Target to Pay $3.7M to Settle Criminal History Hiring Bias Suit

Target Corp. will pay $3.74 million and give priority hiring opportunities to some black and Latino job applicants to resolve charges that its criminal background check policy illegally excluded thousands of minorities from hourly and entry-level jobs.

The April 5 filing of the preliminary settlement comes the same day the company was sued in Manhattan federal court by the Fortune Society and two workers on behalf of a proposed nationwide class. The lawsuit alleges that Target’s practice of requiring disclosure of prior convictions and other criminal history on its job applications had a disparate impact on black and Latino applicants, who have a higher chance of having been arrested or incarcerated than do white job seekers.

That amounts to unlawful discrimination under Title VII of the 1964 Civil Rights Act, which prohibits bias based on a worker’s race or national origin, the complaint says. Target stores in the U.S. have applied the practice through a third-party vendor since 2001, the Fortune Society and other plaintiffs allege. The Fortune Society is a New York City-based nonprofit organization dedicated to helping individuals released from incarceration successfully reentry society.

The Equal Employment Opportunity Commission—the federal agency that enforces Title VII against private-sector employers—has long-held the view that employers may not use policies or practices that screen out individuals from hiring based on a criminal history where such policies significantly disadvantage applicants based on a trait protected under Title VII and don’t assist the employer in accurately deciding whether the applicant “is likely to be a responsible, reliable, or safe employee.”

The settlement requires Target to make available up to $1.2 million of the $3.74 million to pay eligible class members as much as $1,000 each for the company’s alleged bias. Class members, including lead plaintiffs Carnella Times and Erving Smith, may instead reapply for work at Target and will receive “priority hiring” into team lead and senior team lead positions, providing such jobs are available at the stores where they applied and they’re otherwise qualified to be hired.

Any of the $1.2 million that isn’t distributed to eligible class members within 180 days of final court approval of the settlement will be redistributed to the Pipeline Project to assist nonprofit organizations providing support to people with criminal histories trying to reenter the workforce. The Pipeline Project will also receive a separate $600,000 payment under the settlement.

The New York-based law firm Outten & Golden LLP and the NAACP Legal Education Defense and Educational Fund Inc., which filed the lawsuit on behalf of the proposed class, will ask the U.S. District court for the Southern District of New York to approve payment of $1.9 million in attorneys’ fees and costs. That payment will come from the $3.74 settlement.

The Fortune Society, Times, and Smith will also receive service awards for acting as representatives of the class in the case.

Target Revising Policies

As part of the settlement agreement, Target also must work with a pair of industrial organizational psychologists to revise and validate its guidelines for using criminal history checks in its hiring processes. The costs of those efforts, as well as payment of the claims administration process for class members, will be borne by Target.

The company said the revamping of its hiring methods is well under way.

“More than 10 years ago, like many major employers, Target began conducting regular criminal background checks as part of our hiring process to help ensure our stores were safe places to work and shop,” Senior Communications Manage Jenna Reck said in an April 5 statement. “As a result, there were claims that the approach may have unintentionally disqualified certain applicants, and that some applicants were disqualified because of convictions that weren’t related to the position for which they applied.”

“Since then, we’ve revised our hiring practices, removing the criminal history question from our employment application nationwide. Now, we gather criminal background information in the final stages of the hiring process. This ensures individuals are considered for employment based on their qualifications, interview and availability,” Reck said.

“This settlement is the result of years of advocacy and negotiations on behalf of Plaintiff Times, Smith, and the Fortune Society,” class counsel Cheryl-Lyn Bentley told Bloomberg Law in an April 5 email. She said that class counsel “hopes that through this example, other companies will review their screening practices and consider every candidate based on their qualifications for the job.” Bentley is with Outten & Golden.

While saying Target is happy to resolve the decade-old allegations “and move forward,” Reck stressed that the retailer still places a high value on the safety of its customers and workforce.

Target still believes “it is important to consider an individual’s criminal conviction history as part of the overall hiring process,” Reck said.” Individuals are given an opportunity to explain their criminal history and provide information about the circumstances, mitigating factors, good conduct and rehabilitation.” She said the company only turns away “applicants whose criminal histories could pose a risk to our guests, team members or property, and design our process to treat all applicants fairly while maintaining a safe and secure working and shopping environment for team members and guests.”

Adam T. Klein, Ossai Miazad, Lewis Steel, and Christopher McNerney of Outten & Golden, and Sherrilyn Ifill and Samuel Spital in New York, and Coty Montag in Washington, all of the NAACP Legal Education Defense and Educational Fund, also represented the class.

The case is Times v. Target Corp., S.D.N.Y., No. 1:18-cv-02993, preliminary settlement 4/5/18.

To contact the reporter on this story: Patrick Dorrian in Washington at pdorrian@bloomberglaw.com

To contact the editor responsible for this story: Terence Hyland at thyland@bloomberglaw.com