When Background Checks Lead to Discrimination

How churches should use screening services to avoid unfair exclusions in hiring.

In response to the numerous cases of child abuse by church employees, most attorneys recommend that churches conduct criminal background checks on employees that work with children and youth. Similarly, churches began requesting credit reports on employees and applicants because of the high rate of reported theft and fears of embezzlement. Unable to resist a good idea, many churches have expanded these checks to include all job applicants. Now the extensive use of background checks may have created a new problem for churches: unlawful discrimination based on race, national origin, and color of skin.

Not too long ago, well-known secular employer paid $3.1 million in financial relief to settle a discrimination claim related to its use of background checks. It also agreed to change its policy regarding criminal background checks.

According to the Equal Employment Opportunity Commission (EEOC), more than 300 African American applicants were denied job opportunities with the company because something appeared in a criminal background check that caused the applicant to be denied a job. According to the EEOC, excluding applicants based on the results of a criminal background check can create a violation of Title VII, the law prohibiting employment discrimination based on race, color, religion, sex, and national origin. The commission says background check results may have a “disparate impact,” meaning a disproportionate negative effect on protected classes of workers as compared to the general population, especially those of race and national origin.

Now the National Labor Relations Board has issued guidance on when, and how, an employer may lawfully use background checks and not create a disparate impact on protected classes of applicants.

How checks could lead to discrimination

In 1991, only 1.8 percent of the general population served time in prison. The U.S. Department of Labor projects that 6.6 percent of those born in 2001 will serve time in prison. This projection indicates that many more Americans are likely to have a criminal history than ever before.

In America, African American and Hispanic individuals (especially African American and Hispanic males) receive far more criminal convictions than Caucasian individuals. In 2008, America’s general population had the following racial composition: 66 percent Caucasian; 14 percent Hispanic; 13 percent African American; and 7 percent other races. In contrast to the general population, the prison population in 2009 had the following racial composition: 39 percent African American; 39 percent Caucasian; 16 percent Hispanic; and 6 percent other.

Assuming current incarceration rates remain unchanged, about 1 in 17 Caucasian men are expected to serve time in prison during their lifetime; by contrast, this rate climbs to 1 in 6 for Hispanic men, and to 1 in 3 for African American men. For men in their early thirties, African American men are about 7 times more likely to have a prison record than Caucasian men of the same age.

Minorities also have lower credit scores than Caucasians. According to a study by the Federal Reserve Bank in 2007, 22.6 percent of Caucasians had a bad credit score, while 65.9 percent of African Americans had a bad credit score and 42 percent of Hispanics had a bad credit score.

Based on the disproportionate presence of minorities with either criminal convictions or bad credit scores, an adverse employment decision based on a background check could mask unlawful discrimination against African Americans and Hispanics. If the background check is used at the beginning of the job search, the church has likely wrongfully excluded qualified African Americans and Hispanic individuals.

No one, including the EEOC, wants churches exposed to liability by hiring a sex offender or a convicted embezzler. The key to the proper use of the background check is using it at the right time for the right position and for the right reasons. When adverse information appears in a background check, the church needs to inquire further into the circumstances surrounding the adverse information.

Building best practices

Here are best practices churches should use when performing background checks:

  1. Tailor your policies. Identify policies and procedures in your employment practices that are likely to have a disparate impact on a protected class of applicants and employees. For example, if your policy rejects an applicant for any criminal conviction, then your policy will have a disparate impact on minorities. Consider modifying your policy based on the specific crime committed (drug offense versus violent crime, felony versus misdemeanor, prison time versus probation), the length of time that has passed since the crime occurred, and the status of any rehabilitation.
  2. Justify the check. Review job descriptions to determine whether the position requires a background check. You should focus on the dangers of particular crimes and the risks in particular positions. You should link the criminal conduct to the essential functions of the job in question. Your policy or practice must be job-related and consistent with the business necessity for criminal background screening. Your policy must demonstrate the relationship between the job and the risks associated with certain criminal convictions. Positions that deal with children, youth, and the elderly should exclude individuals with a history of sexual abuse, violent crimes besides sexual abuse, and crimes that deal with financial integrity. Positions that deal with finances need to exclude those that have been convicted of financial crimes and other crimes that deal with integrity, such as fraud. You should review and follow the Uniform Guidelines on Employee Selection Procedures (http://www.uniformguidelines.com/uniformguidelines.html) that relate certain crimes to certain jobs. Job descriptions should list the justifications for the background check, the crimes that are automatic disqualifying factors, and the amount of time that must pass before these crimes become less of a factor in the employment process.
  3. Decide what “the past” means. The particular facts and circumstances of each case should determine the duration of an exclusion from hiring. Relevant and available information to make this assessment includes, for example, studies demonstrating how much of the risk of recidivism declines over a specified time.
  4. Ask questions at the right time. Do not ask for a background check in the initial application. Do not ask about arrests or charges that were made. When reviewing an applicant’s background report, only consider felony convictions or misdemeanor convictions that are related to the job description. Do not ask about bankruptcies or lawsuits until the job is conditionally offered.
  5. Provide notification. Place a notice on your job application that a criminal conviction or a bad credit score is not an automatic denial to employment.
  6. Be responsible with credit info. Comply with the Federal Fair Credit Report Act. The church should engage a reputable company to conduct the background check. The third-party company should give the church guidance about the church’s responsibilities as user of the report. The company should provide the appropriate forms to use with the applicant. The company should also provide forms and guidance if the report results in an adverse decision. Finally, the company should provide information about how to correct incorrect information. (Some companies report that up to 65 percent of the reports contain material errors.)
  7. Provide a chance to explain. Give the applicant written notice of the potentially disqualifying information and give them an opportunity to explain the conviction and rehabilitation. You may ask whether he or she was not correctly identified in the criminal record, or if the record is otherwise inaccurate. According to EEOC guidance issued in April 2012, other relevant, individualized inquiries include:

    • The facts or circumstances surrounding the offense or conduct;
    • The number of offenses for which the individual was convicted;
    • Age at the time of conviction, or release from prison;
    • Evidence that the individual performed the same type of work, post conviction, with the same or a different employer, with no known incidents of criminal conduct;
    • The length and consistency of employment history before and after the offense or conduct;
    • Rehabilitation efforts, e.g., education/training;
    • Employment or character references and any other information regarding fitness for the particular position; and,
    • Whether the individual is bonded under a federal, state, or local bonding program.

    If the individual does not respond to the employer’s inquiries about his or her background, the employer may make its employment decision without the information.

  8. Get permission to check again. Since the passage of time changes circumstances, you should secure written permission before updating the background check. Criminal background checks and credit reports should be repeated every three to five years. Some vendors offer continuous updating under the terms that you dictate. For example, you may request that you be notified if an employee’s criminal background check adds a new felony conviction, or if his or her credit score drops below a certain score. If the church uses this option, then make sure that the employee has consented to this arrangement.
  9. Narrowly focus the information’s use. Treat the background information as confidential. Do not discuss it with anyone who is not involved in the employment decision. Only use the background information for employment decisions. Do not use it for other church purposes.
  10. Understand agency requirements. The Federal Trade Commission enforces the law governing investigative consumer reports (criminal and credit reports). If the church verifies more than just position, dates of employment and compensation, its notes from those conversations may cause those notes to be also governed by the Fair Credit Reporting Act. Whether the notes or the report from a consumer reporting agency, the church must take care to treat the background report as a private secure document. This means it needs to be located in a locked file cabinet (paper) or have the file encrypted and password protected (electronic). Disposal must also be secure. This means that paper reports must be shredded and electronic reports must be securely deleted so that they cannot be recovered.
  11. Understand state laws. Note that many states also have laws that govern the handling of background checks and consumer privacy. When conducting the background checks, churches should use third-party vendors that are familiar with the laws in the state where the church is located. Churches will need to follow the most restrictive law governing background checks.
Frank Sommerville is a both a CPA and attorney, and a longtime Editorial Advisor for Church Law & Tax.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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