EEOC Accuses Kaplan Higher Ed of Race Discrimination

The U.S. Equal Employment Opportunity Commission is suing Kaplan Higher Education, a division of The Washington Post Co., claiming the company has violated the Civil Rights Act since at least 2008.

The lawsuit, filed in a Cleveland federal court Tuesday, says that Kaplan discriminated against black job applicants by taking credit histories into consideration when making employment decisions.

"This practice has an unlawful discriminatory impact because of race and is neither job-related nor justified by business necessity," the EEOC said in a statement.

The agency argues that credit reports are not an indicator of responsibility but rather whether applicants pay their bills. Many states have banned or restricted the practice of reviewing credit reports in hiring because of the potential for keeping unemployed or financially strapped Americans from getting jobs.

Kaplan says the credit reports are a necessary component of its background checks into employees who would be dealing with financial matters like financial aid.

"We are an equal opportunity employer, and we are proud of the diversity of our work force," the company said in a statement.

The lawsuit seeks to recover lost wages, benefits and employment offers for people who were not hired by Kaplan. The EEOC is conservative when it comes to discrimination cases and only files them when convinced that serious abuse has occurred, according to The New York Times. In the most recent fiscal year, only 250 lawsuits were filed out of the 99,000 charges reported to the agency.

Kaplan Higher Education runs a network of for-profit schools, which enroll 110,000 students, approximately 70,000 of whom take their courses online, according to Bloomberg News.

The company has come under intense scrutiny this year after investigators from the Government Accountability Office secretly videotaped Kaplan recruiters in Florida and California making misleading statements to prospective students, for instance saying student loans wouldn't need to be paid back.

The Florida attorney general's office is investigating eight for-profit colleges, including Kaplan, for misrepresentation of financial aid and misleading recruitment practices. The company also faces four whistle-blower suits, which allege that Kaplan enrolls unqualified students, pays recruiters for the students they enroll, keeps students on the books even after they withdraw, and inflates student grades so they remain eligible for financial aid.

Kaplan gets 91.5 percent of its revenue from federal student aid, according to The New York Times. But only 28 percent of Kaplan students were repaying their loans in 2009, compared with 44 percent of students enrolled in The University of Phoenix, the country's largest for-profit school.

In a letter to the Times in November, Kaplan Chairman and CEO Andy Rosen brushed aside whistle-blower claims as "questionable" and said the media was ignoring the service his company provides to low-income Americans.

"Our graduation rates for the higher-risk population we serve are 15 percentage points higher than the national average for comparable students, and we do it at a taxpayer cost less than half that of traditional institutions," Rosen wrote.