January 18, 2012

Pepsi popped for $3.1M in background check case

Posted in Application Process, Color, Race tagged , , , , , , at 12:24 pm by Tom Jacobson

Background checks are very important tools during the hiring process, but as Pepsi Beverages (formerly Pepsi Bottling Group) recently learned, asking the wrong questions can be discriminatory — and expensive.  In a January 11, 2012 press release the EEOC reported that Pepsi has agreed to pay $3.13 million to settle a case challenging its former background checking policy.

At issue was Pepsi’s policy which rejected applicants who had been arrested and were pending prosecution.  The policy also denied employment to applicants who had been arrested or convicted of certain minor offenses.  According to the EEOC, this policy disproportionately excluded black applicants from permanent employment and that it therefore violated Title VII of the Civil Rights Act of 1964.

In addition to the monetary settlement, Pepsi also changed is background checking policy, and it agreed to offer employment opportunities to victims of its former policy, supply the EEOC with regular reports on its hiring practices, and conduct Title VII training for its hiring personnel and managers.

Although using arrest and conviction records to screen applicants is not per se illegal under Title VII, it can be when it is not relevant to the job. Therefore, employers are urged to use them cautiously.

According to Julie Schmid, Acting Director of the EEOC’s Minneapolis Area Office, “When employers contemplate instituting a background check policy, the EEOC recommends that they take into consideration the nature and gravity of the offense, the time that has passed since the conviction and/or completion of the sentence, and the nature of the job sought in order to be sure that the exclusion is important for the particular position.  Such exclusions can create an adverse impact based on race in violation of Title VII.” Schmid added, “We hope that employers with unnecessarily broad criminal background check policies take note of this agreement and reassess their policies to ensure compliance with Title VII.”

For more information about this article, please contact me at taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2011 Swenson Lervick Syverson Trosvig Jacobson Schultz, PA

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1 Comment »

  1. […] While Title VII does not expressly prohibit the use of such records when making employment decisions, the use of those records will be unlawful discrimination if it disproportionately impacts classes of individuals who are protected by Title VII. One example of this is a recent case where Pepsi agreed to pay $3.13 million to settle a case challenging its former background checking policy (see Pepsi Popped for 3.1M in Background Check Case). […]


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