Pepsi Beverages to pay $3.1 million to settle federal racial
(January 15, 2012) Pepsi Beverages Co. will pay $3.1 million to settle
federal charges of race discrimination for using criminal background
checks to screen out job applicants -- even if they weren't convicted of
The settlement announced with the Equal Employment Opportunity
Commission is part of a national government crackdown on hiring policies
that can hurt blacks and Hispanics.
EEOC officials said the company's policy of not hiring workers with
arrest records disproportionately excluded more than 300 black
applicants. The policy barred applicants who had been arrested, but not
convicted of a crime, and denied employment to others who were convicted
of minor offenses.
Using arrest and conviction records to deny employment can be illegal if
it's irrelevant for the job, according to the EEOC, which enforces the
nation's employment discrimination laws. The agency says such blanket
policies can limit job opportunities for minorities with higher arrest
and conviction rates than whites.
The company has since adopted a new criminal background policy and plans
to make jobs available to victims of the old policy if they are still
interested in jobs at Pepsi and are qualified for the openings.
"I commend Pepsi's willingness to reexamine its policy and modify it to
ensure that unwarranted roadblocks to employment are removed," EEOC
Chairwoman Jacqueline Berrien said in a statement.
Pepsi Beverage spokesman Dave DeCecco said the company's criminal
background check policy has always been neutral and that the EEOC did
not find any intentional discrimination. He said after the issue was
first raised in 2006, the company worked with the EEOC to revise its
background check process "to create a workplace that is as diverse and
inclusive as possible."
"We are committed to promoting diversity and inclusion and we have been
widely recognized for our efforts for decades," DeCecco said.
He said the new policy would take a more "individualized approach" in
considering the applicant's criminal history against the particular job
Pepsi Beverages is PepsiCo's beverage manufacturing, sales and
distribution operating unit in the United States, Canada and Mexico.
Under the settlement, the company will provide the EEOC with regular
reports on its hiring practices and offer antidiscrimination training to
its hiring personnel and managers.
About 73 percent of major employers report that they always check on
applicants' criminal records, while 19 percent do so for select job
candidates, according to a 2010 survey by the Society for Human Resource
But increased federal scrutiny of such policies has led some companies
to reevaluate their hiring process. Pamela Devata, a Chicago employment
lawyer who has represented companies trying to comply with EEOC's
requirements, said there has been an uptick over the past year in EEOC
charges over the use of background checks.
"The EEOC has taken a very aggressive enforcement posture on the use of
criminal background and criminal history," Devata said.
The commission held a special meeting on the topic last summer, and
Devata said employers have been expecting the EEOC to issue more
EEOC officials have said, for example, that an old drunken driving
conviction may not be relevant to a clerical job, but a theft conviction
may disqualify someone from working at a bank.
Julie Schmid, acting director of the EEOC's Minneapolis office, said the
EEOC recommends that employers consider the nature and gravity of
offenses, the time that has passed since conviction or completion of a
sentence, and the nature of the job sought.
"We hope that employers with unnecessarily broad criminal background
check policies take note of this agreement and reassess their policies
to ensure compliance" with antidiscrimination laws, Schmid said in a
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