After coming under fire for what critics said was racially biased hiring practices, Target Corp. recently agreed to pay out nearly $4 million and to re-examine how it utilizes criminal-background screening.
A judge signed off on the settlement April 5 in a class-action lawsuit led by individuals with criminal records who were denied employment by Target, an agreement that also addressed a complaint filed by the Equal Employment Opportunity Commission.
The plaintiffs, represented by the NAACP Legal Defense and Education Fund Inc. and Outten & Golden, contended that Target’s criminal-background policies are so broad that they unfairly affect African-American and Latino applicants, who are disproportionately represented in the criminal-justice system, which they said is a violation of Title VII of the Civil Rights Act of 1964. They argued that the company lacks clearly defined guidelines for handling applicants with criminal records, often resulting in those with any prior conviction at all being screened out, even if the offense is not relevant to the nature of the work.
As part of the settlement, Target will work with two industrial- and organization-psychology experts to ensure clear screening guidelines and protocol are in place that dictate that only those with recent convictions related to the job and who could pose a threat would be disqualified.
The company will also fast-track class-action plaintiffs to employment at Target. Cheryl-Lyn Bentley, an associate at Outten & Golden, says it’s unclear how many people will take advantage of that offer, since the overall number of class-action participants has yet to be determined—as the case reaches back to 2006.
“Some people may elect to take advantage of priority hiring and some may not be able to, if they don’t live within a commutable distance to a Target store or if they may now be retired or disabled,” Bentley says. As part of the settlement, Target will pay $3.7 million to a settlement fund, out of which up to $1,000 will be given to each plaintiff who is not interested in employment with Target.
Bentley called Target’s approach toward criminal-background screening “arbitrary.”
“There are no validated practices when it comes to screening individuals with criminal convictions,” she says, noting that such ambiguity opens up the door to discrimination. That applicants were often turned away for years-old convictions that she says would have no bearing on their job performance was a primary problem area.
“Our hope with this case was to show that these individuals are qualified and capable of working and contributing to society,” Bentley says. “That was one of the goals of the settlement and hopefully this will be a good model for other retailers and large companies to open up jobs to thousands of people who have convictions but who are still qualified and capable.”
In recent years, Target removed a question from its standard job application about criminal history and now addresses the issue in the final stages of the pre-employment process, an approach that will continue to be more narrowly defined as a result of the settlement.
Sweeping exclusions for applicants with criminal records are common, says Sarah Flotte, a partner with Michael Best. Such approaches are at odds with the EEOC’s recommendations regarding the need for individual assessments when it comes to candidates with a criminal history.
“That’s not necessarily because companies are trying to evade the EEOC’s guidance,” she says, “but rather, because the guidance is very confusing.”
In a 4-1 vote in 2012, the EEOC updated previous policy statements clarifying the legalities involving criminal-background checks for employment.
The guidance cautioned that use of criminal-history information could be deemed discriminatory in two primary ways: if it results in disparate treatment, or applicants of a certain protected class, such as race or national origin, being treated differently in employment decisions; or disparate impact for an entire class of selected people, which is the aspect tagged by the Target case. According to the EEOC, any employer with a policy that has a disparate impact must demonstrate that exclusions are “job-related and consistent with business necessity” in order to avoid liability.
“Proving that an exclusion is ‘job-related and consistent with business necessity’ is not burdensome,” the EEOC wrote in a statement about the 2012 guidance. The statement went on to note that the employer should consider “at least the nature of the crime, the time elapsed since the criminal conduct occurred and the nature of the specific job in question, and give an applicant who is excluded by the screen the opportunity to show why he should not be excluded.”
The Target case puts employers on notice, Flotte says, that the EEOC “remains focused on rooting out discrimination in background-checks processes.” Companies should use this opportunity, she adds, to ensure they have thorough policies that dictate how applicants’ individual histories will be evaluated.
“Companies have to have a written policy in place that sets forth the baseline for how the company will conduct individual assessments,” she says. “That’s step one.”
Subsequent measures could include the implementation of a “position-specific matrix” to label certain criminal convictions as disqualifiers for individual jobs. “This should not be applied as a bright-line rule, but rather it can be used as a tool in conducting the individual assessment,” Flotte adds.
Another safeguard could be the creation of a group of hiring managers who are specifically trained for, and tasked with, making employment decisions based on background checks and criminal histories. These would be the individuals, she says, who could consider applicants’ statements explaining their record.
Another issue raised in the Target case that Bentley says is pervasive in criminal-background screening was the “falsification” policy—dictating that any applicant who does not fully or correctly disclose a criminal record is disqualified from employment.
Bentley says her firm fields complaints weekly from people who were rejected by employers because the information they offered about their criminal record varied from what employers found on their own screening. She says often people incorrectly think their records were expunged, may not recall the exact year of the conviction or are unsure whether the offense was a misdemeanor or a felony.
“There were a lot of instances [in the Target case] where people were screened out because of this falsification policy, even though it had no real bearing on the person’s capacity to tell the truth. That’s why companies have these, but a lot of times a criminal record can be very confusing and the applicant may not know the details and intricacies.”
That the company typically follows up with its own screening process to check a criminal record, Bentley says, makes that self-disclosure step a redundant complication.
While Target will review and amend its policies, Bentley says, the plaintiffs are eager for the settlement to encourage other companies to do the same.
“We do hope that this case prompts other companies to create models that have less of a disparate impact on African-Americans and Latinos and people with conviction histories,” Bentley says. “Hopefully, other retails will see this model and adopt some form of that. But regardless, we want companies to review their policies and practices in light of this development because there is some liability there.”