Pepsi Beverages pays $3.1M in racial bias case for using criminal background checks

WASHINGTON — Pepsi Beverages Co. has agreed to 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 Equal Employment Opportunity Commission, which is working to crackdown on hiring policies that can hurt blacks and Hispanics, said Wednesday that the company's policy of not hiring workers with arrest records disproportionately excluded more than 300 black applicants. The policy barred applicants with arrest records even if they had never been convicted of a crime, and denied employment to those arrested or 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.