Court Sanctions EEOC in Staffing Firm Lawsuit

A Michigan federal court recently issued a stinging rebuke of the U.S. Equal Employment Opportunity Commission’s aggressive litigation practices, ordering the agency to pay more than $750,000 in attorneys’ fees, expert witness fees, and court costs to staffing firm Peoplemark Inc., which is not an ASA member.
After three years of investigation, the EEOC sued Peoplemark for an alleged blanket policy against hiring candidates with criminal convictions. The agency claimed that this policy violated Title VII of the Civil Rights Act of 1964 by having an unlawful disparate impact upon African-American job seekers.
According to the court, Peoplemark had no such policy—a fact the EEOC knew or should have known early in the litigation. Peoplemark produced evidence showing that it actually had hired 22% of the 286 people identified by the EEOC as allegedly having suffered discrimination.
“Given this reality,” the court said, “the EEOC should have acted to terminate the lawsuit promptly. It did not. Instead, it continued to let it drag on.” The court further commented, “This is one of those cases where the complaint turned out to be without foundation from the very beginning. Once the EEOC became aware that its assertion that Peoplemark categorically refused to hire any person with a criminal record was not true, or once the EEOC should have known that, it was unreasonable for the EEOC to continue to litigate on the basis of that claim, thereby driving up the defendant’s costs, because it knew it would not be able to prove its case.”
The court’s rebuke comes on the heels of the EEOC publicizing the lawsuit. During an EEOC public meeting on employers’ use of criminal records, commissioner Stuart Ishimaru cited the agency’s decision to sue Peoplemark.
Whether the sanctions against the EEOC will chasten the agency remains to be seen. The EEOC has aggressively pursued employers over the use of criminal records during recent years. Although the agency has said for several years that it would issue new guidance to employers regarding the use of criminal backgrounds, it has not yet done so.
As a result, staffing firms must rely on policy guidance issued in 1990, in which the EEOC took the position that an absolute bar to hiring applicants with criminal convictions is unlawful and that a refusal to hire an applicant based on a criminal record can be justified by business necessity only if the following factors are properly taken into account

  • The nature and gravity of the offense or offenses
  • The time that has passed since the conviction and/or completion of the sentence
  • The nature of the job held or sought

The EEOC guidance on considering arrest records in employment decisions is available
Because these factors do not provide a “bright line” test for making employment decisions, staffing firms face a dilemma when it comes to candidates with criminal records. If a firm refuses to hire a particular candidate, it could be sued by the candidate for discrimination. But if a firm places a candidate who later commits a crime at the client’s work site, it could lose the client—or, even worse, be sued by the client for negligent hiring or placement.
This much is clear: Staffing firms should not have blanket policies against hiring candidates with criminal convictions, and neither should clients. To the extent a client has such a blanket policy and a staffing firm complies with it, the firm risks being found to have engaged in discriminatory conduct along with the client.
Stephen Dwyer, courtesy of Staffing Week, American Staffing Association


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