Earlier this month, the Equal Employment Opportunity Commission announced settlement of a bitter lawsuit between it and BMW involving hiring practices at the manufacturer’s Spartanburg, South Carolina facility. The lawsuit stemmed from BMW’s requirement that a new logistics contractor perform background checks on all persons used for its work, including employees of the prior contractor who already worked at the facility. The EEOC alleged that BMW automatically disqualified workers based on certain categories of convictions, and that this practice disproportionately impacted African-American employees.

In addition to denying the substantive allegations, BMW attempted to subpoena the EEOC’s own hiring records. The company contended that the agency’s hiring practices were in substance no different than those imposed by BMW on its contractors. The parties eventually settled for $1.6 million. BMW agreed to offer employment opportunities to up to 90 African-American applicants denied employment by the contractor.

This litigation demonstrates the EEOC’s emphasis on the use of criminal and financial background checks in the hiring process. The agency is convinced that such checks unjustifiably suppress the numbers of minority applicants hired, and the EEOC continues to look for circumstances to pursue through litigation. Employers that use criminal or other background checks as part of the hiring process should carefully review EEOC guidelines on those practices. In general, the employer bears the burden of demonstrating the connections between the crime and the job applied for if it uses the checks to screen applicants. Employers should make individual decisions when reviewing criminal histories, and avoid the use of broad exclusionary rules.