Hunton Employment & Labor Perspectives

As of late, it seems we can hardly go a day without hearing about the rise of artificial intelligence (“AI”) and its potential to disrupt all manner of industries.  But awareness of AI’s potential implications to our careers has only recently hit the mainstream.  Many employees may be surprised to learn that a number of employers have already been using AI to make employment decisions for some time, especially in the hiring process.  And the number of employers using AI in the workplace has been growing rapidly.  Some employers are even using AI to make promotion decisions.

Uber Technologies, Inc. has been sued in a class action lawsuit alleging the company’s use of criminal background checks discriminates against Black and Latinx drivers. The complaint, filed in the U.S. District Court for the Southern District of New York on April 8, challenges Uber’s “unlawful use of criminal history to discriminate against its drivers in New York City as well as its brazen noncompliance with human rights and fair credit laws.”

Named plaintiff Job Golightly, a Black resident of Bronx County, New York, drove for Uber from 2014 through August 2020. Golightly claims that his criminal history consists of a single 2013 misdemeanor speeding violation from Virginia. According to the lawsuit, until 2017 Uber had relied solely on background checks conducted by the New York City Taxi and Limousine Commission (TLC). Plaintiffs allege that in mid-2017, in response to negative news coverage on assaults committed by drivers, Uber began using the credit reporting agency Checkr to conduct additional background checks on current and prospective drivers. As a result, in August 2020 Uber allegedly conducted a background check on Golightly that revealed his 2013 speeding violation. One day later, Golightly claims that Uber deactivated him from its platform, preventing him from driving for the company.

While most EEOC enforcement actions are related to individual complaints of discrimination and/or retaliation, so-called “pattern or practice” matters are those in which the EEOC attempts to show that an employer has systematically engaged in discriminatory activities. The Equal Employment Opportunity states on its website, “Systemic discrimination involves a pattern or practice, policy, or class case where the alleged discrimination has a broad impact on an industry, profession, company or geographic area.” To combat systemic discrimination, section 707(a) of Title VII of the Civil Rights Act of 1964 authorizes the EEOC to sue employers engaged in a pattern or practice of discrimination.

With the age of artificial intelligence (AI) unfolding, products aimed at automating the recruiting and hiring process are hitting the market with increasing frequency.

Companies have been utilizing AI for tasks such as screening resumes, and even interviewing candidates and assessing whether they will be successful employees.  These automated tools range from algorithms that “weed through” resumes to personality assessments and biometric analyses that employ AI to analyze a candidate’s facial expressions, body language, voices, and inflections in video interviews.

Dollar General and the Equal Employment Opportunity Commission (“EEOC”) recently settled a six-year-old Title VII lawsuit.  The EEOC brought its race discrimination claim on behalf of a Charging Party and a class of Black job applicants, alleging that Dollar General’s use of criminal justice history information in the hiring process had a disparate impact on Black applicants.

The United States District Court for the Western District of New York recently granted an early dismissal of a class action lawsuit prior to class certification.  Mandala v. NTT Data, Inc., 18-CV-6591 CJS, 2019 WL 3237361, at *1 (W.D.N.Y. July 18, 2019). The plaintiffs in Mandala were two African-American men who applied for and were offered jobs with the defendant employer.  After the employer conducted a criminal background check on the plaintiffs and found they each had a felony criminal conviction, the employer withdrew their job offers.  The plaintiffs filed a class action lawsuit against the employer alleging claims for disparate impact race discrimination under Title VII, and violations of New York state laws prohibiting criminal history discrimination and regulating the background check process.

In late January 2019, the Seventh Circuit Court of Appeals ruled that the Age Discrimination in Employment Act (“ADEA”) does not allow outside job applicants to bring disparate impact claims.  The plaintiff in the case, Dale Kleber, an attorney, is now asking the Supreme Court to review that decision.

Facts and Procedural History

On October 5, 2016, the Eleventh Circuit, sitting en banc, held that an unsuccessful job applicant “cannot sue an employer for disparate impact [under § 4(a)(2) of the ADEA] because [an] applicant has no ‘status as an employee.’”  Villarreal v. R.J. Reynolds Tobacco Co., --- F.3d ---, No. 15-10602, 2016 WL 5800001, at *1 (11th Cir. Oct. 5, 2016).

The U.S. Supreme Court is considering a case that could have important implications to disparate impact analysis, including on criminal background checks.  The case also foreshadows further challenges from the Texas Attorney General to aggressive positions taken by federal enforcement agencies in regard to disparate impact.  The case is Texas Department of Housing & Community Affairs, et al., v. The Inclusive Communities Project, Inc., Case No. 13-1371, and is being argued by the Texas Attorney General.

On April 9, 2014, the Sixth Circuit of Appeals not only affirmed summary judgment in EEOC v. Kaplan Higher Education Corp., et al. but also chastised the EEOC for applying a flawed methodology in its attempts to prove that using credit checks as a pre-employment screen had an unlawful disparate impact against African-American applicants.

On October 7, 2013, the United States Court of Appeals for the Sixth Circuit upheld the imposition of fees and costs against the Equal Employment Opportunity Commission (“EEOC”) in EEOC v. Peoplemark, Inc., Case No. 11-2582, for knowingly pursuing a meritless claim in which the agency alleged that Peoplemark’s criminal background check policy had a disparate impact on minority job applicants.  The EEOC recently has moved aggressively to enforce its April 2012 guidance regarding the use of criminal background checks in hiring.  That guidance appears to suggest that any criminal background check policy may be vulnerable to an EEOC enforcement action under a disparate impact theory—regardless of its terms and the manner in which it is implemented—solely on the basis of national data that show disproportionate rates of incarceration for African-Americans and Hispanics.  However, the Peoplemark decision, of which the EEOC presently seeks en banc review, also heralds an emerging pattern of judicial skepticism towards the agency’s enforcement tactics and its efforts to pursue disparate impact claims premised solely on national statistical evidence that is unrelated to any specific employer practice.

Since the U.S. Supreme Court’s decision in Wal-Mart v. Dukes, there has been a significant amount of educated speculation about the effect of that decision on class action litigation in general and more particularly on class actions involving claims of employment discrimination.  Dukes is seen as creating an impassable barrier for class actions claiming discrimination in multiple locations based on excess subjectivity arising from decentralized decision-making.  Dukes instead focuses the inquiry on the existence and discriminatory effect of enterprise-wide policies such as an employment test or standardized performance criterion.  The question remains: what constitutes an enterprise-wide policy or practice?  This is a question that has challenged practitioners since General Tel. Co. of the Southwest v. Falcon, 457 U.S. 147, 159 n. 15 (1982), and before.

In its decision in Ricci v. DeStefano, 129 S.Ct. 2658 (2009), the Supreme Court sought to resolve a conflict between the “twin pillars of Title VII,” the Act’s disparate-impact and disparate-treatment provisions.  Ricci involved a promotional examination administered by the City of New Haven.  After candidates took the examination, the City refused to certify the test results because of a concern that the test had a disparate impact on African-American candidates and would lead to the promotion of white candidates.

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The national unemployment rate, as reported by the Department of Labor, has stubbornly remained at about 9% or higher for more than two years. As many of these unemployed individuals search for new jobs, some have purportedly been denied available employment opportunities simply because they were unemployed. Unemployment discrimination, as it is often called, is not currently prohibited under federal law. The EEOC and Congress, however, have taken steps focused on so-called unemployment discrimination that could affect how employers conduct their hiring processes.

On Monday, the United States Supreme Court ruled that claims brought by African American firefighters who had sued the City of Chicago alleging that a hiring test was discriminatory were not time barred.  Lewis v. City of Chicago, No. 08-974, 560 U.S. ___ (2010).  The City conceded that its use of the hiring test was unlawful, but argued that the firefighters claims were untimely.  Addressing only the statute of limitations issue, the Court issued a unanimous decision in favor of the firefighters, holding that the firefighters timely filed a disparate impact claim based on the continued use of the hiring test.