Macy’s to Settle Class Action Over Background Check Policies for $1.8M

Retail giant Macy’s Inc. has agreed to settle a class action lawsuit over its hiring practices by paying out $1.8 million and making a promise to revise its background check policies.

The deal was unveiled in court papers filed Thursday in the U.S. District Court for the Southern District of New York by the plaintiffs in the case. According to the notice, Macy’s will hire a consultant and update the Class Members on the company’s progress towards creating a new approach for screening job candidates.

The Fortune Society, a non-profit organization that provides social services and support to formerly incarcerated people, filed the class action lawsuit in July 2019 on behalf of a Black woman who said she was offered a job by Macy’s in its credit and customer service department in October 2018, but was fired a month later after the results of a background check came in.

According to the class action lawsuit, Jenetta R. wasn’t provided with the results of her background check at the time, but she tried in vain to explain to her bosses at Macy’s that the misdemeanor conviction on her record she assumed prompted her termination happened 10 years earlier and was based on a minor incident. She said she was convicted because she was found to be driving without car insurance during a traffic incident because she couldn’t afford to pay the premiums.

Macy’s formally rescinded her employment.

Title VII of the Civil Rights Act, the U.S. Equal Employment Opportunity Commission and New York state and city laws say employers can only consider criminal records in making employment decisions if the conviction would hinder a job candidate’s ability to do the specific job they are seeking.

The Fortune Society said Jenetta’s experience violated those laws and was only one of many committed by Macy’s because of its background check policies.

What’s more, the policies are discriminatory, the class action said, because people of color are more likely to have criminal records because of pervasive racial inequality in the American criminal justice system.

The class action lawsuit also argued Macy’s violated the Fair Credit Reporting Act by failing to notify her and others who had the same experience that their criminal records were being used to deny them employment without regard to the nature of the offenses on their records.

“Macy’s’ discriminatory criminal history screening policies and practices have a disparate impact on Black and Latino people who, as a result of systemic racial discrimination, constitute a demonstrably overrepresented segment of the criminal justice system population,” the class action lawsuit said.

The Macy’s class action represents job applicants to Macy’s in New York City who were denied employment between September 2017 and January 2020 because they would not consent to a background check in their online applications.

Lawyer’s for Macy’s twice moved to have the class action lawsuit dismissed, but were rebuffed by the court. Settlement negotiations began in the fall of 2019.

Under the terms of the newly proposed settlement, the $1.8 million gross amount will include net payments of at least $900 to as many as 1,171 Class Members, totaling nearly $1.1 million.  The Fortune Society would get $50,000 and the legal team representing the plaintiffs would get as much as $600,000. Another $10,000 will pay for settlement administrators to oversee the distribution of the settlement fund.

Beyond the financial agreement, Macy’s will reportedly adopt “substantial measures to address their criminal screening process to the benefit of class members and future applicants to Macy’s,” the settlement proposal submitted to the court said. Among those measures is the hiring of a consultant to review its background check policies.

Macy’s also said it would keep in any reforms it makes in place for at least two years and will give status reports about the efforts to the plaintiffs.

Have you ever lost out on a job opportunity because of the results of a background check? Do you think you’ve been discriminated against by an employer’s hiring policies? Tell us about it in the comment section below.

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The Plaintiff and Class Members are represented by Ossai Miazad, Lewis Steel, Chauniqua D. Young, Maya S. Jumper and Michael C. Danna of Outten & Golden LLP, Rachel Kleinman, Coty Montag and Jason Bailey of the NAACP Legal Defense and Educational Fund Inc. and Michael Pope, Eric Eingold and Dale Ventura of Youth Represent.

The Macy’s Background Check Policies Class Action Lawsuit is The Fortune Society Inc., et al. v. Macy’s Inc., et al., Case No. 1:19-cv-05961, in the U.S. District Court for the Southern District of New York.

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