Reuters (01/17/12) Stephanie Rabiner

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 were not convicted of a crime. The settlement with the U.S. Equal Employment Opportunity Commission is part of a national government crackdown on hiring policies that can hurt blacks and Hispanics.

The Pepsi settlement is not the first time the agency has targeted such criminal background check policies, and some observers predict that these types of enforcement actions will only increase with time. Employers may want to review how they use criminal background checks, as a wholesale refusal to hire persons with arrest records can result in trouble for the firm. Consideration should be given to using the U.S. Department of Labor’s Federal Bonding Program that will give a company six months of free “dishonesty” insurance if an at-risk, hard-to-place job seeker is hired.