Pepsi Settles EEOC Charges for $3.1 Million: Poor Application of Criminal Background Check Results

Is your company looking for an easy way out when it comes to background checks in hiring decisions? The time and care taken to analyze results and consider each applicant, rather than using criminal history as a be-all-end-all factor, ends up having long-term positive consequences. What can happen from careless application of criminal background checks? Consider Pepsi’s recent $3.1 million settlement.

On January 11, the EEOC revealed that 300 blacks were affected by Pepsi’s use of criminal background checks in hiring, which excluded such individuals from permanent, full-time employment. The Minneapolis location of Pepsi, where the charges were filed, implemented a policy that blocked applicants with arrests pending prosecution from employment, even if the individual was not convicted or had a minor offense. The hiring policy, as a result, negatively affected individuals of color, which is a violation of Title VII of the Civil Rights Act of 1964.

Aside from the large amount of money Pepsi paid to settle the EEOC charges, what happened to the victims of the company’s hiring practices? EEOC Chicago District Director John Rowe told the press:

“We obtained significant financial relief for a large number of victims of discrimination, got them job opportunities that they were previously denied, and eradicated an unlawful barrier for future applicants. We are pleased that Pepsi chose to work with us to reach this conciliation agreement, and that through our joint efforts we have been able to bring about real change at Pepsi without resorting to litigation.”

Pepsi, as well, has a new hiring policy and is required to provide the EEOC with better reports of its practices. To make sure the new policy is enforced, hiring personnel and managers are being trained on Title VII.

Criminals should not be blocked out of employment – especially when the job description does not pertain to his or her past offenses. Companies, to avoid discrimination lawsuits like Pepsi’s, must consider each candidate’s background – and not eliminate an individual simply for an unrelated criminal conviction.