Federal Court Dismisses EEOC’s Credit-Check Discrimination Case

February 6th, 2013 by JBWK

An Ohio federal court dealt the EEOC a major blow by dismissing its case against Kaplan Higher Education last week. The case had been the most notable one so far advancing the EEOC’s theory of “disparate impact” discrimination based on Kaplan’s use of credit reports in hiring.

The court found largely technical problems with the EEOC’s potential evidence of discrimination and its proposed expert testimony, so it didn’t scrap the theory writ large. Still, it may cause the EEOC to hesitate when considering similar lawsuits unless there is clear statistical evidence that applicants’ credit backgrounds caused a disparate impact on minorities without any underlying business purpose.

Remember that using credit reports is not illegal; it just has the potential to be discriminatory if it’s not based on business necessity and arbitrarily screeens out minorities.

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