WASHINGTON (AP) -- Pepsi Beverages Co. has agreed to pay $3.1 million to settle federal charges of race discrimination for using criminal background checks to screen out job applicants.

The Equal Employment Opportunity Commission says the company's policy of not hiring workers with arrest records disproportionately excluded more than 300 black applicants.

Under the policy, applicants with arrest records were not hired even if they had never been convicted of a crime. The company also denied employment to those arrested or convicted of minor offenses.

The EEOC says using arrest and conviction records to deny employment can be illegal if it's not relevant for the job.

The company has since adopted a new criminal background policy. A company spokeswoman did not immediately return a request for comment.

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