Leprino Foods To Pay $550K To Settle OFCCP Charge Pre-Hire Screening Test Illegally Discriminated

July 19, 2012

The consent decree between the U.S. Department of Labor’s Office of Federal Contract Compliance Program and Leprino Foods Inc. resolving charges of systemic hiring discrimination at the company’s Lemoore West facility signed today by an Labor Department administrative law highlights the growing aggressiveness of the Labor Department in challenging employment screening practices. The Leprino Foods case highlights the advisability of businesses judiciously determining and documenting in advance the valid business justification for employment screening procedures such as pre-employment tests and background screening.

Leprino Foods is one of the largest producers of mozzarella cheese in the world and is based in Denver, Colo. Since 2005, the company has received contracts totaling nearly $50 million from U.S. Department of Agriculture’s Farm Services Agency to provide mozzarella and other dairy products to the federal government. The Leprino Foods consent decree settles OFCCP’s allegations that Leprino Foods’ use of a pre-employment test called WorkKeys to select hires for on-call laborer positions illegally discriminated against discrimination against African-American job applicants and applicants of Asian and Hispanic descent.

OFCCP charged Leprino Foods violated Executive Order 11246, which prohibits federal contractors and subcontractors from discriminating on the bases of race, color, religion, sex and national origin in their employment practices. The agency made its findings after a scheduled compliance review in which OFCCP investigators conducted interviews, analyzed company data and reviewed documents provided by the company. Through this review, OFCCP discovered that the administration of the WorkKeys exam had an adverse impact on minority job applicants for these specific positions. The agency also found that the exam was not job-related, as it tested applicants’ skills in mathematics, locating information and observation – skills that the OFCCP felt were not critical to the entry-level tasks performed by on-call laborers, such as inspecting products, monitoring equipment and maintaining sanitation at the facility.

Under the terms of the consent decree, Leprino will pay $550,000 in back wages, interest and benefits to 253 minority workers who were rejected for on-call laborer positions between January 2005 and October 2006 because they failed the WorkKeys exam. Additionally, the company has agreed to discontinue use of the test for this purpose, hire at least 13 of the original class members, undertake extensive self-monitoring measures and immediately correct any discriminatory practices. 

One of a growing number of challenges by the Obama Administration to pre-hire screening and credentialing procedures by employers as illegally discriminatory, the settlement reminds business leaders of the growing aggressiveness by the Obama Administration in challenging a broad range of pre-hire screening procedures such as pre-employment skills and other testing, background checks or the like.  In addition to challeging tests like that use by Leprino Foods, the OFCCP and EEOC under the Obama Administration also are challenging criminal background and other screening procedures.

In the face of these enforcement activities, businesses desiring to use these or other screening procedures should take steps to position themselves to defend against likely challenges and scrutiny. 

As part of these efforts, businesses should exercise care to conduct and retain carefully conducted and well documented analysis of the legitimate business justification for their use of tests, background checks or other credentialing procedures.  This analysis and documentation should be conducted prior to the implementation and use of these procedures to minimize the likely that the “after acquired evidence rule” or other similar arguments might be used to undermine the admissibility and effectiveness of these business justification arguments.  Businesses also should implement procedures to monitor for potential evidence of adverse impact or other improper bias against candidates in protected employment classes by the tests themselves or in their administration and implement well-documented processes to control for such bias.

Tighten Defensibility of Criminal & Other Background Check Practices In Light of Labor Department Non-Discrimination Regulation & Enforcement Emphasis

May 25, 2012

Employers, job banks, recruiters and other parties that conduct and rely upon criminal background checks for purposes of screening applicants or making other employment decisions should check and update their practices in response to the announced plans of the U.S. Department of Labor to expand and enforce limitations on employment discrimination against individuals with criminal records as well as the criminal background check requirements of the Fair Credit Reporting Act and other applicable laws.

While criminal or other background checks often are mandated or otherwise business justified, employers and others conducting or using background check information need to understand and comply with legal requirements about the use and administration of criminal or other background checks.

Potential Employment Discrimination Exposures From Criminal Background Checks

Over the past several months, Labor Department officials have identified protection of individuals with criminal backgrounds against employment discrimination as a policy and enforcement priority.

In keeping with this goal, the Labor Department Employment and Training Administration (ETA), with the Civil Rights Center (CRC). on May 25, 2012 published updated training guidance for about exclusions based on criminal records, and how they are relevant to the existing nondiscrimination obligations for the public workforce system and certain other entities that receive federal financial assistance to operate Job Banks, to provide assistance to job seekers in locating and obtaining employment, and to assist employers by screening and referring qualified applicants in Training and Employment Guidance Letter No. 31-11 (TEGL) along with the following accompanying guidance documents:

Meet FCRA Criminal & Other Background Check Requirements

When conducting such a criminal or other background check using a third-party or the internet, care should be taken to comply with the applicable purpose, notice and consent requirements for conducting third-party conducted background checks under the Fair Credit Reporting Act (FCRA) and otherwise applicable law. 

Since criminal and other background investigations generally qualify as a credit check for purposes of the FCRA, employers, recruiters, job banks and other parties conducting background checks for employment related purposes risk significant liability for conducting these activities without providing the proper notifications and obtaining necessary consents.  Additional requirements often also may apply under applicable state laws, labor-management contracts, government contracting requirements or other similar requirements.  Consequently, before doing any credit or other background check, employers or others should ensure that they have the policies, disclosures, data security and written consents required to comply with the FCRA and other laws.

With these procedures in place, employers or others planning to use criminal or other background checks then should work to manage discrimination and other potential risks associated with potential challenges to their use of the information.

Among other things, businesses should carefully document the business justification for their use of the background check and restrict the data they request and receive to information relevant to that purpose.  The collection and receipt of this information should be structured and managed in such a way to mitigate employment discrimination, privacy and other legal risks and to promote defensibility.  For instance, proper procedures should be used to lower the risk of a pattern of prohibited discrimination on race, national origin, disability or other similar employment discrimination laws.  Likewise, collection or receipt of information such as bankruptcy history or other liability sensitive information should be avoided unless a legally defensible need and appropriate procedures governing use can be demonstrated in operation.  Care also should be taken to apply the criteria uniformly. Given ADA, GINA, FACTA and other privacy concerns, employers also should specifically check their data collection and protection procedures for adequacy.

To help with these and other concerns, consider defining and documenting in advance the relevant criteria for the position and why it is relevant.  Where possible, try to avoid getting information beyond that defined as relevant which could raise sensitivities.  Since the FCRA requires notice if adverse hiring decisions are made, employers also should carefully evaluate and document the basis of their decisions when deciding not to hire or promote individuals based on this information and appropriately safeguard this information against improper use or disclosure. 

For Help Or Additional Information

If you need help reviewing and updating, administering or defending your background check or other employee benefits, human resources, health care or insurance matters, please contact the author of this update, Cynthia Marcotte Stamer.

Board Certified in Labor and Employment Law, a Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on human resources, recruitment, employee benefits, compensation, credentialing, promotion and discipline and related workforce and risk management matters. 

Widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend employment and other services arrangements and assocaited employee benefit,  compensation, reductions in force and other severance and other human resources, employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s r management goals.  A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns. 

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations.   She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications.   You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

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©2012 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.