Dollar General is the latest employer to settle with the Equal Employment Opportunity Commission (EEOC) over its use of criminal history information in the hiring process.
The consent decree memorializing the settlement requires the company to pay $6 million to aggrieved applicants and prohibits it from considering criminal history when hiring unless it engages a criminology consultant to reevaluate its practices.
The outcome sends a strong message to employers—the EEOC has no plans of backing down on its stance that background checks can be unlawful.
Criminal History Info May Have a Disparate Impact on Minorities
In 2013, the EEOC filed suit against Dollar General arguing it discriminated against African-American applicants by considering criminal conviction history during the hiring process. Specifically, the agency claimed the retailer required applicants who received a conditional offer to undergo a background check.
The company used a “matrix” identifying specific crimes and a corresponding time period that must have elapsed since the conviction. If an applicant failed the background check because she had a conviction within the time period, the conditional offer was revoked. The EEOC argued the process was discriminatory because, even though it was facially neutral, it had a disproportionately negative effect on African-American applicants as compared to white applicants.
After 6 years of litigation, the EEOC and Dollar General settled the case, without any admission of wrongdoing. On November 18, 2019, the court approved a 3-year consent decree, jointly drafted by the parties, involving both monetary payment in the amount of $6 million to be distributed to aggrieved applicants as well as certain injunctive relief.
The main thrust of the agreement is that Dollar General is prohibited from considering criminal history when making hiring decisions unless it hires a mutually agreed upon criminology consultant to evaluate the use of criminal history during its hiring process.
The consultant must consider certain factors, including the time elapsed since the conviction, the number of offenses, their nature and gravity, the potential for recidivism, and the job duties. The company then must implement the consultant’s recommendations.
The purpose of the requirement is to ensure its consideration of criminal history is job-related and consistent with business necessity.
The settlement also prohibits Dollar General from engaging in retaliation and discouraging individuals with criminal histories from applying. And it requires the retailer to give notice to conditional hires about background screenings, have a reconsideration process if an offer is rescinded based on criminal history, keep records, give reports to the EEOC, provide training on the consultant’s recommendations, and update its employee handbook. U.S. Equal Employment Opportunity Commission v. Dolgencorp, LLC, d/b/a Dollar General, 1:13-CV-04307 (N.D. Ill., Nov. 11, 2019).
This isn’t the first high-profile lawsuit involving an employer’s criminal history use during the hiring process and certainly won’t be the last. Even if a policy isn’t discriminatory on its face, it can still be unlawful under federal and state antidiscrimination laws if it has a disproportionate impact on a protected class.
Employers that consider criminal histories should ensure there’s a job-related reason and business need for doing so. In addition, while not specifically at issue in this case, you must be aware of applicable state and local “ban the box” laws, which may restrict what you can ask applicants about criminal histories.
Further, employers that use consumer reports (such as background checks) when making employment decisions also must comply with the Fair Credit Reporting Act (FCRA) and any state fair credit reporting laws. The FCRA sets forth certain steps you must take before obtaining a consumer report and when taking any adverse action based on information in the report.
To help navigate this process, consult your employment counsel to ensure your screening policies comply with the laws.