BMW Agrees to 1.6 Million Dollar Settlement with EEOC On Its Criminal Background Check Policy

The consent decree was approved on 9/8/15 by Judge Henry M. Herlong of the District of South Carolina and may be viewed here.

A summary of the decree was also issued by the EEOC that may be viewed here.

Briefly, after BMW switched to a new logistics contractor in Spartanburg, S.C., the new contractor performed criminal background checks on all existing logistics employees and changed the criteria previously used by BMW.  BMW previously focused on certain crime categories and had an automatic exclusion policy in those areas.  After the new contractor took over, 100 incumbent employees (80% of total incumbents) were let go regardless of whether convictions were for felonies or misdemeanors. Many of them had worked for BMW for years. The EEOC charged that the background check policy had an adverse impact based on race on behalf of 56 Blacks.  BMW subsequently changed its guidelines.

The settlement stipulates that BMW will pay 1.6 million dollars and will offer employment opportunities to as many as 90 applicants who were previously not hired under the older rules.  BMW will also provide training on the use of background checks and will be subject to reporting and monitoring requirements for the duration of the decree.

I had previously written on the BMW case in an alert dated 1/2/15.  In that alert, I noted that the EEOC reached a settlement with Pepsi ($1.3 million) and that New York State reached a settlement with Bed, Bath, and Beyond.  Although these were victories for the EEOC, I also noted that we won’t know how effective the EEOC guidelines on background checks are until a prima facie case of adverse impact is established and a court gets involved to actually evaluate whether a policy is job related and consistent with a business necessity.  This has yet to happen.  My recommendation, though, remains the same --- stick within the confines of those guidelines, particularly the part about individual treatment of applicants or employees who are flagged.

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

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