The Equal Employment Opportunity Commission has sent a warning to businesses: Conduct criminal background checks at your own risk.
Companies that ask job applicants if they've been convicted of a felony or check criminal histories expose themselves to potential discrimination lawsuits.
"I would suggest to (businesses) that they think long and hard about why they think they need to do a criminal background check," said John Hendrickson, the regional attorney for the EEOC's Chicago district.
The EEOC in April issued enforcement guidance on the matter that is expected to hold significant sway in court. The commission stated that people cannot be denied employment based solely on criminal histories but stops short of banning the use of criminal background checks.
To avoid missteps, the EEOC suggests that companies consider three things: how long ago the crime was committed, the nature of the crime and how the crime might relate to the job. The agency also said companies should also give ex-offenders a chance during job interviews to explain conviction circumstances as well as rehabilitation efforts.
"Employers should record and document the justification for their employment decisions when they are making the decision with someone with a criminal history," said Jeff Nowak, a Chicago labor and employment attorney.
Sometimes there are good business reasons not to hire people with certain criminal records.
For example, if a job applicant is a convicted embezzler, the company would have a strong case not to hire that person in a financial capacity. But the person might be qualified to hold jobs that don't deal with money.
Even before the guidance was issued, companies were put on notice that they could be vulnerable to paying damages to people for using their criminal history background against them. In January, Pepsi was ordered in a court case to pay $3.13 million to black applicants who had been denied work because of past arrests or minor convictions. As a result, Pepsi revamped its hiring procedures.
A 2007 court case triggered the EEOC to look at the issue. In the case, Douglas El claimed he was unjustly fired when his employer learned about a 40-year-old second-degree murder conviction. While an appeals court upheld his dismissal, the court asked the EEOC to provide a legal analysis and updated research on the impact of using criminal records in hiring decisions.
The EEOC found that significantly more African-American and Hispanic people -- especially men -- are incarcerated, so they are disproportionately affected when companies don't hire ex-offenders.
Employers are being forced to consider: "Do I want to risk ... being sued by the EEOC or risk criminal conduct by future employees that might impact my clients?" Nowak said.
So far, more businesses are opting not to conduct criminal background checks, with 14 percent of businesses reporting this year that they don't do them, a 7 percent increase from 2010, according to the Society for Human Resource Management. In 2012, 69 percent of businesses used criminal background checks for every position, while the rest only use the checks for some positions.
Because of the potential for negligent hiring suits due to employee criminal misconduct, Nowak said businesses should still do criminal background checks.
Some small businesses like Erie-LaSalle Body Shop in Chicago, a 78-year-old family-owned business, mostly rely on intuition when making hires.
Owner Robert Gottfred is glad to interview anyone who shows the initiative to make an appointment.
He does criminal background checks only after he knows he wants to hire someone, as a precaution. His main concerns about prospective hires are involvement in serious crimes such as theft or sexual or physical abuse.
"I use somewhat of my intuition in many cases, sometimes right, sometimes wrong," Gottfred said. "Obviously I'm for the freedom for the employer to act in the best interest of his employees and clients."
While he had not heard of the EEOC's enforcement guidance, Gottfred said he has hired ex-offenders he thought were qualified.
Sometimes people who aren't called back after job interviews never know the reason they've been rejected.
A case in point is William Greene, a 60-year-old with a slew of drug convictions from his youth who five years ago decided to turn his life around. "I promised my mom I'd leave everything alone," Greene said. "She begged me to stop."
Greene worked at two jobs as cook for a few years each and spent almost a year as an assistant to a disabled stroke patient, who was also a friend. He was fired -- unjustly, Greene said -- from his job as a cook in 2010 when new management came in. Since then, he has applied for many jobs but never hears back.
"If you never get a call back, if you don't know, how can you know you're being discriminated against?" Green asked.
The EEOC guidance could mean he'll start getting calls back, or at least explanations, for why he wasn't hired.
Mike Dombrowski, program director at Illinois Manufacturing Foundation, understands Greene's frustration. He helps run a 600-hour training program at the Sheridan (Ill.) Correctional Center to prepare inmates to get jobs after they've served their time. He teaches the inmates specific machining and vocational skills and requires them to attend counseling.
Dombrowski said the deciding factor in recidivism is whether the ex-offender can find a job.
"You give him an education and a decent living wage, and he can stay out of prison," Dombrowski said.
Some businesses, like Chicago's Lou Malnati's, have been hiring felons for years.
The popular Chicago-style pizza chain runs a program that helps train felons to work at the restaurant, Chief Operating Officer Jim D'Angelo said.
Several of D'Angelo's most loyal employees have come from that program, he said.
"I'd say the success of the program is if the individual is ready to change their life," D'Angelo said.
Businesses that haven't already will likely begin to revise policies that bar hiring ex-offenders and assess whether convictions have "a nexus to the job," said Nancy Hammer, senior government affairs policy counsel for the Society for Human Resource Management.
Once businesses do that, she said, they can focus on candidates' central qualities.
"The bottom line, too, is what they're really looking at is skills," Hammer said. "Do you have the right skills? Do you have the right experience? All this other stuff is sort of in addition to that."
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