Executive Summary: Individuals and organizations indirectly or directly in control of rental property face a new dilemma when trying to comply with new EEOC hiring guidelines issued in April. A conflict may arise between the new EEOC guidelines and Minnesota’s statutory prohibitions on hiring a property manager if that manager has been convicted of certain crimes. Property owners and others in similar positions are recommended to implement an individualized assessment into their hiring practices in light of the new guidelines.
Property owners in Minnesota may face a dilemma in making hiring decisions in light of the new EEOC guidelines issued April 25, 2012. The dilemma arises from the Property Manager Background Check statutes, also known as the Kari Koskinen Manager Background Check Act. (Minnesota Statutes Section 299C et al) The Property Manager Background Check statutes apply to an owner of real property, a contract for deed vendee, receiver, executor, trustee, lessee, agent, or other person directly or indirectly in control of rental property.1 The statutes provide that an owner may not hire a manager whose duties include the means to enter tenants’ dwelling units if that manager has been convicted of certain specified crimes. Some of the specified crimes are “never hire” crimes, meaning that the timing of the conviction does not matter. Other specified crimes will only preclude hiring if less than ten years have elapsed since the sentence was discharged.
On April 25, 2012, the U.S. Equal Employment Opportunity Commission issued EEOC Enforcement Guidance Number 915.002 (hereinafter “Guidelines”) concerning enforcement guidance on the consideration of arrest and conviction records in employment decisions under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. As the Guidelines explicitly reference, state and local laws are preempted by Title VII if they “purport to require or permit the doing of any act which would be an unlawful employment practice” under Title VII, meaning Title VII may trump any conflicting state laws.
The EEOC Guidelines advise:
An employer’s neutral policy (e.g. excluding applicants from employment based on certain criminal conduct) may disproportionately impact some individuals protected under Title VII and my violate the law if not job related and consistent with business necessity.
This “disparate impact” theory creates Title VII liability where the evidence shows that an employer’s criminal record screening policy or practice disproportionately screens out a Title VII protected group and the policy is not consistent with business necessity. Therefore, if any employer’s policy is not consistent with business necessity and job related, the fact that it was adopted to comply with state law does not protect the employer from Title VII liability.
The newly issued Guidelines are not a change to Title VII itself or the volumes of case law that have been developed to interpret the boundaries of Title VII claims. However, the Guidelines are used as a tool by the EEOC for interpreting Title VII and will likely be relied upon and cited by attorneys representing individuals who have been denied employment.
The potential conflict between the newly issued Guidelines and the Property Manager Background Check statutes is that the Guidelines suggest that a permanent employment restriction based upon a conviction may not meet the business necessity standard that has been used by the courts. The Guidelines refer to a case where the Eighth Circuit Court of Appeals held that permanent exclusions from all employment based on any and all offenses was not consistent with the business necessity standard. The Guidelines then suggest that the duration of an exclusion from employment based upon a criminal conviction must be sufficiently tailored to satisfy the business necessity standard. Minnesota’s Property Manager Background Check statute does include certain offenses that are a permanent exclusion from employment. In this regard, the Minnesota Property Manager Background Check statute may create a conflict with the EEOC Guidelines.
The Minnesota Property Manager Background Check statute is still enforceable in Minnesota and violations of the statutes may subject the property owner to a petty misdemeanor or other damages. Therefore, it is advisable to continue to screen applicants for the list of offenses identified in the statute. However, in an attempt to balance the requirements of the Minnesota Property Manager Background Check statutes with the new EEOC Guidelines, it is recommended that property owners also engage in an individualized assessment as contemplated by the Guidelines:
Title VII . . . does not necessarily require individualized assessment in all circumstances. However, the use of individualized assessments can help employers avoid title VII liability by allowing them to consider more complete information on individual applicants or employees, as part of a policy that is job related and consistent with business necessity.
An individualized assessment occurs when the employer informs the individual that he may not be eligible for employment because of a past criminal conviction and provides the individual the opportunity to demonstrate that the exclusion should not be applied to him because the policy, as applied, would not be job-related or consistent with business necessity. Each circumstance will differ based upon the facts presented, and property owners are encouraged to consult with legal counsel before making any final hiring decisions. Until the courts have been presented with a case allowing them to analyze the interplay between the Minnesota Property Manager Background Check statutes and the new Guidelines, the potential for a conflict between these two laws remains.