“Laughable” – That’s The Word A Federal Judge Used To Smackdown The First EEOC Lawsuit Based On Criminal Background Checks….

Posted on August 17, 2013 by sundance

Before getting to the actual outcome of the EEOC lawsuit and the Federal Judge’s ruling we must review the BACKSTORY:

In September of 2012 Newark New Jersey, passed Ordinance 12-1630, “which limits employers’ ability to conduct criminal background checks.” The ordinance went into effect November 18, 2012 and “prevents employers with five or more employees who do business, employ persons or take applications for employment in the City of Newark, from asking applicants about their criminal history.” We wrote about it HERE.

In February of 2013, at the request of the White House, the Equal Employment Opportunity Commission (EEOC) and the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) each determined that employers who use background checks as one of the determinants of whether to hire a prospective employee may be engaging in prohibited discrimination.

These federal agencies claim the use of criminal background checks can lead to a disparate impact on minority job applicants.

According to these government agencies, in order for an employer to avoid claims that using a criminal background check is discriminatory, they must show that excluding applicants based upon criminal history is job-related and consistent with business necessity. And the EEOC for its part is threatening lawsuits against companies which employ background checks.

So the basic principle espoused by the EEOC is that pre-screening employment based on prior criminal record is unlawful – got it? OK, we move forward. Well, with the backstory that is:

The next move was for President Obama to appoint former DOJ Civil Rights Head, Tom Perez, as Labor Secretary. Tom Perez did not just work at the Dept of Justice. Tom Perez was head of the “Civil Rights Division” within the DOJ.In that position he was in charge of the Community Relations Service, the super-secret race-based sub agency affectionately, and ironically, called “The Peacekeepers”.

Both Attorney General Eric Holder and Tom Perez use the Dept of Justice to deliver their perspectives of social justice to the larger population. This is the instruction they both had/have received from the White House. This approach was a policy directive of President Obama.

This is specifically the ideology of considering race first, and behavior or qualifications second. This race-based approach has led to numerous alarming proclamations from various elements within the larger Federal apparatus.

The intended consequences within that apparatus is so alarming, and so troubling, they actually initiated an internal investigation to see how damaging such race-based applications of policy enforcement would be.

That scathing four year internal investigation of the DOJ Civil Rights division itself found the Dept was willfully blind, corrupt – and often engaging in unlawful application of justice policy based only on skin color.

The investigation resulted in a 250 page report that no politically correct and fearful member of congress has been brave enough to address. (read it here)

Summation of back story: President Obama directed various agencies within the government to change rules, and then change the application of laws, to make it easier on a segment of the population, to take advantage of rules created in their favor, based on skin color. He then specifically positioned people within those organizations to deliver a race-based overall agenda.

However, not everyone in government bought in to the race preferential programs they were told to implement. Some were not comfortable with the broad new interpretation of policy based on skin color; the “new national policy”, the “fundamental change” per se’. One person who would not comply was Ondray Harris.

Ondray Harris was a former head of the DOJ Civil Rights Division himself. He ran the Community Relations Service (the CRS) prior to becoming Executive Director of the Public Employees Relations Board in DC.

However, Mr. Harris was not just given vague new rules which he was to apply with a race-based prism; he was specifically told not to hire white people.

Unwilling, and feeling unable to comply with such direct racism, he quit. Mr Harris was quoted as saying: “In some cases, this is the U.S. government taking a stand against some people”. (link)

All of this backstory is to present the larger understanding for how this Federal Judge just ruled in EEOC v FREEMAN COMPANIES:

“Laughable”. “Unreliable”. “Mind Boggling”.

(From IQ – Human Resources) Those are the words Judge Roger Titus of the U.S. District Court in Maryland used when he dismissed the Equal Employment Opportunity Commission’s (EEOC) case against Freeman Companies for what the commission alleged as discriminatory hiring practices related to Freeman’s use of criminal background checks andcredit reports. I’ve included a copy of Freeman’s press release for their take on the case because the EEOC didn’t see fit to allow them to respond when they announced “this egregious” case.

The outcome of this case is no surprise; so far the courts have not been swayed by the EEOC’s arguments in similar cases (see EEOC v Kaplan Higher Education). What is shocking is that the EEOC has now suffered another embarrassing setback in their quest to punish employers for their reliance on employment background checks (see EEOC v PeopleMark).

Add the recent efforts of nine state Attorneys General who have taken the EEOC to taskfor what they deem to be misguided and an example of gross federal overreach for their lawsuits against BMW and Dollar General and you begin to see that the courts seem to be protecting employers’ responsible use of employment background checks. I am hopeful that the EEOC will reassess their tactics and focus their energies on real instances of discrimination.

Seyfarth Shaw’s Pam Devata, Gerald Maatman Jr. and Howard Wexler did a remarkable job of explaining the judge’s ruling and the anticipated effect it will have on employers. See below.

Court Dismisses EEOC’s Background Check Lawsuit Based On Its Reliance On “Laughable” And “Unreliable” Expert Report Filled Of “Errors and Analytical Fallacies”

In a scathing opinion issued today in EEOC v. Freeman,No. 09-CV-2573 (D. Md. Aug. 9, 2013), Judge Roger Titus of the U.S. District Court for the District of Maryland dismissed a nationwide pattern or practice lawsuit brought by the EEOC (previously discussed here and here) that alleged that Freeman, Inc., a service provider for corporate events, unlawfully relied upon credit and criminal background checks that caused a disparate impact against African-American, Hispanic, and male job applicants. This decision marks yet another blow to the EEOC’s use of systemic lawsuits to challenge employers’ reliance on background checks in making hiring decisions.

The Court’s Opinion

Prior to analyzing the EEOC’s disparate impact claim, Judge Titus discussed the utility of credit and criminal background checks, as well as the EEOC’s recent targeting of employers for such background checks, including the recent cases it filed against BMW and Dollar General Corp. In discussing these lawsuits, Judge Titus noted that:

“Because of the higher rate of incarceration of African-Americans than Caucasians, indiscriminate use of criminal history information might have the predictable result of excluding African-Americans at a higher rate than Caucasian. Indeed, the higher rate might cause one to fear that any use of criminal history information would be in violation of Title VII. However, this is simply not the case. Careful and appropriate use of criminal history information is an important, and in many cases essential, part of the employment process of employers throughout the United States. As Freeman points out, even the EEOC conducts criminal background investigations as a condition of employment for all positions, and conducts credit background checks on approximately 90 percent of its positions.”

Id. at 2. Turning to the specific case before him, Judge Titus focused on whether the EEOC provided the requisite evidentiary foundation that Freeman’s policies had a disparate impact based on reliable and accurate statistical analysis. Judge Titus held that the EEOC had not made such a showing and spent a majority of his 32-page ruling bashing the “expert” reports prepared by Dr. Kevin R. Murphy, the EEOC’s statistical expert. This is not the first time a U.S. District Court Judge has criticized the EEOC’s reliance on Dr. Murphy’s statistical analysis. As previously reported here, Judge Patricia A. Gaughan of the U.S. District Court for the Northern District of Ohio granted summary judgment to the defense in EEOC v. Kaplan Higher Education Corp. (discussed here) – in part based on the “great concern” she had regarding several aspects of Dr. Murphy’s disparate impact analysis in that case.

Judge Titus pulled no punches in taking the EEOC to task based on the flaws in the data it relied upon in support of its disparate impact claims, labeling Dr. Murphy’s expert reports as: “laughable”; “based on unreliable data”; “rife with analytical error”; containing “a plethora of errors and analytical fallacies” and a “mind-boggling number of errors”; “completely unreliable”; “so full of material flaws that any evidence of disparate impact derived from an analysis of its contents must necessarily be disregarded”; “distorted”; “both over and under inclusive”; “cherry-picked”; “worthless”; and “an egregious example of scientific dishonesty.” Id. at 14-20.

Given Dr. Murphy’s “continued pattern of producing a skewed database plagued by material fallacies” the EEOC left Judge Titus with “no choice but to entirely disregard his disparate impact analysis.” Id. at 24-25. Left without credible expert analysis, Judge Titus held that the EEOC’s case cannot survive as “it is sufficient for Defendants to point out the numerous fallacies in Murphy’s report, which raise the specter of unreliability” to defeat the EEOC’s prima facie case. Id. at 24.

Finally, Judge Titus held that even putting aside the unreliability of Dr. Murphy’s expert reports, the EEOC nonetheless failed to identify the specific policy or policies causing the alleged disparate impact and made “no effort to break down what is clearly a multi-faceted, multi-step policy.” As the EEOC could not demonstrate “which such factor is the alleged culprit” of the purported disparate impact, Judge Titus held that the EEOC failed to meets its prima facie case of discrimination. Id. at 25-28.

Implications for Employers

The defeat of the EEOC’s case is significant. Judge Titus’ decision is yet another favorable opinion for employers who fall victim to the EEOC’s “do as I say, not as I do” litigation tactics, especially in pattern or practice cases that rely heavily on the use of statistical analysis.

While the criticism of Dr. Murphy’s statistical analysis is noteworthy given his use as an expert in many of the EEOC’s larger cases, an equally important take-away for employers is the fact that Judge Titus rejected the EEOC’s argument that it had no duty to identify the specific aspect of Freeman’s policies that caused the alleged disparate impact and could merely rely upon the policy in general in support of its claims – a tactic frequently advanced by the EEOC in these type of cases.

….Mr. Murphy’s database “represents only a distorted fraction of the time period relevant in this case” and that he “cherry-picked” data to support his conclusion of a disparate impact. A report by another expert is “likewise unreliable and inadmissible,” says the ruling.

“The story of the present action has been a theory in search of facts to support it,” concludes Judge Titus’ ruling. “But there are simply no facts here to support a theory of disparate impact resulting from any identified, specific practice of the defendant.

“Indeed, any rational employer in the United States should pause to consider the implications of actions of this nature brought based upon such inadequate data. By bringing actions of this nature, the EEOC has placed many employers in the ‘Hobson’s choice’ of ignoring criminal history and credit background, thus exposing themselves to potential liability for criminal and fraudulent acts committed by employees, on the one hand, or incurring the wrath of the EEOC for having utilized information deemed fundamental by most employers.

“Something more, far more, than what is relied upon by the EEOC in this case must be utilized to justify a disparate impact claim upon criminal history and credit checks. To require less, would be to condemn the use of common sense, and this is simply not what the discrimination laws of this country require,” says the ruling, in granting the defendant’s motion for summary judgment dismissing the case.

Given the magnitude of this decision, it is possible (if not likely) the EEOC will appeal Judge Titus’ decision (link)