The Sixth Circuit Court of Appeals shredded the EEOC in a victory for Kaplan. The EEOC sued Kaplan over its use of credit and criminal background checks in hiring job applicants. Yup, the EEOC doesn't think a company that handles financial information for students seeking financial aid should find out if job applicants might be more likely to engage in identity theft. Judge Raymond Kethledge skewered the EEOC with its own logic in the very first sentence:
In this case the EEOC sued the defendants for using the same type of background check that the EEOC itself uses. The EEOC’s personnel handbook recites that “[o]verdue just debts increase temptation to commit illegal or unethical acts as a means of gaining funds to meet financial obligations.” Because of that concern, the EEOC runs credit checks on applicants for 84 of the agency’s 97 positions. The defendants (collectively, “Kaplan”) have the same concern; and thus Kaplan runs credit checks on applicants for positions that provide access to students’ financial-loan information, among other positions. For that practice, the EEOC sued Kaplan.
Why would Kaplan check credit histories and criminal backgrounds? The learned jurist stated:
Kaplan’s concerns became reality about a decade ago, when it discovered that some of its financial-aid officers had stolen payments that belonged to students. Kaplan also learned that some of its executives had engaged in self-dealing, by hiring relatives as vendors. In response, Kaplan implemented a number of measures to prevent these abuses. One of those measures was to run credit checks on applicants for senior-executive positions, accounting and other positions with access to company financials or cash, and positions with access to student financial-aid information. The credit checks are performed by a third-party vendor, which reports, among other things, whether the applicant has ever filed for bankruptcy, is delinquent on child-support payments, has any garnishments on earnings, has outstanding civil judgments exceeding $2,000 or has a social-security number that does not match the number the credit bureau has on file. If an applicant’s credit history includes any of the enumerated items, the vendor flags the applicant’s file for “review.” At that point, Kaplan typically reviews the file and makes an ad hoc decision as to whether to move forward with the application. The credit-check process is racially blind: the vendor does not report the applicant’s race with her other information.
The court then determined the EEOC used junk science to support its position and ended the opinion with some parting shots:
We need not belabor the issue further. The EEOC brought this case on the basis of a homemade methodology, crafted by a witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness himself. The district court did not abuse its discretion in excluding Murphy’s testimony.