OFCCP Issues Directive Cautioning Contractors on Hiring Exclusions Based on Criminal Records

February 8, 2013

Federal contractors and subcontractors with blanket hiring policies and practices that exclude applicants from employment based on their criminal history records will likely run afoul of federal antidiscrimination laws, according to a new directive from the Department of Labor’s (DOL) Office of Federal Contract Compliance Programs (OFCCP).  OFCCP’s Directive 306, issued on January 29, 2013 and effective immediately, addresses the nondiscrimination obligations of federal contractors with respect to the criminal history of applicants and employees.

Directive 306 cites Department of Justice (DOJ) testimony and statistics indicating that approximately one in three Americans has a criminal history, and Pew Center research documenting how Hispanic and African-American men comprise a disproportionate percentage of incarcerated persons.  Because of these racial and ethnic disparities, the Directive states, employment policies that exclude people based on the “mere existence of a criminal history” without accounting for “the age and nature of an offense,” will likely “unjustifiably restrict the employment opportunities of individuals with conviction histories,” and violate laws prohibiting discrimination on the basis of protected characteristics such as race and national origin.   

The Directive highlights the guidance issued by the Equal Employment Opportunity Commission (EEOC) in April 2012 regarding the use of criminal records in employment decisions.  EEOC guidance explains that antidiscrimination laws apply to both disparate treatment of protected groups and facially neutral policies that have a disparate impact on protected groups.  Although individuals with criminal records do not make up a protected group under either Title VII of the Civil Rights Act of 1964 or Executive Order 11246, OFCCP said contractors may engage in unlawful disparate treatment by favoring Caucasians with criminal records in comparison to similarly situated African-Americans with the same or similar records.  In addition, the OFCCP explained that unlawful disparate impact may lie where a contractor uses a facially neutral policy to exclude job candidates with arrest or conviction records, by including “no criminal background” or “clean criminal background” requirements in job postings. 

The OFCCP, citing EEOC guidance, further stated that if an employer’s policy regarding employee and potential employee criminal history has a disparate impact on a protected group, then the employer must show that the policy is “job related and consistent with business necessity.”  Three factors are relevant to whether such a policy is related to the job and consistent with business necessity:  (1) the nature and gravity of the offense, (2) the time that has passed since the offense, conviction or sentence, and (3) the nature of the duties and essential functions of the job in question. 

The Directive recommends that federal contractors look to the EEOC’s list of best practices to avoid liability for impermissibly discriminating on the basis of criminal history.   To avoid potential liability, among the best practices, the EEOC recommends that employers make individualized assessments of candidates’ criminal records and that screening procedures be narrowly tailored to the specific position in question.  The OFCCP Directive further recommends that criminal convictions not be the subject of inquiry in an initial job application.  Later inquiries may be permissible if they are sufficiently relevant to the job at issue, and the information involved is kept confidential. 

Lastly, the Directive cited to a May 2012 training and employment guidance letter, TEGL 31-11, issued by the DOL’s Employment and Training Administration and Civil Rights Center.  The TEGL advises entities receiving federal financial assistance to operate the American Job Center network and other public workforce system job banks to promote employment opportunities for formerly-incarcerated individuals and other individuals with criminal records.  All contractors using covered entities, whether required by the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 or not, should be aware of new procedures outlined in the TEGL and noted in the OFCCP Directive.  For instance, covered entities are required to use a system that identifies employer vacancy announcements that include hiring restrictions based on arrest or conviction records.  When such an announcement is identified, the Directive states, the entities are required to send a notice to the employer “that gives the employer an opportunity to remove or edit the vacancy announcement.”  In addition, a job announcement that includes a criminal history exclusion may continue to be posted only where it includes a job seeker notice “explaining that the exclusions in the posting may have an adverse impact on protected groups and informing them that individuals with criminal history records are not prohibited from applying for the posted position.”

In light of OFCCP’s recent guidance, contractors should review their hiring policies and practices with counsel to ensure that they are compliant with applicable federal, state and local antidiscrimination laws.

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