(LEGAFI) -- PepsiCo, Inc. has been ordered to pay over $3 million to settle a racial discrimination lawsuit accusing the company of racially discriminating against black applicants by using criminal background checks to weed out job applicants who were arrested but not convicted. The U.S. Equal Employment Opportunity Commission said this disproportionately excluded African Americans.

According to the Pepsi hiring discrimination lawsuit, more than 300 black applicants were improperly excluded because of the former policy of the company's Pepsi Beverages Co. unit not to hire workers who had arrest records or were convicted of minor offenses.

The use of arrest and conviction records to deny employment can be illegal under Title VII of the Civil Rights Act of 1964 if that is use is irrelevant to the jobs being sought, said the EEOC, which filed the discrimination lawsuit on behalf of the applicants.

 

A Pepsi Beverages spokesman said the company has always applied its background checks neutrally and added that after the issue first surfaced in 2006, the company worked with the EEOC to revise its background check policy to help promote diversity in the workplace.

In addition to the $3.13 million settlement, Pepsi Beverages also agreed to improve training and offer jobs to qualified applicants who were victims of the old policy and still want employment.

The EEOC commended Pepsi Beverages’ decision to change its background check policy “to ensure that unwarranted roadblocks to employment are removed."