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Background Checks: New Lessons from BMW Case

We recently shared a blog post about background checks and the notice requirements under the Fair Credit Reporting Act (FCRA). A recent case settlement on this topic stresses the importance of following the FCRA regulation as well as Title VII of the Civil Rights Act of 1964.  


This month BMW Manufacturing Co. agreed to pay $1.6 million and offer jobs to dozens of applicants to settle a federal lawsuit brought by the US Equal Employment Opportunity Commission (EEOC) in 2013 based on the company’s previous guidelines on criminal background checks. 

In 2008, BMW switched its contractor handling the company’s logistics at its production facility in Spartanburg, SC. It required the new contractor to perform a criminal background screen on all existing logistics employees who reapplied to continue working in their positions at BMW.  At that time, the company’s background screening policy excluded from employment all people with convictions in certain categories of crime, regardless of how long ago the individual had been convicted or whether the conviction was for a misdemeanor or a felony.

After the criminal background checks were performed, BMW learned that approximately 100 incumbent logistics workers at the facility, including employees who had worked there for several years, didn’t pass the screen, according to the complaint.  The EEOC alleged 80 percent of the incumbent workers disqualified from employment as a result of applying BMW’s guidelines were black. The FCRA and Title VII prohibit discrimination based on race, as well as other protected classes.

BMW denied the allegation of discrimination but has since revised its policies and must adhere to the settlements consent decree.

Lessons to Learn from this Case

First Lesson
The settlement decree in this case states that BMW must conduct an individualized assessment if it seeks to disqualify any job applicant based on his or her criminal history. As mentioned in the EEOC 2012 Enforcement Guidance, a company must provide written notice to the job applicant describing the criminal history that is at issue and an offer to the applicant to explain the conviction and their appropriateness for employment. The settlement decree in this case also says that BMW must provide 21 days for the applicant to reply and before an adverse employment decision is made.

This is much longer than the five days previously considered “adequate time” for an applicant to reply to a Pre-adverse Action Notice. And, it would mean that you would have to hold a job open for 21 days until an applicant responds. Lets hope that the EEOC sees the unreasonableness in this guidance.  In the meantime, start considering how this may affect your background check policy, what is included in your Pre-adverse Action Notice, and your timeline to fill positions if an applicant is not selected for a specific position based on criminal background.

Second (and most important) Lesson
Staffing firms should not rely solely on your clients dictate for what criminal history excludes applicants from employment.  A staffing firm should also conduct it’s own evaluation of the job-relatedness and business necessity of the background check policy to ensure the clients viewpoints align with your firms.   Staffing firms must be experts in staffing, meaning you must be fully educated on the laws effecting your business.  Staffing firms and clients companies assume a joint employer relationship under discrimination regulations, which means your staffing firm could, and likely would, be named in a suit brought by the EEOC. 

The EEOC has an informational (yet confusing) website you can use to reference employment laws. There is also the 2012 Enforcement Guidance on Arrest and Conviction Records in Employment Decisions on this topic specifically.  Educate yourself and your staff, because “I didn’t know” is not a defense in the eyes of the EEOC.
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