Pepsi Pays $3 Million to Settle EEOC Discrimination Claim

By ROBERT SCALLY and R. DAVID WENDEL–

Pepsi Beverages will pay $3.13 million and provide job offers and training to settle charges of racial discrimination filed with the Equal Employment Opportunity Commission’s Minneapolis office.

More than 300 African Americans were affected by a criminal background check policy that disproportionately excluded black applicants from permanent employment at Pepsi Beverages (formerly known as Pepsi Bottling Group), according to the EEOC.

 

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An EEOC investigation found that the criminal background check policy formerly used by Pepsi Beverages discriminated against African Americans and violated the Civil Rights Act of 1964. Job applicants who had been arrested pending prosecution were not hired for permanent jobs even if they had never been convicted of any offense. During the EEOC’s investigation, Pepsi voluntarily adopted a new criminal background check policy.The $3.13 million settlement, announced on 11 January 2012, will primarily be divided among black applicants for jobs at Pepsi, with a portion of the sum paying for the administration of the claims process. Pepsi will also offer employment opportunities to victims of the former criminal background check policy who still want jobs at Pepsi and are qualified for the jobs for which they apply.In addition, Pepsi will conduct Title VII training for its hiring personnel and all of its managers and give the EEOC regular reports on its hiring practices under its new criminal background check polices.Pepsi Beverage spokesman Dave DeCecco told the Associated Press that the EEOC did not find any intentional discrimination. DeCecco said that the background checks became an issue in 2006, according to the AP. Pepsi worked with the EEOC to revise its process in order "to create a workplace that is as diverse and inclusive as possible," DeCecco told the AP.“We obtained significant financial relief for a large number of victims of discrimination, got them job opportunities that they were previously denied, and eradicated an unlawful barrier for future applicants,” said John Rowe, EEOC Chicago district director. “We are pleased that Pepsi chose to work with us to reach this conciliation agreement and that through our joint efforts, we have been able to bring about real change at Pepsi without resorting to litigation.”The settlement was a “landmark,” according to a post on www.planattorney.org, the website for the Professional Liability Attorney Network, a national organization of independent law firms specializing in professional liability and related industry law.According to the www.planattorney.org post:“The EEOC reasoned that people of certain races and colors are arrested and convicted more frequently than others outside of those groups; thus, employers using such information in hiring decisions may cause a disparate impact against those protected groups. This is the first such EEOC settlement in this context. It is also remarkable in that it arises from a private settlement agreement following an investigation this normally kept confidential.”“The EEOC has long standing guidance and policy statements on the use ofJacqueline Berrien

arrest and conviction records in employment,” said Jacqueline A. Berrien, EEOC chair. “I commend Pepsi’s willingness to re-examine its policy and modify it to ensure that unwarranted roadblocks to employment are removed.”

The EEOC provides this bit of guidance for employers on backgrounds checks:

When employers contemplate instituting a background check policy, the EEOC recommends that they take into consideration the nature and gravity of the offense, the time that has passed since the conviction and/or completion of the sentence, and the nature of the job sought in order to be sure that the exclusion is important for the particular position.

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