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The pending appeal of EEOC v. Kaplan Higher Education Corp. is a case worth watching.  It has received attention as a test case for the EEOC’s aggressive stance on credit checks, but the story behind the lawsuit highlights intriguing questions about race and the philosophical underpinnings of Title VII.


Faced with an increase in employee theft, Kaplan University began using credit checks in hiring. Kaplan sought to screen out applicants at risk of stealing.  The EEOC sued Kaplan under Title VII of the Civil Rights Act, claiming that its use of credit checks had an unlawful adverse impact on applicants on the basis of race.  The story takes an interesting turn.  To prove its case, the EEOC determined the race of some applicants by using a group of “race raters” to review their names and DMV photographs.  A federal district court in Ohio rejected this evidence, essential to the EEOC’s case, as unscientific and unreliable.


Civil rights groups have criticized the EEOC’s use of “race raters” as demeaning and reinforcing racial stereotypes.  Notably, EEOC guidance prefers self-identification to visual determination of race.  The EEOC states that its guidance is intended to facilitate and respect individual dignity and should not be understood to suggest that visual identification is not reliable.  The Kaplan case raises intriguing questions. Can race be determined from a photograph?  What about individuals with multiracial backgrounds?  Do surnames lead to inaccurate assumptions?


The EEOC has appealed the dismissal and the parties have submitted briefs to the United States Court of Appeals for the Sixth
Circuit.  Just last week, in EEOC v. Peoplemark, Inc., the Sixth Circuit upheld an award of  $750,000 in fees and costs to an employer sued by the EEOC regarding the use of criminal background checks in hiring.  The EEOC was ordered to pay after continuing to pursue the case after receiving evidence that the company did not have the company-wide policy the EEOC contended it did.


As the EEOC’s aggressive stance on these matters faces judicial scrutiny, employers should remain careful about using criminal
background or credit checks when making employment decisions.  While these can be valuable tools in furthering business objectives, seeking legal counsel can help employers ensure proper use and avoid costly mistakes.