Think Twice Before Rejecting Criminals

8/1/2012

First published in the August 2012 issue of Credit Union Magazine

The Equal Employment Opportunity Commission (EEOC) published a controversial "enforcement guidance" on the consideration of arrest and conviction records in employment decisions.

While this guidance—effective immediately—isn't a law, it does reveal how the agency will consider claims of discrimination when someone is denied employment due to an arrest or criminal conviction.

The EEOC enforces Title VII of the Civil Rights Act that prohibits discrimination based on race, color, religion, sex, or national origin. Due to the significant increase in the number of Americans who've been arrested or convicted of crimes, the agency has determined that denying employment because of an arrest or criminal conviction can result in unlawful discrimination due to race or national origin.

This is based on the fact that arrest and incarceration rates are much higher for certain populations. Therefore, a blanket ban on hiring those with a criminal arrest or conviction will negatively affect those populations in the workplace. PepsiCo recently agreed to a $3.13 million settlement for having a blanket policy denying jobs to anyone with an arrest.

The EEOC is also concerned that employers might intentionally discriminate against minorities based on criminal history (e.g., by treating a white applicant with a conviction better than a minority with a similar conviction). In addition, policies that prohibit the hiring of applicants based only on an arrest or conviction will more often preclude minorities from joining the workforce.

While the EEOC realizes employers must balance the need to avoid discrimination while preventing criminal activity and violence in the workplace, the agency provides only a general outline for how employers should move forward.

Defense for CUs

The EEOC's guidance notes that employers in industries subject to federal statutory or regulatory requirements prohibiting individuals with certain criminal records from holding certain positions must comply with those laws. In other words, compliance with federal law is a defense.

The Federal Credit Union Act specifically prohibits credit unions from hiring employees with convictions relating to dishonesty or breach of trust, or who have completed pretrial diversion programs in connection with prosecution of such an offense (12 USC 1785[d]).

This is typically a minimum 10-year prohibition from the date of the conviction unless a waiver is obtained. Credit unions must carefully identify which crimes meet this standard, tailor policies and practices to identify these crimes, and determine how to inquire about other crimes.

The guidance also advises that an individual's "arrest record standing alone may not be used to deny an employment opportunity." This is based on the concept that one is innocent until proven guilty.

However, an employer may make a decision based on the underlying conduct if the conduct would make the individual unfit for the position in question—if, for instance, the conduct included fraud and the position was chief financial officer.

Even though the EEOC acknowledges a conviction is sufficient evidence that an individual has engaged in criminal conduct, it advises against asking about convictions on job applications or early in the application process except for crimes subject to the Federal Credit Union Act. The agency recommends that any inquiry into criminal conduct be limited to convictions for which exclusions would be "job related and consistent with business necessity."

To meet this standard, a credit union must show that specific criminal conduct and its dangers are related to the duties of the particular position. Credit unions can meet this burden by conducting a "targeted screen"—looking at the nature of the crime, time elapsed, the nature of the job, and an individualized assessment of facts related to the applicant.

Credit unions must bring their practices in line with the EEOC's recommendations. For a list of best practices, visit www.creditunionmagazine.com.

Reprinted with permission of Credit Union Magazine