EEOC Settles Background Check Suit with BMW, Leaves Employers Still Without Guidance

Earlier this week, it was announced that BMW Manufacturing Co. and the EEOC had entered into a Consent Decree, resolving one of three high-profile suits over a company's use of background checks in the hire process that had been pending since 2013. The settlement requires BMW to pay $1.6 million to roughly 56 claimants and other applicants to be identified and provide job opportunities to rejected applicants. The deal was approved Tuesday, September 8th by the South Carolina federal judge overseeing the litigation.

The EEOC alleged that BMW's former process for checking applicants' criminal histories had a disparate impact on African-American applicants, i.e. that it disproportionately screened out more African-American candidates. The case was all but headed for trial after hard-fought discovery battles that were regularly reported on in the legal press. BMW defended the case arguing that it had a business necessity to impose background checks on employees, as well as employees of vendors and contractors with access to the plant given its status as a member of the Customers Trade Partnership Against Terrorism, among other defenses.

The parties are right that a settlement now brings certainty and avoids the time and expense of a trial, which can take a heavy toll both in terms of monetary expense and a distraction from the business operations. The practical effect of negotiated settlement in the labor and employment field, however, is a delay in getting what management has been looking for: clearer guidance from the courts on when the use of background checks may actually violate the law rather than just taking the EEOC's word for it. What remains clear is that companies that have not already reviewed and assessed their background screening practices should do so immediately, particularly now in light of this seven figure settlement.

Questions? Contact Aimee Delaney of Hinshaw's Chicago office or any other Hinshaw employment attorney.