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Pepsi Settles EEOC Racial Bias Case for $3.1 Million

By Stephanie Rabiner, Esq. on January 16, 2012 | Last updated on March 21, 2019

A spokesperson for the Equal Employment Opportunity Commission announced on Wednesday that the agency has extracted a $3.1 million settlement in a racial bias suit filed against PepsiCo.

The EEOC's Pepsi suit focused on the company's policy of not hiring workers who have arrest records, as well as those convicted only of minor offenses. Though applied neutrally, the policy disproportionately affected African-American job applicants.

Approximately 300 of those applicants will share in the settlement monies.

Pepsi has also agreed to change its criminal background policy, which is something that you may want to think about, too. The EEOC Pepsi suit actually seems to be part of a growing trend.

In April 2010, Inside Counsel reported an increase in EEOC actions against employers who indiscriminately use criminal background checks. And in July 2011, the Commission held a meeting at which it thoroughly discussed the issue, indicating that new guidelines may be coming soon.

As any lay person can tell you, minorities have a significantly higher arrest and conviction rate than whites. No matter how innocent or neutral the policy, refusing to hire persons with arrest or conviction records will almost always disproportionately impact racial minorities.

Though criminal background checks are useful for limiting all kinds of legal liability, related policies must overcome this inherent bias. Think about tailoring your policy to the company's needs, and looking only for crimes that could lead to problems.

Now is the time to reassess -- you don't want another EEOC Pepsi lawsuit on your hands.

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