirmative answer doesn’t constitute an automatic bar to a job but that the employer will take the information into account based on the nature, timing and job-relatedness as to the offense. The applicant might even be invited to share more information on a blank piece of paper if they want to provide an explanation. Next, employers need to apply a balancing test to review the criminal record, and in reviewing the various factors such as the nature of the job, the nature and gravity of the offense, and the time that has past since the events. The requirements of the FCRA must also be met, and as a general rule arrest records should not be considered since they are the hardest to justify as a business necessity. Occasionally, particular egregious and recent arrest might result in an investigation of the underlying facts, but the employer would be relying on the circumstances and not just the fact of the arrest.