The $3.13 Million Background Check. EEOC finds that Pepsi’s former use of criminal background checks discriminated based on race

Pepsi Beverages, like many companies, performed background checks on its employment applicants. Pepsi continued performing those criminal background checks until January 2012, when the U.S. Equal Employment Opportunity Commission fined Pepsi $3.13 million for those background checks.

The Equal Employment Opportunity Commission (the “E.E.O.C.”) investigated Pepsi’s background check policy and found that Pepsi failed to hire job applicants who had simply been arrested, but not convicted. The E.E.O.C.’s investigation also revealed that Pepsi’s policy denied employment opportunities to job applicants who had been arrested or convicted of certain minor offenses. Overall, the E.E.O.C. found that the effect of Pepsi’s background check policy unlawfully affected African Americans, and that at least 300 African Americans were excluded from permanent employment with Pepsi because of this background check policy.

The far-reaching implication of this multi-million dollar judgment is that employers cannot maintain a policy of blanket exclusion from employment based on the results of a criminal background check. In fact, the E.E.O.C. has specifically recommended that employers avoid these blanket exclusions. The E.E.O.C. has also taken the position that arrests alone, without convictions, are not probative of criminal conduct.

Employers can still perform criminal background checks on job applicants, but in making a decision whether or not to hire an employee, the employer must analyze (1) the nature of the offense; (2) the time elapsed between the conviction and the application; and (3) the nature of the job. This process should be implemented for every job application in which a criminal background check is conducted and should also be included in every company’s employee handbook or written employment or hiring policies.

You can read the EEOC’s press release here.


One comment on “The $3.13 Million Background Check. EEOC finds that Pepsi’s former use of criminal background checks discriminated based on race

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