Judge Roger Titus’ scathing opinion in EEOC v. Freeman 09-CV 2573 (D. MD August 9, 2013) is a lesson to any plaintiff, be it a government agency or an individual in how not to handle disparate impact cases. (Click here to read the opinion).
Factual and Procedural History of the Case
Freeman (a nationwide convention, exhibition and corporate events marketing company) denied employment to Katrina Vaughn based on her credit history, and Ms. Vaughn filed a discrimination charge on January 17, 2008. The EEOC filed suit on September 30, 2009. It alleged that since February 2001 Freeman engaged in a pattern or practice of discrimination against African-Americans in credit, and against African-Americans, Hispanics and males in using criminal background checks that disproportionately impacted these groups, and were not job-related or consistent with business necessity. After dismissals based on procedural issues, the “credit class” consisted of 51 African-Americans allegedly unlawfully excluded from employment between March 23, 2007 and August 11, 2011. The “criminal class” was comprised of African-Americans and males allegedly unlawfully excluded from employment between November 30, 2007 and July 12, 2012.
The case focused primarily on the expert report offered by the EEOC to support its disparate impact claims. Freeman moved to strike the expert’s report and testimony, on December 18, 2012, based on inaccuracies in the underlying data. Three days later, Freeman moved for summary judgment, arguing that since the EEOC failed to present reliable statistical evidence, the EEOC could not show disparate impact. Judge Titus agreed, feeling he had “no choice” but to disregard Dr. Murphy’s disparate impact analysis, calling it “distorted”, “both over-inclusive and under-inclusive”, and, “an egregious example of scientific dishonesty”. Judge Titus also found the report to be “based on unreliable data”, “rife with analytical error”, and contained a “mind-boggling number of errors”, such that it was “completely unreliable”. For example, Dr Murphy had access to information about more than 58,000 applicants, but focused on only about 2,000 applicants, most of whom were not even connected with the time periods that were the subject of the case.
The Court’s Reasoning
Aside from the extremely flawed expert analysis, Judge Titus rejected the EEOC’s argument that it had no specific duty to identify the specific aspect of Freeman’s policies causing the supposed disparate impact, and need only rely on the policy in general to support its claims. While some uses of credit and criminal background checks may be discriminatory and may violate Title VII, Judge Titus ruled that the EEOC had the burden of applying reasonable, reliable expert testimony and “statistical analysis that demonstrates the disparate impact stemming from a specific employment practice before such a violation can be found”.
A plaintiff must therefore show that a certain class or classes of applicants is disproportionately and adversely impacted by a particular employment practice based on their race, color, religion, sex or national origin. A plaintiff does so by showing statistical disparities between the number of protected class members in the qualified applicant group and those in the relevant segment of the workforce. Only then does the burden shift to the employer to show that the practice is job-related and/or consistent with business necessity. Judge Titus specifically stated that a plaintiff must prove the discriminatory impact, and that “statistics alone are not enough”.
What Freeman Did Right
Freeman also succeeded because of its multi-faceted criminal background check review process that incorporated the EEOC’s recommendation of targeted and individualized review. The primary aspects of Freeman’s policy that withstood scrutiny were:
1. The application asked about guilty plea and conviction information, with lying being a bright line violation, resulting in denial of employment;
2. Freeman decided to offer the job before conducting the background screening;
3. Freeman reviewed warrants and gave applicants a reasonable amount of time to resolve them. Applicants who could not resolve the issues were not likely to be hired;
4. Freeman only considered convictions or releases from prison occurring within the last seven years;
5. Freeman evaluated offenses in terms of job-relatedness;
6. Crimes were rated. Violent crimes, destruction of private property (employees handled Freeman’s and vendors’ property) sexual misconduct, felony drug convictions and job-related misdemeanors were the highest-concern crimes;
7. Upper HR officials reviewed recommendations of “not to hire”;
8. Freeman restricted use of credit checks to those handling consumer credit cards, money and customer’s property of value.
In addition, Freeman articulated the following goals:
1. Avoid exposure to negligent hire/retention lawsuits;
2. Increase security of its assets and employees;
3. Reduce liability from inconsistent hiring or screening practices;
4. Proactively reduce the risk of employee-related loss;
5. Mitigate the likelihood of adverse incidents occurring on their property that could jeopardize employee or consumer confidence.
Freeman clearly thought about the specific jobs, and its “business necessities” and made a concerted effort to develop and implement policies and procedures consistent with and narrowly tailored to those goals.
Some Observations (Take Away)
The decision in this case, while a significant setback for the EEOC, does not reject challenges to the use of credit or criminal background checks by employers. The decision focused primarily on the EEOC’s failure to produce sufficient evidence to support its disparate impact claim, and perhaps secondarily on the fact that Freeman had a well-thought-out, narrowly tailored process that supported its goals.
Disparate impact cases can be costly for both sides. Proof usually requires qualified expert witnesses who can analyze evidence, prepare accurate reports, and testify credibly, which Dr. Murphy failed to do on behalf of the EEOC. Therefore, Freeman “only” had to successfully attack the EEOC’s inability to produce reliable, statistical analyses to support its disparate impact claim. The EEOC not Freeman, had the burden of proof. Winning after expert discovery, however, may be small, if any, consolation for an employer.
Disparate impact cases, decided in federal court, are instructive if not also binding on the OFCCP. Federal contractors should therefore take note of and learn from this ruling. Generally the more sophisticated the process, the more difficult for the EEOC, OFCCP or state EEO agency to pursue a disparate impact claim.
What Employers Can Learn
Although the EEOC suffered a serious defeat, Judge Titus’ ruling does in no way affects the EEOC’s Enforcement Guidance on the use of criminal background (and credit) checks in the hiring process. Therefore, employers should start by taking the following steps:
1. Click here and download the EEOC’s Enforcement Guidance, focusing on its Best Practices section at the end;
2. Consider goals and business necessities and job functions for which they hire (Aligning requirements of both business and jobs);
3. Develop and implement policies and procedures consistent with job requirements, business necessities and the EEOC Enforcement Guidance.
For more information, please contact Ahmed Younies at 714-426- 2918, x. 1 or [email protected]
Re-evaluating long-standing beliefs, behaviors, and institutions, companies need to continue moving forward with attracting talent, developing their workforce, forming productive teams, maximizing innovation, and tackling internal and external challenges.
Key approaches in this endeavor include maximizing thoughtful awareness and deepening understanding of beliefs and tendencies that occur below the surface level of individual awareness. In other words, astute organizations realize that a holistic diversity and inclusion program must include information, explanations, and directions toward addressing unconscious biases and microaggressions.
Often, we don’t realize that implicit biases can sometimes result in microaggressions. In this course, we will demonstrate how subtle or unintentional comments and actions towards others can have a negative impact not just on individuals but on the overall culture of an organization, too.
AAP A01 – Understanding AAP Requirements
Date TBD
“Written AAP” is one of the top violations cited by the OFCCP, implying a great need for companies under the OFCCP’s jurisdiction to really get a handle on AAP creation. Part 1 is designed to overview the foundation of written Affirmative Action Plans and their necessity, focusing primarily on the background and structure of an Affirmative Action Plan.
AAP A02 – Organizational Profile and Job Group Analysis
Date TBD
This webinar is designed to provide Supply and Service federal contractors with best practices for performing an organizational profile and job group analysis.
AAP A03 – Determining Availability
Date TBD
This webinar discusses the two factors federal contractors are required to consider in determining availability, as well as typical data used when calculating availability.
AAP A04 – Good Faith Efforts
Date TBD
This webinar will discuss how a company can determine existence of a potential gap in their actual hiring relative to availability of the protected groups, and how to take corrective actions through ‘good faith efforts (GFE)’ in their talent acquisition process. Details of such GFE will be covered with details of how to attract, reach and manage candidate flow of the gap areas, and how to maintain records of such GFE for successful OFCCP audits.
RECORDKEEPING R01 – Maintaining Applicant Flow Data
Date TBD
This webinar is designed to discuss maintaining applicant flow data, both for the internet applicant and traditional applicant definitions. The presentation will cover the maintenance of employment records in paper and electronic format, as well as accessibility of online systems.
COMPENSATION P01 – Analyzing for Compensation Data
Date TBD
This webinar is designed to address compensation regulations and enforcement. It also discusses case laws and related settlements, along with the best practices to mitigate risk of pay disparities.
FAAP F01 – Understanding Functional Affirmative Action Plan
Date TBD
Is FAAP the right AAP for you? Executive Order 11246, Section 503 and VEVRAA allow a contractor to set up their AAPs based on company functional or business units. This option allows the contractor to analyze data by the various operations rather than location/establishment, which may align more closely to their corporate structure. Learn more about the new FAAP Directive and how to comply. You will learn requirements to qualify for FAAP, industries using FAAPs, advantages of using FAAPs, FAAP update, and more.
C01 – Requirements for Construction Contractors
Date TBD
This webinar will provide an overview of what is expected from construction contractors during an OFCCP Evaluation. The Office of Federal Contract Compliance Programs (OFCCP) is part of the U.S. Department of Labor. The OFCCP is responsible for ensuring that employers doing business with the Federal government comply with the laws and regulations requiring nondiscrimination. Construction contractors or subcontractors have a construction contract with the federal government, and are thus subject to evaluations. In summary, this webinar will provide attendees with the “16 steps” that should be taken by construction contractors to comply with federal regulations.
C02 – What to Expect During an OFCCP Construction Evaluation
Date TBD
This webinar will provide an overview of what to expect during an OFCCP construction evaluation. The Office of Federal Contract Compliance Programs (OFCCP) is part of the U.S. Department of Labor. The OFCCP is responsible for ensuring that employers doing business with the federal government comply with the laws and regulations requiring nondiscrimination. When construction contractors face an evaluation, they will first receive a scheduling letter from the OFCCP. This webinar aims to prepare attendees for the events following the scheduling letter.
Workplace Violence
Date TBD
This webinar includes two topics that are important for business leaders and employers to educate themselves on an unfortunate, yet very real trend in the country. Join us as we review Workplace Violence, specifically causes and signs to look for, pre-attack indicators, ways that you can help to de-escalate situations and keep your workplace safe, and how to prepare and handle difficult conversations. Next, we will review history cases of active shooter incidents and understand the underlying details from investigators and law enforcement officials. Included is an examination of motivators and tactics used by active shooters. We will then review suggested reactions if you find yourself in an active shooter situation (Run, Hide, or Fight), including interacting effectively with law enforcement.
Promoting a Respectful Workplace: Preventing Harassment and Bullying
Date TBD
Harassment and abusive behavior training has become a high priority for HR practitioners, company leaders, and their organizations. Recent headlines and hashtags underscore the need to replace the old model, which trained employees on laws and rules, with a fresh approach that emphasizes what matters most – ensuring employees know how to make the right decisions and take the right actions if they experience or witness harassment, discrimination, or other misconduct in their places of work.
In this dynamic society, anti-harassment training is essential for educating employees and leaders on what is acceptable and unacceptable workplace behavior. Even beyond this, employers need to reinforce the message that it is every individual’s responsibility to speak up and report incidents of harassment and retaliation.
Training employees on how to recognize and respond to situations that can lead to harassment, bullying and related behaviors – from the obvious to the subtle – is one of the most effective ways to foster a positive, respectful workplace. Training can also help organizations avoid costly harassment complaints that can damage their reputation, recruiting, retention and bottom line.
Filing for EEO-1 & Vets 4212
Date TBD
EEO Reports / Surveys:
The EEOC collects workforce data from employers with more than 100 employees (50 employees threshold applies to federal contractors). Employers meeting the reporting thresholds have a legal obligation to provide the data; it is not voluntary.
You will learn:
Filing for the EEO-1
Latest deadline for filing the 2018-EEO-1
Other types of EEO reports
VETS-4212 Federal Contractor Reporting:
According to 38 U.S. Code, Section 4212, codified at 41 CFR Section 61-300, respectively, contractors and subcontractors who enter into, or modify a contract or subcontract with the federal government, and whose contract meets the criteria set forth in the above legislation/regulations, are required to report annually on their affirmative action efforts in employing veterans. VETS has a legislative requirement to collect, and make available to OFCCP, reported data contained on the VETS-4212 report for compliance enforcement.
You will learn:
Filing for Vets-4212
Deadline for filing the 2018 & 2019 Vets-4212
Background Checks
Date TBD
“Ban the box” continues to occupy a large portion of recruiting discussions, even in municipalities that haven’t enacted these regulations. It makes sense for employers to reconsider their hiring practices to include the largely-untapped labor market of individuals with criminal histories. Many employers don’t know if and how to expand their recruiting efforts to include this segment. This course is designed to expand your knowledge about this topic and provide you with specific guidance to develop or modify your existing hiring processes.
After taking this course, you’ll have a better understanding of the labor market and how fair chance hiring regulations affect you as an employer, even if you don’t currently need to comply with these municipal regulations. You will have key knowledge to help ensure that your hiring practices incorporate the processes and actions needed to practically deal with candidates who have criminal histories. You will also understand why expanding your hiring practices to those with criminal histories can help you to continue to build a skilled workforce for your company’s success.