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EEOC Wins $3.13 Million Settlement Against Pepsi Beverages Based on its Discriminatory Use of Criminal Histories in Hiring Facts, lessons, and solutions to help protect your enterprise Hannah Freeman, Editor, SecurTest News

January 11, 2012, a day that will go down in EEOC history, marks the first time the EEOC has successfully charged a large corporation for utilizing blanket no-hire policies against individuals with criminal records, including arrest records, and settled for millions. This recent investigation and suit against Pepsi Beverages is sure to just be the beginning of the EEOC's onslaught against companies that defy EEOC guidelines regarding the use of criminal history in the hiring process.

EEOC Snares Pepsi Instead of dragging the matter into EEOC hearings and a full-blown suit, Pepsi Beverages and the EEOC reached a private conciliation agreement, which ended the EEOC administrative investigation. As part of the agreement, Pepsi agreed to pay out $3.13 million to the EEOC, who will divide the settlement primarily among the black applicants who were denied employment at Pepsi due to their criminal records. A portion of the settlement will also go toward the administrative costs of the claims process. Pepsi also agreed to develop a new criminal background check policy and provide training on Title VII for all of its managers and hiring personnel. Though the nature of the agreement would have allowed for the amount of the settlement to be kept confidential, both parties consented to release the details of the settlement. This may mark a good-faith effort on Pepsi's part to show that they admit their policies may have indeed resulted in discrimination. Even EEOC Chair Jacqueline A. Berrien released the statement, "I commend Pepsi's willingness to re-examine its policy and modify it to ensure that unwarranted roadblocks to employment are removed."* Of course the settlement being made public also works in the EEOC's favor as it sends a strong message to other companies that use similar discriminatory hiring policies. So what were Pepsi's policies that landed them in hot water with the EEOC? According to the EEOC's press release, Pepsi used discriminatory hiring practices when it used blanket hiring policies that automatically disqualified an applicant for having any kind of criminal history. The EEOC reports:
The EEOC's investigation revealed that more than 300 African Americans were adversely affected when Pepsi applied a criminal background check policy that disproportionately excluded black applicants from permanent employment. Under Pepsi's former policy, job applicants who had been arrested pending prosecution were not hired for a permanent job even if they had never been convicted of any offense. Pepsi's former policy also denied employment to applicants from employment who had been arrested or convicted of certain minor offenses. The use of arrest and conviction records to deny employment can be illegal under Title VII of the Civil Rights Act of 1964, when it is not relevant for the job, because it can limit the employment opportunities of applicants or workers based on their race or ethnicity.*
The root of the EEOC's argument lies in the disproportionate number of minorities that have criminal records in the United States. To deny employment based on arrest records and criminal records when the offenses are not relevant to the job will in turn disproportionately affect minorities who are more likely to have a record than white applicants. This kind of blanket policy, like the one Pepsi was formerly practicing, therefore qualifies as discrimination and falls under the EEOC's purview.

iReviewNow® is the Patented Solution Though many were shocked at the outcome of the EEOC-Pepsi settlement, one man not only predicted that these types of lawsuits were bound to happen, he developed a solution. Steven C. Millwee is a prior president and chairman of ASIS International, the preeminent association for security management professionals worldwide. He has also been an expert witness for more than 34 years, helping defend organizations from claims of negligent hiring, which often result in workplace violence by an employee with a past conviction history of violence. As a leading expert in background screening, negligent hiring, HR and security, he predicted that employers would come under increased scrutiny by the EEOC and that lawsuits would reach class-action proportions. Millwee kept this in the back of his mind until finally in March of 2011, he invented iReviewNow, the only patented background-screening solution. The iReviewNow system mitigates, if not completely eliminates, the risks and claims of discrimination or violation of both federal and state laws regarding consumer reports, such as criminal and credit records. iReviewNow creates a transparent system for the employer, applicants, employees, and consumers by delivering a copy of every report—pass or fail—to the consumer at the same time that the employer or hiring manager also receives the report. The subject of the credit, criminal history or other consumer report is therefore made part of the process. Due to this contemporaneous delivery, every consumer is given a fair chance to dispute any inaccuracies in his or her report before any adverse decision can be made. They are also given a platform to explain any adverse information, like an arrest or conviction record, and also identify any and all rehabilitation steps taken since the offense. The employer is now able to fully understand the full context of the report they are reading and can make the better informed hiring decisions. In this way, iReviewNow eliminates the need for a blanket no-hire policy as the employer can view each applicant and their history individually with all of the facts in front of them in one report. iReviewNow delivers what the EEOC and the FCRA need in background reports: (1) The gravity of the convictions, (2) The time passed since the conviction or completion of the sentence, (3) The nature of the job in consideration, (4) Any admissions by the applicant that detail the facts, and (5) Rehabilitation efforts or other factors that allow the applicant to present evidence that an employer would otherwise never learn. "We treat the consumer or applicant like the employer's best customer," said Millwee. The CEO and founder of SecurTest, Inc. also explained that employers have a vested interest in protecting their brand. "Some background screeners and employers operate from the position of ‘when in doubt, keep them out,' which fails to realize that many applicants were customers first," says Millwee. Millwee's patent has resulted in SecurTest becoming the fastest-growing background screening provider. SecurTest's revenues increased by 300 percent in 2011, and the company has contracts indicating that it will experience similar growth this year. SecurTest is the leading provider of background reports for various branches of the U.S. government, including the military, largely because of its reporting accuracy, iReviewNow's compliance system and team of experts, and its unsurpassed customer service. iReviewNow has become the de facto standard in background screening and, in December 2011, it was named one of the best background screening companies by HRO Today based on independent customer satisfaction rankings.

Looking Forward Even with the onset of new lawsuits against employers and background screening companies and even stricter EEOC guidelines released later in 2012, employers can find relief from these tangible hiring fears in new and innovative solutions. By doing due diligence on the background screening company they use, being fully versed in the FCRA and EEOC guidelines, and using iReviewNow, which is the only system that provides context to the reports, employers and hiring managers can rest assured that their enterprises will remain protected against FCRA and discriminatory hiring lawsuits. Want to learn more about protecting your company against FCRA/EEOC lawsuits, or want to find out how to sign your company up for iReviewNow? It's simple. Go to www.ireviewnow.com to learn more. * Source: "Pepsi to Pay $3.13 Million and Made Major Policy Changes to Resolve EEOC Finding of Nationwide Hiring Discrimination Against African Americans." EEOC Press Release, January 11, 2012. Site: http://www.eeoc.gov/eeoc/newsroom


Hannah Freeman is the editor of iReviewNow News. A graduate of the University of Georgia, she is a certified background researcher and supervisor for ensuring accurate background reports are delivered to the military and private employers.
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