To settle a discrimination lawsuit brought against them by the EEOC in 2013, BMW Manufacturing Co. will pay $1.6 million to a group of 56 former employees and offer them their jobs back at a manufacturing plant located in South Carolina. In the decree the EEOC claims that under Title VII of the Civil Rights Act of 1964 BMW “discriminated against black logistics employees through its application of criminal background check guidelines that had a disparate impact which resulted in said employees being discharged”. The claimants in the suit were employed by UTi Integrated Logistics Inc. which contracted with a BMW manufacturing facility in Spartanburg, SC until BMW contracted with another company in July of 2008. Under BMW’s agreement with the new contractor, all UTi employees were required to reapply for their positions as well as have a criminal background check performed. BMW’s background check policy made no distinction between felony and misdemeanor convictions and explicitly stated it will exclude individuals from employment for convictions related to:

“Murder, Assault & Battery, Rape, Child Abuse, Spousal Abuse (Domestic Violence), Manufacturing of Drugs, Distribution of Drugs, [and] Weapons Violations.”

“any convictions of a violent nature are conditions for employment rejection,” and “there is no statute of limitations for any of the crimes.”

“theft, dishonesty, and moral turpitude.”

The criminal background checks resulted in 88 employees being denied employment with the new contractor.  80% or 70 of those denied employment were black.  The suit stated that each of the claimants was a qualified applicant who had worked in the facility for several years and cites an example of a female claimant who had worked in the BMW plant for 14 years, but was denied employment based on a misdemeanor simple assault conviction from 1990 that was punished with a $137 fine.

BMW has claimed no liability or wrongdoing, but, in addition to the monetary restitution and offer of reinstatement to those employees who were terminated, they are also required to alter their background screening and hiring process.  Some of the key requirements are as follows:

• BMW agrees that they “shall not decline to hire any job applicant or otherwise disqualify any individual from employment in a logistics position because of criminal arrests or charges of any type if such arrests or charges did not result in a conviction”. It is permitted to postpone an offer of employment until final determination has been made on pending charges.

• BMW must conduct an assessment of an individual’s criminal history before taking adverse action. This process includes but is not limited to providing a written notice to the applicant explicitly describing the criminal history which may be the basis for adverse action and offering the applicant an opportunity to discuss their history and fitness for the job.

• BMW must provide 21 days between this pre-adverse notification and final adverse action if the decision is made not to hire after the assessment is complete.  This is a significant departure from standard practice given that most employers, following FCRA guidelines, extend a 5 day grace period between pre-adverse and adverse action.
• BMW must appoint an official to review final decisions before disqualifying an applicant based upon the results of his/her criminal background results.

According to Montserrat Miller, partner at Arnall Golden Gregory, the settlement agreement is noteworthy because (a) the EEOC is mandating that BMW conduct an individualized assessment each time criminal history is considered, and (b) the 21-day time frame.  In her blog Miller states, the EEOC’s enforcement guidance on the use of criminal records does not mandate “individualized assessments”.  She also points out, “employers typically provide 5 business days between providing a job applicant with the pre-adverse action letter under the federal Fair Credit Reporting Act and the adverse action letter (assuming the employer is not going to hire the candidate).  Conceding the point that adverse action notices are different than an individualized assessment and any notice related to that, it is interesting to note the 3 week time period here and what that may mean for employers who may seek to terminate a job applicant due to their criminal history.”

Employers are encouraged to speak to their legal counsel to see how or if this settlement will impact their screening process.

Click the link to read the full text of the decree BMW Consent Decree 2015 09 08