The Equal Employment Opportunity Commission’s (EEOC) Office of Legal Counsel recently made available two informal discussion letters addressing how two common and seemingly innocuous hiring practices could, under certain circumstances, inadvertently subject employers to charges of disparate impact discrimination. Although these advisory letters are intended as informal discussions of the specific issues only, they should serve as warnings to employers to double-check their use of credit checks and education degrees as selection criteria.

The first letter, dated March 9, 2010 and released March 29, was written in response to an individual’s request for legislation that would ban an employer’s use of credit checks to screen job applicants. EEOC Assistant Legal Counsel Dianna Johnston responded that while the EEOC has no authority to enact legislation to prohibit employer credit checks, it does enforce Title VII of the Civil Rights Act, which prohibits, among other things, an employment practice that disproportionately screens out racial minorities, women, or another protected group unless the practice is job-related and consistent with business necessity. Therefore, Johnston noted, if the employer’s use of credit information disproportionately excludes one of these protected classes, the practice would be unlawful unless the employer could establish that the practice is necessary for the safe and efficient operation of the business. Johnston emphasized that during an EEOC meeting on employment testing and screening in May 2007, an attorney testified that credit checks have not been shown to be a valid measure of job performance. She admitted, however, that some courts have ruled that such practices are appropriate for certain positions, particularly where an employee would be charged with handling a large amount of cash.

The second letter, also released on March 29 but dated February 19, 2010, was drafted in response to a question as to whether requiring a masters’ degree – without the possibility of substituting experience or other education – for a Public Health Director position would violate Title VII. The letter writer indicated that doing so would result in a significantly disproportionate exclusion of protected racial minorities. EEOC Attorney-Advisor Aaron Konopasky responded that if this result could be proven – most likely through statistical evidence – then adopting the requirement could subject the employer to liability for disparate impact discrimination unless (a) the employer could show that the requirement is job-related and consistent with business necessity, and (b) the plaintiff could not show that a less discriminatory requirement would have been equally effective in predicting job performance. Assuming the requirement has a disparate impact on racial minorities, the letter concludes by advising the employer to determine whether an equally effective alternative selection procedure is available that would have less of an adverse impact, and to adopt that alternative procedure.