Pre-Adverse Action Letters

I got this from the National Association of Professional Background Screeners' (NAPBS) Thursday Letter. It provides some insightful updates on a court ruling that held that an employer can use a blanket or template applicant release and that an employer could refuse to hire anyone that did not agree to provide authorization to conduct a background check. No one should be surprised by these rulings. However, the court did provide some guidance on the use of Pre-Adverse Action letters and the timing employers and CRA's should use when making the ultimate hiring decision. See the excerpt below taken directly from the NAPBS email.

An employer is required to provide a Pre-Adverse Action Letter before taking action against a consumer that is based in whole or in part upon information contained in the consumer report. The unanswered question in the FCRA is: What period of time must lapsed between the sending of the Pre-Adverse Action Letter and the sending the Adverse Action Letter? The FTC has acknowledged that there is no clear standard and that the amount of time that would be reasonable depends upon many factors such as: the nature of the job, how the employer does business etc., but the purpose of this Section is to allow the consumer time to discuss the report with the employer before adverse action is taken. FTC Opinion Letter, Lewis, June 11, 1998.

Normally, a few days should be sufficient for the consumer to inform the prospective employer where he believes the criminal record is not his or other information in the report is inaccurate. The law does not require that the employer do anything with the information the consumer provides, but we hope that the employer will be rationale and listen to the consumer. However, some jobs must be filled immediately or the employer will be damaged, e.g. truck driver is needed to haul a load now and there is no time to investigate the dispute but an employer may work with the consumer for the next available position.

However, a recent case held that time between the Pre-Adverse Action Letter and the Adverse Action Letter should be a sufficient amount of time so that the consumer can receive a copy of his "draft report" and "correct" any inaccuracy in the report before any decision or action is commenced against the consumer. Beverly v. Wal-Mart Stores, Inc., 2008 WL 149032 (E.D.Va.). In support of it's position it cited the case of: Kelchner v. Sycamore Manor Health Center, 305 F.Supp2nd , 429, 435 (M.D. Pa. 2004) for the position that there must be enough time to correct the inaccuracy. However, the court in Kelchner did not say that no adverse action can be taken until a dispute has been resolved. Rather, the Kelchner court simply followed the reasoning of the FTC in the Lewis opinion by stating that only a reasonable time needs to pass between the two letters and that such period would not exceed five (5) days. To be accurate, the Kelchner's court comments are part of what lawyers call "dicta", that is a discussion that has nothing to do with the real issue being decided by the court. The real issues in Kelchner were two fold. The first was whether an employer can use a blanket release for the authorization of consumer reports that extends over the consumer's entire period of employment? The court answered that such releases are permissible. The second issue was whether an employer could refuse to hire someone who would not consent to obtaining a consumer report? Again, the court stated that the employer had this prerogative.

Thus, the court's position in Beverly is not supported by the case it cited but that does not change it's holding that can cause problems for CRAs. In fact, it appears the employer in the case, Wal-Mart, may have attempted to follow the "five (5) day rule" noted in the Kelchner case. Wal-Mart contracted the providing of Adverse Action Letters to it's consumer reporting agency. In this case, the first letter was mailed on September 1, 2005, and the second letter was mailed on September 6, 2005. However, Labor Day fell between these two dates and the consumer received both letters on the same day. The court held that this raised an issue for the jury to determine whether the process complied with the FCRA. One would assume the jury would be instructed that the time necessary would include the concept that the time must allow for the correction of any disputed information. Clearly, five days would often not suffice. If a court file is not available, which happens from time to time, these type of corrections can take considerably longer than five days.

The lesson to be learned in this case is that an automated system that sends out a second letter XXXX days after the first should be flexible to accommodate intervening conditions such as holidays, bad weather etc. and if such occur then the sending of the second letter should be delayed. In this case the Labor Day holiday delayed the delivery of the first letter, essentially depriving the consumer of any pre-adverse action notification. Thus, although the court's interpretation of the FCRA is subject to substantial criticism, the method to supply Pre- Adverse Action and Adverse Action letters is also subject to criticism.

Helpful Advice for Banks & Other Financial Institutions that Conduct Employment Verifications

(I know, long title). Many of you have seen recent articles we've written about what employers can and cannot or do and do not say when providing employment verification information on former employees. One of our clients was kind enough to pass along this article, Are You Hiring A Crook written by Mary Beth Guard at Bankersonline.com.

The article focuses on financial institutions who have terminated employees due to fraud or theft in the workplace, but where charges have never been filed. Many employers are scared to divulge such information if asked for fear of a lawsuit from the former employee. Most are unaware that the USA Patriot Act actually affords them the protection they need to warn financial institutions that might consider the individual for employment.

If you work in the financial sector, this article is a must read. I would recommend paying close attention to how this protection can be used and under what circumstances. I was so facsinated by this little know provision in the Patriot Act that I contacted the author and she was only so kind to offer her opinions and advice for how financial institutions can utilize this important protection. One thing that I found unfortunate was the fact that the language in this provision seems to make it impossible for a CRA (background screening organization) to conduct this type of verification on the employer's behalf.

Enjoy the article.

Medical Marijuana in the Workplace

In the past my articles have centered around industry issues and identity theft. I just came across this article on Yahoo and thought it was very interesting. I think this type of case could make it to the U.S. Supreme court as it could have ADA and possible EEOC implications. Obviously, drug screening and substance abuse testing in the workplace is a hot issue today and certainly a service offered by employeescreenIQ. My passion for this particular issue could be argued on both sides. I am a strong supporter for substance abuse testing in the workplace but also understand and support the Americans with Disabilities Act. I am not sure where this one will go, but it will be an interesting ride nonetheless.

Medical Marijuana users can be fired: California Supreme Court



By Adam Tanner Thu Jan 24, 6:14 PM ET

SAN FRANCISCO (Reuters) - Companies can fire employees who use marijuana for medical reasons even if California law allows such use because federal law prohibits it, the state's Supreme Court ruled on Thursday.

"Under California law, an employer may require preemployment drug tests and take illegal drug use into consideration in making employment decisions," Justice Kathryn Werdegar wrote.

More

Background Checks in the State of Connecticut

If your company conducts background checks on applicants in the state of Connecticut, state Substitute Senate Bill No. 1089 Public Act No. 07-243 affects you. Effective January 1, 2008 all Consumer Reporting Agencies (Background Screeners) must confirm criminal records found on those in the state of Connecticut (on a site provided by the state) before they can be reported to the employer. The CRA must also notify the subject of the report about the presence of the records being reported.

I am guessing that this is the state's way of slapping the hands of those that utilize commercial databases as the sole means of searching for criminal records and, or those that perform shoddy background checks. I come to this conclusion, because if you are performing on-site record searches and validating the records you find (the best practice method), this requirement is a redundant step. Because databases can contain arrest records, expunged records and can even reveal records that do not belong to the subject of a report unless the required authentication takes place an employer could be using information it should not be in the decision process.

To view the full version of this statute click on the link below:

Connecticut Substitute Senate Bill No. 1089 Public Act No. 07-243

FYI, the site that the state is supposed to be operating in was not up and running at the time of this post 1/14/08 (14 days after the law took affect).

employeescreenIQ Releases Latest Newsletter

We've just released the latest edition of our Quarterly Newsletter, The Verifier. Please feel free to check it out.

http://theverifier.net/index.php

Hurry Up and Wait: DHS to Revise No-Match Rule

The on-again off-again drama with the DHS No Match initiative continues according to this legislative update from Seyfarth Shaw.

On Friday, November 23, the Department of Homeland Security (DHS) requested that a federal judge stay the litigation regarding its new Social Security “no match” rule. Rather than proceed with the litigation, DHS plans to revise the rule to address the court’s concerns about the rule’s legality. DHS intends to begin a new rulemaking process in December. More

Will this political game of hot potato ever end?

Guidelines for Use of Employment Credit Reports in Ohio

As we've discussed a number of times in the past, there are a number of restrictions, recommendations, guidelines, etc. about how to use a credit report when making a hiring decision. We found these guidelines on the Ohio Civil Rights Newsletter from October. They are worth the read if you currently utilize or are considering utilizing credit reports for your hiring decisions in the state of Ohio. The following paragraph taken from the newsletter give you the gist:

In the light of the discriminatory impact on minority job applicants, employers should be extremely cautious in their use of consumer credit reports as a tool for screening job applicants. The policy guidance, as approved, makes clear that when an applicant is denied employment on the basis of his or her consumer credit report, the employer should have valid, objective proof--preferably in the form of a job validation study--that its use of these reports is not only related to the job in question, but also based upon a business necessity. More

Update on Ohio Senate Bill 197 Which Seeks to Expunge Felony Convictions

You might recall a couple recent posts where I respectfully disagreed with Ohio State Senator Shirley Smith's proposed legislation that would allow some serious felonies convictions to be expunged from individual's records. This was Senator Smith's way of addressing the issue of those with convictions being excluded from jobs and the increase in recidivism rates when employment cannot be found.

That is a serious issue and one that deserves proper consideration. However, as I said before, inhibiting potential employers' ability to make an informed decision is no way to address this problem. If such a measure was adopted, an employer that conducts background checks wouldn't see the expunged conviction.

I was scheduled to meet with Ohio State Senator Lance Mason last week to discuss our concerns about this bill last week and I was looking forward to blogging about some of the ideas I had already discussed with his staffers. Unfortunately, Senator Mason had to cancel the meeting (it was for a very good personal reason). We are going to reschedule, but rather than wait for the meeting, I thought it would be nice to share one of Senator Mason's remedies to this problem as relayed through his staffers.

Senator Mason believes that one such way to remedy the issue of re-entry into the workforce is to introduce tax credits to those that hire former convicts. I happen to believe that this idea has merit and am impressed with his ability to introduce a solution that serves all interests. I don't know how it would be paid for, but in concept it doesn't punish employers by keeping them in the dark about the people it hires and creates a way to get those who wish to enter the workforce after a criminal conviction to do so without having to lie on job applications or be fearful that past transgressions will automatically eliminate them from all employment opportunities.

This effort by Senator Smith is one we commonly see duplicated throughout the country. And in most cases, the intention is to make sure former convicts have a fair chance at assimilating back into their communities and can become productive memebers of society. These are honorable intentions. However, the ideas that Senator Mason has seem to strike a delicate balance of serving all parties involved.

USCIS Releases New I-9 Form

On Wednesday November 7th, US Citizen and Immigration Services released a revised Employment Eligibility I-9 form to be used by employers. All U.S. employers are mandated by Federal law to have all employees complete an I-9 form within the first three days of work. The use of the newly released form is not yet mandated, but soon will be. Feel free to download a copy of the new form below:

New I-9 Form

Final Rules Issued for Identity Theft Prevention

The FTC and the federal financial institution regulatory agencies have submitted their final rules and guidelines on how creditors and financial institutions must handle identity theft "red flags" and address discrepancies.

Highlights of the rules include the following measures that must be taken:

1. Identify relevant patterns, practices, and specific forms of activity that are “red flags” signaling possible identity theft and incorporate those red flags into the Program;
2. Detect red flags that have been incorporated into the Program;
3. Respond appropriately to any red flags that are detected to prevent and mitigate identity theft; and
4. Ensure the Program is updated periodically to reflect changes in risks from identity theft.

These guidelines seem like things you would think most creditors and financial institutions would already be doing. Hopefully, these measures can help protect consumers.

Click here to view the entire FTC Release

ICE Immigration Enforcement Foiled Again . . . For Now

Last month Seyfarth Shaw updated us with The Department of Homeland Security’s Immigration and Customs Enforcement agency (ICE) efforts to crack down on employers who received mismatch letters from the Social Security Administration and didn't act upon them. Enforcement was to begin on September 14th, but a federal judge in California issued a temporary ruling which prohibits the Social Security Administration from sending the letters and DHS from acting on them.

Again, Seyfarth has provided us with a full breakdown of these events. See link below. Do you think the government will ever figure this thing out?

Lawsuit Halts DHS Crackdown on Unauthorized Workers

Ohio Employers Beware: Proposed Senate Bill Would Hurt Employment Background Screening Efforts

As we reported in an entry from earlier this month, State Senator Shirley Smith of Ohio has proposed a piece of legislation that seeks to expunge or seal certain felonies off the records of those with convictions. This isn't the first time we've seen such proposed legislation, however in most cases the crimes the seek to seal are usually for one time offenders with non-violent convictions. And most of the time, these efforts are squashed when the ramifications are considered.

Well, this time Senator Smith has greater reaching goals. It is being reported in the Cleveland Plain Dealer, that her proposal includes expunging crimnal records including felonies such as manslaughter, reckless homicide, domestic violence, stalking and abduction. Does this really sound like a good idea? I think not. This bill would in essence clean the records of felons with such convictions and leave employers blindfolded when considering such candidates for jobs, posing them with potential threats to their employees, clients and their overall businesses. See article below.

Bill would give felons second chance

As both an employer in the state of Ohio and an employment screener, we are going to do something about this. We have already begun a letter writing campaign to our State Senators and Congressmen urging them to consider the consequences of this measure. We intend to rally the support of our clients who conduct background checks in the state of Ohio to do the same. We will reach out to relevant media outlets and advocate on behalf of all employers in the state of Ohio.

Interested in getting involved? Please email us at info@employeescreen.com

New U.S. Immigration and Customs Enforcement Rule (Ice) Creates Greater Risk for Employers

Check out this update from Seyfarth Shaw concerning a recent rule established by ICE concerning tougher enforcement of Social Security Mismatch Numbers.

Social Security Mismatch Letters: New ICE Rule Increases Risk to Employers

Employers that don't properly follow up on and resolve errors stemming from workers with social security numbers that come back as mismatches now face greater risk. If the government actually follows through on this employers should take note.

There are some affective tools out there for proactively determining an employee's right to work status. One such tool is the Electronic I-9 Process which has developed by experts to allow employers to fill out a "smart" electronic I-9 form and submit it to the Social Security Administration and Department of Homeland Security for instant status. They then can electronically archive the report and the results. It's a great solution to handle the I-9 process, but until the federal government enacts and enforces legislation my experience is that employers aren't going to bite.

Legislative Updates from Seyfarth Shaw

Many of you may be aware of the law firm Seyfarth Shaw LLP. They are one of the country's largest labor and employement firms and widely respected as a foremost expert in such matters. employeescreenIQ is proud to be a client of this esteemed firm and as such get regular legislative updates from them concerning employment topics that can affect all of us.

Seyfarth had been kind enough to allow us to post such updates in this blog, so beginning today we will screen these updates for information that might be of interest to our loyal blog readers.

Just another opportunity for us all the learn together.

ABA Commission Drops Proposal to Seal Criminal Records

ABA Commission Pulls Proposal on Criminal Records

Thankfully, the American Bar Association caved in to business advocacy groups in it's efforts to seal certain criminal convictions from the records of those seeking employment.

As I've said in the past and will continue to say as this issue comes up, it is not the goal of an effective background check to exclude people from getting a job. The purpose of a background check is to make an informed decision about a candidate. Just because someone has a been convicted of a crime should not alone disqualify that person from employment. However, employers shouldn't be left in the dark. They are the ones who will be left holding the bag if something happens. If you want to correct this problem, teach employers how to make proper decisions and hold those accountable who do not.

Thank you to the folks at BRB Publications for bringing this story to our attention.

Feds set to punish employers for illegal workers

Second on our list of coming trends presented to the 2007 SHRM annual conference in Las Vegas was "verification of right-to-work." In a nutshell, the push is to force employers to utilize DHS' Basic Pilot Program for instant, electronic I-9 verifications. It's great in theory but employers have been slow to embrace the instant electronic confirmation of work eligibility.

Colorado has already mandated this tool for employers, and Arizona is set to enforce stiff penalties beginning in 2008, to include potential revocation of business licenses, for employers that fail to comply, or knowingly employ ineligible workers.

A recent article, "Employers brace for immigration rules", discusses a new tack the federal government is considering. Whether or not any employer nationwide utilizes the basic pilot program, the Social Security Administration has historically flagged SSNs that didn't jibe with identity info on record. "No match" letters have always been sent to workers and employers, but left it up to the employee to resolve the issue, with no culpability on the employer's part.

The proposed new rule will put the onus on the employer to make sure the issue is resolved within 60 days, or they must fire the employee outright. Failure to comply means the employer may be deemed as having knowingly hired illegal workers, and face stiff penalties. This will be an obvious incentive for employers to utilize the electronic instant verification system (basic pilot program), but doesn't appear to specifically mandate it (we can probably assume mandated use of the system won't be far behind).

Don't Punish Employers: Criminal Background Checks are Vital Part of the Hiring Process

The Cleveland Plain Dealer recently pusblished a story, Ex-cons need jobs, but bill that would seal their records goes too far , which describes a State of Ohio Senator's efforts to have certain criminal records, including felonies wiped off convicts records so that they can find better jobs. I am not so delusional to think that this a one-sided story, but as an employment screener and a business owner I can't help but think that this solution just punishes employers and dilutes the deterrance of committing a crime. I wrote the following letter to the editor which was then cut down and published. Rather than give you the condensed published version, I thought I would post the un-edited version here.

I am deeply concerned about how a new piece of legislation proposed by State Senator Shirley Smith (Senate Bill 197), which would allow certain felonies to be expunged, will affect our state’s employers. As a both and employer in the state of Ohio and a professional employment screener, we are charged by corporations, large and small, with obtaining any existing criminal records on their job applicants. Obtaining this type of background is necessary because it allows a decision-maker to qualify their applicants. It also allows them to protect their company from the potential risks of hiring those who have a criminal past that would affect their ability to perform a specific job function. Failing to factor in a candidate’s criminal past represents a major liability to employers.

We see it every day — an employee commits a crime while at work that negatively affects a co-worker, customer or vendor. The crime victim files a lawsuit against the employer. It is then discovered the employer failed to perform an adequate background check and the jury rewards the defendant millions at the cost of the employer — this is in addition to the billions of dollars employers lose each year to internal theft. While the cost of a lawsuit or theft can be overcome, the negative publicity and loss of public confidence cannot.

The senator will argue that this measure will apply only to those certain felony offenses that she deems not to be harmful to employers. I contend that a felony conviction is a felony conviction, regardless of the crime and that if it wasn’t a serious crime, than it wouldn’t be prosecuted as a felony. How does this affect employers? If a record is expunged, then it ceases to exist on an individual’s criminal record. When a background check is conducted, that record cannot be found, therefore cannot be factored into an employer’s hiring decision. This leaves the employer twisting in the wind.

Employers are not unchecked when it comes to conducting background checks and acting on adverse information. They must consider the various attributes of the conviction and the individual that committed them; what type of crime was committed, how long ago did it take place, is the person a repeat offender, etc. It is not acceptable for employers to simply adopt a policy with no tolerance for past transgressions. Perhaps a small group of employers have done so and it is my recommendation that rather than hamstring our state’s employers with the inability to properly evaluate job applicants, that Senator Smith propose funds for educating employers on how to make proper hiring decisions and holding them accountable in the isolated incidents when they run afoul of the law.
Remember that a background check is an acceptable tool for determining a candidate’s qualifications and suitability for employment. There is a job out there for everyone including those with past transgressions. Just don’t inhibit the ability of employers to make an informed decision.

State of Georgia Mandates Verification of Work Status

Another day, another state passing a law that requires employers to verifiy their employee's work eligibility status. (Okay, this actually took place on June 29th, but I've been busy blogging about other topics) This time, the State of Georgia has enacted Senate Bill 529 that mandates that all businesses the contract with the state and have 500 or more employees must confirm their employees legal right to work status with the Social Security Administration or Department of Homeland Security (DHS)for residents of other countries who are legally permitted to work in this country.

In addition to enforcing federal immigration laws, the state feels that this measure will discourage those doing business with the state from human traffiking and taking state deductions for undocumented workers.

What I find interesting about this measure is that they only require this of those that employ over 500 employees. Why? Do they trust that small employers wouldn't hire illegals and are they just starting somewhere? Also, this should be an interesting test case for the state. What if these contractors now cannot find enough legal workers to complete the jobs the state has contracted for? Do they rescind this measure? Do they look for out-of-state contractors? Can they require out-of-state contractors to do the same? Will they eventually mandate this for all employers in the state of Georgia?

Who knows? We'll keep following this story and update you from time to time.

State of Arizona Set to Mandate Tougher Regs for Employment Eligibility

Some trends take longer than others. Take for instance beanie babies, bell bottom pants, swatch watches, or cabbage patch kids. These things took off like wild fire. For better or worse, it seemed like everyone couldn't wait to participate. Okay so maybe the trend for states to enforce employment eligibility laws isn't setting world records for speed, but Arizona is now set to be the second state to pass a law that puts teeth into the enforcement of only hiring legal U.S. citizens and it is believed that Georgia is close behind. Arizona house bill #2779 threatens to suspend the business license of first time offenders and even includes a "death penalty", permanent revocation of a business license for failing to verify work status on all employees. Of course, so far the state's efforts are only being bolstered with a $100,000 budget, but if these efforts actually do take shape, employers in the state of Arizona better take note, and fast!

I was recently speaking with an employment attorney about states adopting such laws for the enforcement of a federal statute and she questioned whether the state could actually adopt legislation that mandates the enforcement. It's a question I still haven't been able to answer but one that we should most definitely follow up on.

In the meantime, should this trend continue, it puts further onus on the employer to ensure that their employees are working legally in this country. It dictates that they must spend more time making sure that I-9 documentation is filled out correctly, that identification be scrutinized and that the employer confirm the employees eligibility status with the Social Security Administration. With the threat of the aforementioned sanctions, failure to do this could really hurt . . . now.