Shoppers walk past a Target department store in Hackensack, New Jersey. Photo Credit: Northfoto/Shutterstock.com

Target has agreed to a settlement over allegations that the national retailer's hiring practices unfairly affected African-American and Latino job applicants.

Target's hiring process since 2001 required a criminal background check. Candidates with certain misdemeanor and felony convictions that involved violence, theft or drugs were automatically rejected. Candidates that were discovered to have not accurately told the company about prior criminal convictions were also automatically rejected.

The process, according to the plaintiffs, “imported the racial and ethnic disparities that exist in the criminal justice system into the employment process.” The filings note that African-Americans and Latinos are arrested and convicted of crimes at more than double the rate of whites.

In 2007, Carnella Times, a plaintiff in the suit, filed a discrimination complaint with the federal U.S. Equal Employment Opportunity Commission over Target's hiring practice. In August 2011, the EEOC issued a finding that the company's background check policy had discriminated against a class of applicants. Discussions between the parties after years of investigations led to the settlement filed Thursday in the U.S. District Court for the Southern District of New York.

In a statement, a spokeswoman for the New York employment law firm Outten & Golden said the settlement “will not only open job opportunities for thousands of individuals previously disqualified because of their justice involvement, but revise Target's hiring policies and practices …”

“Outten & Golden hopes that through this example, other companies will review their hiring policies and practices and consider every candidate based on their qualifications for the job,” the spokeswoman said.

Target agreed to pay $3.74 million to resolve the lawsuit. The funds will cover potential payments to class members, who will be afforded an opportunity to be hired by Target, with a potential $1,000 award in lieu of employment in certain situations. Nonprofits that support re-entry for previously incarcerated people will have access to $600,000 from the settlement. Approximately $1.9 million of the agreement will be set aside for attorney fees.

The company has also agreed to hire independent experts to help improve its hiring process going forward, the costs of which will be borne by the company apart from those agreed to in the settlement.

In a statement, Target spokeswoman Danielle Schumann provided details on the company's hiring process, noting that, like many company's, Target began checking backgrounds as part of the hiring process. Now, she said, the company has removed the criminal history question from employment applications, and only gathers information in the final stages of hiring as the company “still believe[s] it is important to consider an individual's criminal conviction history as part of the overall hiring process.”

“We exclude applicants whose criminal histories could pose a risk to our guests, team members or property, and design our process to treat all applicants fairly while maintaining a safe and secure working and shopping environment for team members and guests,” she said, adding: “We're glad to resolve this and move forward.”

The case has not yet been assigned to a judge.