March 2013 / Volume 11, No. 1

EEOC GUIDANCE ON CRIMINAL BACKGROUND CHECKS

Based on recent pronouncements by the U.S. Equal Employment Opportunity Commission (“EEOC”), businesses that conduct criminal background checks do so at their own risk.  Companies that either ask job applicants if they have been convicted of a felony or check criminal histories expose themselves to potential discrimination lawsuits.  Under the EEOC’s recent Enforcement Guidance (“Guidance”), while conducting criminal background checks is not, by itself, unlawful, the use of criminal histories can be discriminatory in its impact on minorities and can result in liability for an employer if the employer cannot show a “business necessity” for rejecting an applicant based upon the applicant’s criminal past.

The use of criminal conviction records by employers has generally been considered appropriate.  In fact, employers in some industries (such as daycare centers) are required to exclude applicants based on certain types of convictions. However, in more recent years, the routine use of conviction records has become more suspect, and companies have been put on notice that they could be vulnerable to pay damages to individuals whose criminal histories have been used against them.  The EEOC has found that significantly more African-Americans and Hispanics, especially men, are incarcerated, so they are disproportionately affected when companies blanketly do not hire ex-offenders.  This “impact” on minorities has led to an increasing number of discrimination lawsuits based on an employer’s use of a person’s criminal background.

The EEOC’s Guidance does not prohibit an employer from asking about criminal convictions in employment applications, but does recommend that employers refrain from asking such questions.  The Guidance also recommends that when an employer does ask about an applicant’s criminal history, the employer ask only applicants who are applying for positions where criminal history may be relevant and that the questions be limited to those convictions that have a direct connection to job duties.  The EEOC advises companies to consider three things:  How long ago the crime was committed, the nature or gravity of the crime and how the crime might relate to the job held or being sought.  The agency also strongly recommends that companies give ex-offenders a chance during job interviews to explain conviction circumstances as well as rehabilitation efforts before making a final decision. 

Businesses still considering conducting criminal background checks should consider using the following guidelines:

  • On employment applications, eliminate the question: “Have you ever been convicted of a felony?”
     
  • Review background screening policies and practices, including those that deny employment based on criminal convictions.
     
  • Assess job candidates with a criminal history and consider how long ago the crime was committed, the severity of the crime and whether the crime would have anything to do with the job in question.
     
  • Give the job applicant a chance to explain himself, and take into consideration positive references and rehabilitation efforts.
     
  • Record and document the business necessity for employment decisions for individuals with criminal backgrounds.
     
  • Train recruiters, job interviewers and decision-makers on the Guidance and on discrimination laws and how they relate to criminal history discrimination.
     
  • Be aware of state law prohibitions regarding arrest and conviction records in those states where the company does business, and determine how they may interact with the EEOC’s Guidance.

When deciding whether or not to conduct a criminal background check, an employer should balance the risk of being sued for discrimination with the risk of criminal conduct by a future employee that may impact its business, as well as the possibility of having to defend a negligent hiring suit due to employee criminal conduct. 

By Norman T. Finkel


WHEN IS A CONTRACT TERMINABLE?

With the possible exception of a diamond, nothing lasts forever.  This is especially true with contracts and contractual relationships, even when the parties do not specify the length of time for which their contractual relationship will last.  As the Illinois Supreme Court has said:

“Forever” is a long time and few commercial concerns remain viable for even a decade.  Advances in technology, changes in consumer taste and competition mean that once profitable businesses perish regularly.  Today’s fashion will tomorrow or the next day inevitably fall the way of the buggy whip, the eight-track tape and the leisure suit.  Men and women of commerce know this intuitively and achieve the flexibility needed to respond to market demands by entering into agreements terminable at will.

 Jespersen v. Minnesota Mining & Manufacturing Co., 283 Ill.2d 290, 295 (1998).  So, no contract will last forever.  But it is important that parties know, before they enter into a contract without a specified, definite term (e.g., one year), how and under what circumstances that contract may be terminated by either of them.

In Illinois, as in most states, the general rule is that contracts that do not specify the length of the parties’ relationship are “at-will” contracts.  In other words, either party may terminate the contract at any time, for any reason (or no reason at all).  This is true, generally, even if the contract states something to the effect that it shall “continue in force indefinitely.”  However, good business practices dictate that, if the parties intend for a contract to be terminable “at will,” the contract should so specify.  For example, the contract could state that “This contract will remain in force until terminated by one of the parties hereto.”

To avoid any questions about the parties’ intent, an “at-will” contract should provide a specific method for its termination, as well as a specified notice period before the termination becomes effective.  For example, a contract could state that “This contract may be terminated by either party by giving the other party thirty (30) days’ written notice of its intent to terminate.”

The contract should also specify a particular method by which such notice must be delivered to the other party, and when such notice will become effective.  For example, the contract may specify that “Any notice given by one party hereunder must be sent to the other by certified mail, return receipt requested, and such notice shall be deemed effective upon receipt by the party to whom it is addressed.”  By providing a specific method by which the contract may be terminated, the parties can avoid any problems or questions if and when one (or both) determines that it wants to put the contractual relationship to an end.

Parties should also be aware, however, that a contract with no definite term can contain provisions which take it out of the “at-will” universe, by setting forth specific triggers which will allow for termination.  This generally occurs when a contract specifies that it is terminable only for cause or upon the happening of some specified event. 

Such provisions generally have been strictly construed by courts.  For example, a contract of indefinite duration which stated that one of the parties “may” terminate it for specified reasons was found to be an at-will contract.   Jespersen v. Minnesota Mining & Manufacturing Co., 183 Ill.2d 298 (1998).  The Court found that, by using the word “may,” the termination provision was “permissive and equivocal,” and a clear inference existed that the specified grounds for which the contract “may” be terminated were not intended by the parties to be the sole or exclusive basis for termination.

To the extent, therefore, that the parties wish to have an indefinite-term contract that can only be terminated for cause or when a specified event occurs, they should state that the contract may only be terminated for those reasons, and not cloak such a termination provision in permissive or ambiguous terms.

Certainty is important, particularly when contracts are involved.  Though many contracts run for a specified term, not all do.  Therefore, before a party enters into a contract of indefinite length, it should make sure that it knows how and when the contract may be terminated by either party.  If a party is not clear as to the potential triggers for termination of a contract, it should consult its attorney to avoid surprises that might arise down the road

By David S. Makarski


Schoenberg Finkel Newman & Rosenberg, LLC (312) 648-2300

This newsletter is not intended to be legal or tax advice and is not a substitute for obtaining legal or tax advice. This Newsletter is deemed to be advertising material by the Illinois Supreme Court.