In EEOC v. Kaplan Higher Learning Corp., the Obama Administration is suing Kaplan for running credit checks on employee applicants. Prior to 2004, Kaplan had learned that some of its employees had misappropriated student payments. To provide safeguards against this behavior, Kaplan began screening its applicants for major red flags in their credit history. The Obama Administration sued Kaplan, arguing that it cannot use credit checks, because use of credit checks has a disparate impact on black applicants.
There was one major problem with the government’s argument. Kaplan’s applications for employment do not ask for a person’s race. Kaplan had absolutely no data to determine if the credit checks were harming black applicants more harshly than white applicants, because race was wholly irrelevant to Kaplan. Undeterred, the Obama Administration subpoenaed the DMV records of applicants who had been denied employment with Kaplan. It then hired a group of
economists “experts” to determine whether the applicants “looked” like individuals of a certain race. Then, based on the perceived skin color of the individuals in their DMV photos, the Administration determined that Kaplan’s credit checks had a disparate impact on black job seekers.
Fortunately, the Court rejected this “evidence” outright, holding that the EEOC “fails to present sufficient evidence that the use of ‘race raters’ is reliable.” Interestingly, the Court also noted that the EEOC itself forbids precisely this type of stereotyping: “In fact, the EEOC itself discourages employers from visually identifying an individual by race and indicates that visual identification is appropriate ‘only if an employee refuses to self-identify.’ … According to the EEOC, it implemented these guidelines not because of the accuracy of visual identification, but to facilitate and respect ‘individual dignity.’ Regardless of the reason supporting the pronouncement, it is clear that the EEOC itself frowns on the very practice it seeks to rely on in this case and offers no evidence that visual means is a method accepted by the scientific community as a means of determining race.”