I. INTRODUCTION
The U.S. Equal Employment Opportunity Commission (EEOC), which is responsible for the enforcement of Title VII of the Civil Rights Act, has issued a detailed update of its enforcement guidance regarding the use of arrest and conviction records in employment decisions. The EEOC’s guidance is relevant to banks, as federal law regulates their employment of certain individuals with criminal records, and the guidance directly addresses this issue. The EEOC guidance may be found at www.eeoc.gov by searching for "Press Release 4-25-12."
II. OVERVIEW OF TITLE VII AND CONVICTION RECORDS
Title VII does not prohibit discrimination on the basis of conviction records. Nevertheless, the EEOC identifies two ways in which an employer’s use of criminal records may violate Title VII. First, conviction records may result in “disparate treatment” discrimination by which conviction records are treated differently for an individual in a protected class. Second, an employer’s use of conviction records may have a “disparate impact” against members of a protected class. Disparate impact discrimination occurs when an employer’s “facially neutral” policy has a disproportionately negative impact on those in a protected class.
III. EEOC’S GUIDANCE ON COMPLIANCE WITH TITLE VII
The EEOC’s new guidance focuses on disparate impact. Under this framework, if an employer’s consideration of criminal records, especially as a screening device, has a disparate impact on a protected class, then the employer will be liable under Title VII unless it can demonstrate that its criminal record policy or practice “is job related for the positions in question and consistent with business necessity.” Employers must have specific evidence to justify excluding those with criminal records. Generalized concerns about security will not allow an employer to escape liability. The Guidance goes on to explain methods by which employers can show the job-relatedness of a criminal records policy.
IV. SPECIFIC ISSUES APPLICABLE TO BANKS
The EEOC’s guidance acknowledges that the banking industry is subject to federal requirements prohibiting individuals with certain criminal records from holding particular positions. The guidance specifically notes that federal law requires a ten-year ban on employing individuals in banks if they have certain financial-related convictions, and states that compliance with federal laws and/or regulations is a defense to a charge of discrimination. Thus, banks that properly comply with their legal obligations under federal law regarding the hiring of individuals with certain types of criminal records should not be in violation of Title VII.
However, the EEOC’s guidance specifically notes that to the extent that employers choose to impose conviction records exclusions that go beyond the requirements of federal law, those exclusions would be subject to a Title VII analysis. Therefore, to the extent a bank imposes conviction record exclusions that are more expansive than the requirements of federal law, it must analyze those restrictions to ensure that they comply with Title VII.
Another area of the EEOC’s guidance that should be considered by banks relates to bonding requirements. Bonds frequently include restrictions pertaining to criminal records, and a bank may use an individual’s inability to meet these conditions as the basis for not hiring the individual. Once again, if the bond requirements are more stringent than federal law, and would result in a disparate impact on a protected class of people, the EEOC’s guidance suggests that the bank would have to consider whether such adverse employment action is job related and consistent with business necessity in order to ensure compliance with Title VII.