Use of criminal background checks requires compliance with the technical requirements of the Fair Credit Reporting Act  and has spawned a large number of class actions and individual claims under the FCRA.  However, use of background checks has also been under siege by the states and localities that have been enacting “ban the box” requirements that prevent inquiry into criminal background checks until the employment process has reached an advanced stage, and by the Equal Employment Opportunity Commission (EEOC), which has brought suits against employers alleging that use of background checks can have a disparate impact on protected groups.  A recent decision, however, indicates that the EEOC’s attacks on use of background checks may be floundering.

In EEOC v. Freeman, the EEOC sued Freeman for alleged violations of Title VII on two theories: (1) that Freeman’s criminal background checks had a disparate impact on black and male job applicants; and (2) that Freeman’s credit checks had a disparate impact on black job applicants.  On February 20, 2015, the Fourth Circuit affirmed the district court’s decision to exclude the EEOC’s expert report and, without the expert report, grant summary judgment to Freeman.

To support its case, the EEOC produced an expert report, and several supplementations, indicating that Freeman’s background check policies had a disparate impact on certain classes of applicants.  The district court excluded this report, however, concluding that it omitted vast swaths of relevant data and included a “mind boggling number of errors and unexplained discrepancies.”  Although the EEOC attempted to correct its expert report through supplementation, the district court found that the supplementations failed to make corrections and even introduced fresh errors.

In its decision, the Fourth Circuit affirmed the district court’s grant of summary judgment solely on the basis that the district court did not abuse its discretion in excluding the expert reports as unreliable.

Judge Agee wrote a significant concurrence in order to separately “address [his] concern with the EEOC’s disappointing litigation conduct.”  After discussing the reasons that the EEOC’s expert testimony was “fatally flawed,” Judge Agee dedicated a portion of his concurrence to admonishing the EEOC to wield its power carefully.  According to Judge Agee, the EEOC must balance its responsibilities to the employee with its responsibilities to the employer to “cease enforcement attempts after learning that an action lacks merit.”  Judge Agee found the EEOC failed to live up to this second responsibility in the Freeman case.

As the EEOC continues to assert claims against employers under Title VII, the Fourth Circuit’s decision indicates that courts will continue to hold the EEOC to its heavy evidentiary burden.