Pepsi Beverages pays $3.1M in racial bias case

WASHINGTON (AP) — Pepsi Beverages Co. will pay $3.1 million to settle federal charges of race discrimination for using criminal background checks to screen out job applicants — even if they weren't convicted of a crime.

The settlement announced Wednesday with the Equal Employment Opportunity Commission is part of a national government crackdown on hiring policies that can hurt blacks and Hispanics.

EEOC officials said the company's policy of not hiring workers with arrest records disproportionately excluded more than 300 black applicants. The policy barred applicants who had been arrested, but not convicted of a crime, and denied employment to others who were convicted of minor offenses.

Using arrest and conviction records to deny employment can be illegal if it's irrelevant for the job, according to the EEOC, which enforces the nation's employment discrimination laws. The agency says such blanket policies can limit job opportunities for minorities with higher arrest and conviction rates than whites.

The company has since adopted a new criminal background policy and plans to make jobs available to victims of the old policy if they are still interested in jobs at Pepsi and are qualified for the openings.

"I commend Pepsi's willingness to reexamine its policy and modify it to ensure that unwarranted roadblocks to employment are removed," EEOC Chairwoman Jacqueline Berrien said in a statement.

Pepsi Beverage spokesman Dave DeCecco said the company's criminal background check policy has always been neutral and that the EEOC did not find any intentional discrimination. He said after the issue was first raised in 2006, the company worked with the EEOC to revise its background check process "to create a workplace that is as diverse and inclusive as possible."

"We are committed to promoting diversity and inclusion and we have been widely recognized for our efforts for decades," DeCecco said.

He said the new policy would take a more "individualized approach" in considering the applicant's criminal history against the particular job being sought.

Pepsi Beverages is PepsiCo's beverage manufacturing, sales and distribution operating unit in the United States, Canada and Mexico.

Under the settlement, the company will provide the EEOC with regular reports on its hiring practices and offer antidiscrimination training to its hiring personnel and managers.

About 73 percent of major employers report that they always check on applicants' criminal records, while 19 percent do so for select job candidates, according to a 2010 survey by the Society for Human Resource Management.

But increased federal scrutiny of such policies has led some companies to reevaluate their hiring process. Pamela Devata, a Chicago employment lawyer who has represented companies trying to comply with EEOC's requirements, said there has been an uptick over the past year in EEOC charges over the use of background checks.

"The EEOC has taken a very aggressive enforcement posture on the use of criminal background and criminal history," Devata said.

The commission held a special meeting on the topic last summer, and Devata said employers have been expecting the EEOC to issue more specific guidance.

EEOC officials have said, for example, that an old drunken driving conviction may not be relevant to a clerical job, but a theft conviction may disqualify someone from working at a bank.

Julie Schmid, acting director of the EEOC's Minneapolis office, said the EEOC recommends that employers consider the nature and gravity of offenses, the time that has passed since conviction or completion of a sentence, and the nature of the job sought.

"We hope that employers with unnecessarily broad criminal background check policies take note of this agreement and reassess their policies to ensure compliance" with antidiscrimination laws, Schmid said in a written statement.

Rare but Grudging Judicial About-Face in Bias Case

“It’s a nice Christmas present, isn’t it?” said U. W. Clemon, Alabama’s first black federal judge.

Mr. Clemon, who stepped down from the bench in 2009 after three decades of service, was talking about an extraordinary about-face this month from the federal appeals court in Atlanta. He was home with a cold, but he sounded delighted to have played a part in persuading the court that some words still carry the sting of oppression, even in the modern South.

“The court now understands,” Mr. Clemon said, “the unwillingness of black men to go back to being called ‘boy.’ ”

Last year, the United States Court of Appeals for the 11th Circuit ruled that there were no racial overtones when a white manager at a Tyson chicken plant in Gadsden, Ala., called adult black men working there “boy.”

“The usages were conversational” and “nonracial in context,” the majority wrote in a 2-to-1 decision that overturned a jury verdict of about $1.4 million in an employment discrimination case brought by a black Tyson employee, John Hithon.

The decision prompted Mr. Clemon and 10 other civil rights leaders to file a brief. Among the signatories were giants of the civil rights movement like the Rev. Fred L. Shuttlesworth, who survived beatings and bombings in Alabama and who died in October, and Andrew Young, a former mayor of Atlanta and ambassador to the United Nations.

The brief urged the court to reconsider, making the case that “boy” retains its venom. For evidence, the brief drew on personal experiences, history, literary classics like “To Kill a Mockingbird” and “Native Son,” and the writings of the Rev. Dr. Martin Luther King Jr.

“Boy,” the brief said, is either a proxy for or “at the very least a close cousin” of the most charged racial epithet.

On Dec. 16, more than a year after the initial decision, the appeals court reversed course. The new ruling was opaque and grudging, but Mr. Clemon said he welcomed it, particularly since it is very unusual for a federal appeals court panel simply to change its mind. “I don’t recall it ever happening,” said Mr. Clemon, who graduated from law school in 1968.

Judge Edward E. Carnes wrote the new decision, now for a unanimous panel. He said the court had reconsidered the evidence in the case and “we now reach a different conclusion.”

Stephen B. Bright, the president of the Southern Center for Human Rights, was less magnanimous than Mr. Clemon. He said the case demonstrated “how judges manipulate facts and law to make a case come out the way they want it to.”

“The new opinion flatly contradicts the first one in several places,” Mr. Bright said.

The new decision followed unflattering news coverage of the earlier one and might have been prompted by the possibility of a rebuke from the full 11th Circuit.

On the other hand, the panel had dug in its heels in the face of earlier criticism in the long-running case, including from the Supreme Court.

In 2005, for instance, the appeals court said the meaning of “boy” depended on whether there was an adjective attached.

“The use of ‘boy’ when modified by a racial classification like ‘black’ or ‘white’ is evidence of discriminatory intent,” the court said. But “the use of ‘boy ’alone is not evidence of discrimination.”

The Supreme Court unanimously reversed the 2005 decision the following year. “The speaker’s meaning may depend on various factors including context, inflection, tone of voice, local custom and historical usage,” the justices said in an unsigned opinion.

That admonition was rejected by the 11th Circuit panel last year. Then it was embraced this month, though with little enthusiasm.

“The verdict could have gone either way,” Judge Carnes wrote, “and it went Hithon’s way.”

In the end, the new decision upheld a compensatory award to Mr. Hithon of about $365,000. But the decision struck down a $1 million award of punitive damages, saying the manager in question, who supervised 1,400 workers, was not high enough in Tyson’s corporate hierarchy for his actions to be attributed to the company, which in any event had a policy against discrimination.

A Tyson spokesman did not respond to two requests for comment.

Judge Carnes thought it worthwhile to drop a footnote criticizing the civil rights leaders’ brief, saying it had made a minor error in reciting the facts of the case. “Although we welcome amicus curiae briefs that are helpful, misstatements of fact are not helpful,” Judge Carnes wrote, using the Latin term for friend of the court.

Judge Carnes also took a swipe at Mr. Hithon’s trial lawyer, who had elicited testimony at trial about the meaning of “boy.”

“You know,” Anthony Ash, a black Tyson worker, testified in 2007, “being in the South, and everybody know being in the South, a white man says ‘boy’ to a black man, that’s an offensive word.”

“You might as well use the N-word if you are going to say that,” Mr. Ash added.

Then the lawyer uttered the word itself. Saying it, Judge Carnes wrote, was “an improper attempt to inflame the jury.”

There are classier ways to own up to mistakes. Some judges like to quote Justice Felix Frankfurter, as Judge Harry T. Edwards of the United States Court of Appeals for the District of Columbia Circuit did when he changed his mind in 1994 in a libel suit against this newspaper.

“Wisdom too often never comes,” Justice Frankfurter wrote, “and so one ought not to reject it merely because it comes late.”

By ADAM LIPTAK NYT