What Can We Learn from the EOCC v. Kaplan Decision?

It is every employer’s nightmare to be accused of discrimination.

But in today’s world it’s a very real possibility. And while the EOCC’s dictation of employee and employer rights and responsibilities is vital to ending discrimination based on any category, with the case of EOCC v. Kaplan we can see how this agency can sometimes overstep its bounds.

The Case

In 2010, the EOCC filed a lawsuit against Kaplan Higher Education Corporation (“Kaplan”), claiming that by considering applicant’s credit history in the hiring process Kaplan created an unlawful disparate impact on African Americans, violating Title VII of the 1964 Civil Rights Act.

It isn’t against the law to use credit checks in the hiring process, but because the use of the checks created an unintended discrimination against African Americans, EOCC filed a lawsuit.

If a disparate impact occurs, the employer must prove that the procedure causing the negative impact was a “business necessity.” In this case Kaplan checked applicant’s credit history when applying to a trusted, financial position.

Why their case didn’t hold up

It was discovered that the EOCC also uses credit checks during the hiring process. Woah! Naturally Kaplan did a double take, and took the defense of estoppel and “business necessity.” Estoppel essentially bars a party from taking action against another party for what they themselves have done in the past.

During litigation Kaplan asked for information regarding EOCC hiring practices. Naturally, the EOCC opposed, but in 2012 the judge granted Kaplan’s request.

This was pivotal for Kaplan’s case. After EOCC hiring practices were made public, Kaplan made a motion for summary judgment. Meaning, Kaplan asked for a speedy dismissal of the case, without trial, because EOCC had failed to show how Kaplan had created a disparate impact. The court agreed and granted the summary judgment April 2014.

Of course, the EOCC appealed, and was denied.

What does this mean for the future?

The ruling of this case shows that even the EOCC sees the value of credit checks, and suggests that the EOCC must follow its own rules if it wishes to prosecute.

You can’t litigate on the proverb “Do as I say, not as I do.”

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