If you own a business, you probably run a background check on all job applicants that you consider hiring in order to ensure safety of the workplace and to get more insight into the character of your potential employee. But is this necessary step in the application process a violation of business law?
Recently Pepsi Beverages and the EEOC (Equal Employment Opportunity Commission) brought this topic to the forefront of business law. Pepsi was running background checks on potential employees and refused to hire anyone who had an arrest record, even if these were only minor offenses. The EEOC stepped in and ruled that this policy affected African Americans strongly and more than 300 African Americans who would have been hired were excluded from job offers because of the policy.
Pepsi was then forced to pay a $3.1 million fine, ordered to revise its criminal background check policy, and pushed to give job offers to the people who were excluded under the previous policy.
This situation highlights that under federal business law, hiring policies cannot have disproportionate impact on minorities. The EEOC also claims that an arrest record is not a useful hiring tool because it doesn’t count convictions and that all people are innocent until proven guilty.
Essentially what this means for your business is that you should not make umbrella decisions about hiring new employees based on a criminal background check but should look at each applicant on a case by case basis to avoid breaking business law and incurring strong penalties.
