EEOC SETTLES WITH PEPSI ON ALLEGED DISCRIMINATION BASED ON BACKGROUND CHECKS

by Art Gutman Ph.D., Professor, Florida Institute of Technology

The EEOC announced on 1/11/12 that Pepsi Beverages has agreed to a 1.3 million settlement to head off litigation (see http://www.eeoc.gov/eeoc/newsroom/release/1-11-12a.cfm). Most of the money will be divided among black applicants who applied for positions, with a portion reserved for administration and claims expenses. Additionally, Pepsi agreed to monthly reports on its hiring policies, to hire class members in their top three job location preferences, and to report to the EEOC on a regular basis its new background check policies, which were initiated prior to the actual settlement.

According to the EEOC, Pepsi used arrest and conviction criteria, which adversely impact blacks and therefore, are illegal under Title VII. More specifically, the EEOC noted:


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.



According to the report, the EEOC began its investigation in 2007 after an applicant filed a charge with the EEOC, claiming for an arrest even though his case had yet to be prosecuted. Based on its investigation, more than 300 individuals were illegally excluded between 2006 and 2010. Apparently, Pepsi also excluded applicants guilty of minor offenses bearing no relationship to the requirements of the at issue jobs. Pepsi also agreed to hire class members in their top three job location preferences, and to report to the EEOC on a regular bases on its new background check policies, which were initiated prior to the actual settles.

A Pepsi spokesman said “the company decided to enter into the conciliation agreement because it valued its relationship with EEOC and because it is committed to diversity and inclusion.” What company would say otherwise.

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