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Target agrees to $3.7M settlement over job-screening bias claim

Target Corp. has agreed to pay $3.7 million to settle a lawsuit that accused the retailer's criminal background checks of disproportionately keeping Latinos and black applicants from employment.

The lawsuit, filed in U.S. District Court in New York, claimed that Target (NYSE: TGT) violated Title VII of the Civil Rights Act of 1964, which bans employers from discriminating against employees on the basis of sex, race, color, national origin, and religion.

The suit bases its claims on Target's background checks to screen applicants for prior convictions, "many of which are unrelated to the job sought by the applicant." Target began using criminal background checks in 2001. The lawsuit argued that the checks were unlawful under Title VII because they disproportionately impact Latinos and African Americans.

The plaintiffs in the case were Carnella Times and Erving Smith. Times and Smith are black and both applied for stocker positions at Target in 2006. Both claimed they were denied the positions with the company after background checks uncovered previous convictions.

The Fortune Society Inc. — an organization that supports reentry from incarceration and promotes alternatives to incarceration — was also a plaintiff.

The proposed settlement, which still requires court approval, calls for priority employment for eligible blacks and Latinos who applied at Target after May 11, 2006 and were denied employment because of criminal background checks, or they could seek a reward up to $1,000. It also calls for experts to review Target's current background check policies and determine where changes need to be made. Target didn't admit to wrongdoing.

Of the $3.7 million in the settlement, a $600,000 payment will be made by Target to five nonprofit organizations that provide re-entry support to individuals with criminal history records: A New Way of Life Reentry Project, AccessAbility Career & Education Pathways, The Center for Employment Opportunities, The Fortune Society, Inc., RS Eden Correctional Services and Community Partners in Action.

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The preliminary settlement was filed Thursday. Attorneys representing the plaintiffs included the NAACP Legal Defense & Educational Fund and New York City law firm Outten & Golden.

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