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The EEOC probably prefers Coke: Pepsi agrees to pay $3M to settle charges relating to discriminatory background checks

For further evidence that the EEOC is ramping up enforcement efforts related to job applicant background checks, one need look no further than Pepsi.  Pepsi recently agreed to pay more than $3 million to settle EEOC charges alleging that Pepsi’s use of criminal background checks adversely affected more than 300 African American job applicants.  Click here to read the EEOC’s press release on this subject.

According to the EEOC, Pepsi’s background check policy led to Pepsi’s rejection of job applicants who had been convicted of minor offenses even when those convictions were unrelated to the jobs applied for.  Even more troubling, Pepsi relied on its background check policy to reject job applicants who had merely been arrested – but not convicted – of crimes.

The EEOC has long insisted that background check policies that deny employment based solely on arrests – whether they result in conviction or not – likely violate Title VII since these policies can disproportionately affect minorities.  As to criminal convictions, the EEOC recommends that employers who rely on criminal background checks as part of their hiring process take the following factors into consideration:

  • The nature and gravity of the offense;
  • The time since conviction; and
  • The nature of the job applied for.

In light of Pepsi’s hefty settlement payment, employers should review their background check policies to ensure that they comply with the EEOC’s interpretation of Title VII in this regard.  For instance, an employer would almost certainly be justified in denying an applicant with a burglary conviction from working as an in-home service technician.  On the other hand, an employer that rejects a computer programmer applicant based on a DUI arrest 15 years ago may face unwelcome scrutiny.  By taking the EEOC factors into account, employers can help ensure that exclusion of an applicant because of a background check is defensible.