EEOC suit: Employers auto-rejecting applicants who fail background check
The EEOC is challenging auto-rejection practices amid a national reckoning over the personal and societal costs of unemployment for those who served time.
In the April lawsuit, the EEOC asserts that Sheetz’s auto-rejection practice disproportionately discriminates against Sheetz job applicants who are Black, American Indian or multiracial.
The agency faults Sheetz for taking no additional steps to evaluate the rejected candidates, such as inviting them to provide additional information about their criminal matters, or forwarding the application to a manager for further consideration.
Employment attorneys expect it to be a template for many others, given the agency’s pledge to focus on “eliminating barriers in recruitment and hiring,” one of six subject-matter priorities delineated in the agency’s 2024-28 strategic enforcement plan released last year.
“Employers can reasonably expect that the agency is going to bring more large-scale, systemic actions across the country in this area,” said Christopher DeGroff, a partner at Seyfarth Shaw in Chicago.
The EEOC is challenging auto-rejection practices amid a national reckoning over the personal and societal costs of unemployment for those who served time. The National Employment Law Project estimates that more than 55,000 people each year are released from prison and return to the community.
One-third of those released from prison between 2010 and 2014 could not find employment at any point during the period, according to a study by the U.S. Department of Justice.
In 2015, the Obama administration ordered federal agencies to delay inquiries into applicants’ records until later the stages of hiring. Today at least 37 states and 150 cities or counties have some sort of second-chance “ban the box” policies requiring employers to consider a candidate’s qualifications first, “without the stigma of a conviction or arrest record,” the NELP said.
Still, the EEOC case against Altoona, Pennsylvania-based Sheetz may seem surprising given that its rejection rates for minorities with criminal records tracks along broader conviction trends.
Black job applicants failing a criminal history screening at Sheetz were denied at a rate exceeding 14.5% compared with whites, at about 8%.
The EEOC even acknowledges in the suit that Sheetz’s screening outcomes are consistent with published statistics, “which indicate that Black persons throughout the United States … are subject to arrest, conviction, and incarceration at significantly higher rates relative to White persons.”
Sheetz, with 680 stores in six Appalachian states, did not respond to a request for comment. However, a spokesperson told Convenience Store News the company “does not tolerate discrimination of any kind.”
“We take these allegations seriously. We have attempted to work with the EEOC for nearly eight years to find common ground and resolve this dispute. We will address the claims in court when the time comes,” the spokesperson said.
Although the EEOC does not allege Sheetz was motivated by race when making hiring decisions, it argues that the retailer’s hiring practices violate provisions of Title VII that prohibit “disparate impact discrimination.”
“This is an interesting case to watch, particularly for employers with retail operations, and may shape the way employers approach criminal background checks and internal policies related to criminal background checks in the hiring process,” Jennifer Sun Park, a shareholder at Dentons in Pittsburgh, said in a client note.
Like many employers, Sheetz obtains applicant criminal information through questions on the application and via a criminal background check conducted by an outside vendor.
According to the EEOC suit, “defendants refuse to hire all job applicants who they deem to have failed their criminal justice history screening.” In other words, consideration ends at that point.
The EEOC faulted Sheetz for not following up with applicants who failed the background check to learn more, for not having a policy stipulating that a manager or other company official conduct a further review, for not telling applicants the reason for the denial, and for lacking any process to appeal or receive reconsideration.
Curiously, employers are not required under Title VII to conduct individual assessments or to reach out to candidates to gather information before making a decision, said Pamela Devata, a partner at Seyfarth Shaw.
Rather, it stems from 2012 EEOC guidance regarding conviction and arrest records. The guidance recommends that employers consider the nature of the crime, the time elapsed since the conduct occurred and the nature of the specific job in question.
It also recommends in some cases that an individualized assessment be performed.
In addition, the guidance also recommends employers give an applicant excluded “the opportunity to show why he should not be excluded.”
Devata said that despite the emergence in recent years of second-chance laws limiting what employers can ask about criminal backgrounds, it generally is not illegal to inquire about criminal history after granting a conditional offer.
Indeed, an employer may consider asking if there might be mitigating circumstances or other information relating to the facts and circumstances surrounding a conviction at the time it asks an applicant about criminal history.
An employer might also consider the applicant’s job history in prior or subsequent years and take into consideration how much time has passed since a conviction, for example, by looking at the application, resume or criminal background report.
These considerations may allay concerns and lead to hiring an employee qualified for the position, Devata added.
Related: EEOC’s final rule for the PWFA clarifies employer responsibilities
DeGroff suggests that some employers consider privileged self-audits of their hiring policies, practices and trends, conducted by in-house or outside counsel. “Understanding an employer’s own data can help business leaders avoid litigation surprises later.”
Roughly 19 million Americans, including one-in-three Black men, have a felony conviction, which can be a barrier to employment and a loss of a potential resource for an economy “threatened by demographically challenged workforce growth,” Fifth Third Bank Chief Economist Jeffrey Korzenik said in a piece for Stanford Social Innovation Review.
Korzenik, author of “Untapped Talent,” has documented successful second-chance hiring initiatives, including one at Ohio manufacturer JBM Packaging. The company partnered with community groups to get recently released convicted felons back into the workplace.
Such hiring so soon after prison release “requires a specific model of targeted recruiting and supportive employment to be a viable business strategy,” he wrote