Word Association with the EEOC’s Latest Background Check Hearing

Oh don’t mind me.  I’m just playing word association with the following phrase “EEOC Meeting to Discuss Use of Criminal Records”.  Feel free to send in your own suggestion for my word cloud above.

Why the sarcasm?  Where to start?  We asked earlier this week if the EEOC was willing to have an honest and open dialogue on employers’ use of criminal background checks. We got our answer pretty quickly.  If the list of those who would testify wasn’t answer enough, check out the press release which the EEOC distributed just hours after the 4 hour meeting was concluded.  The key word here is “distributed” since it was clearly “written” well before the meeting.

Instead of listening to both sides of the issue, the EEOC paraded out a cadre of individuals damning the use of criminal records in the hiring process.  No one was there to talk about the liability employers face.  No one was asked to talk about the victims of violent criminal activity in the workplace.  No one was called on to talk about the mounting losses employers shoulder due to internal theft.  Oddly, no one was there to discuss the nation’s largest consumer of employment background checks, the U.S. government whom the last time I checked, the EEOC was a part of.

They favored testimony from the Department of Justice who offered the Blumstein study on the point of redemption as ironclad and unimpeachable rather than as a limited study, based on limited criminal activity, based on a limited geographical area.  They listened to testimony that the FBI’s database only includes about 50% of all criminal records.  Never mind that those in our industry use far more accurate methods to conduct criminal background checks.  They heard testimony that talked about employers running roughshod over applicants’ rights and ignored that fact the the FCRA and state laws provide protection.

According to those in attendance, here’s where it stands.  There are two EEOC commissioners who think that the commission should overhaul their guidance on employers use of criminal background checks.  There are two commissioners who either think that the current guidelines are sufficient or should be slightly modified.  And there is one commissioner who seems to be in the middle and will most likely be the ultimate deciding factor.

In the meantime, the EEOC has allowed a 15 day comment period on the issue.  Perhaps they’ll consider opinions counter to theirs’ then.  I’ll be holding my breath until then.

Stay tuned.  We have definitely not heard the last of this issue.

P.S. Once the smoke clears out of my ears, I’ll publish some of the materials that were provided to the EEOC in support of criminal background checks.

The Verifier Background Screening Newsletter, Summer 2011

We just published The Verifier XXIII, Summer 2011 Edition, a publication intended as an educational tool and information resource for human resource professionals or anyone interested in keeping abreast of recent employment screening and background check industry developments.

Highlights of this issue include the following:

Articles:

Announcements and Legislative Updates

Check it out!

Will Today’s EEOC Hearing on Criminal Background Checks Be Fair?

Today, the EEOC will hold a hearing to exam their position on employers’ use of criminal background checks.  They held a similar meeting on employment credit reports late last year, and will no doubt duplicate their “open-minded” approach to weighing each side of the argument fairly.  And by fairly, I mean that they will railroad anyone that disagrees with their concerns that criminal background checks are discriminatory and should be significantly curbed.

Here’s the thing.  Yes, a higher percentage of minorities are arrested and convicted than whites.  But can it be proven that they are arrested and convicted because they are minorities or is it because they were actually engaged in criminal activity?  Further, we definitely have a problem in this country with recidivism whereby those convicted of crimes often return to criminal activity again and again.  Many suggest that the primary reason for such recidivism is that they cannot find jobs because employers will not hire people with criminal records.

Fine. I’ll acknowledge these arguments.  I’ll also tell you that I am all for rehabilitation and programs designed to get convicts back to work.  However, the EEOC would prefer to keep employers in the dark about someone’s past and risk the chance of a host of criminal activity from theft to murder to correct the problem.

And this is where I think the EEOC is dead wrong.  Just ask Lucia Bone how she feels about the necessity of criminal background checks.  Her sister was brutally raped and murdered in her own home by a service worker who was not vetted before he was hired.  If the employer would have conducted a background check, the employer would have known that this person was a convicted sex offender.  Tell that to the family of Nan Todor, who was murdered in her Chicago hotel room by a maintenance man who also was not screened.  He too, had serious conviction records that the hotel should have known about.

The EEOC continues to ask how we know that our industry helps employers make sound hiring decisions.  How do you prove a negative?  How can we show that we prevented something from happening if we provided information that caused an employer not to hire someone?

The answer is not to prevent employers from conducting background checks.  After all, does anyone believe that the EEOC doesn’t consider such information before filling a position?  The answer is to invest in programs such as GOSO, an organization that helps convicted felons reintegrate into society.  They help convicts educate themselves, provide resources for battling addiction, find safe places for them to live and teach them how to find jobs.  When I met with GOSO founder and president, Mark Goldsmith last February he told us that he doesn’t blame employers for conducting background checks.  They need to protect themselves.  However, he also said that they people that go through his program as far less likely to return to crime than those that do not have the resources he provides.

There is a job for everyone out there.  But not everyone is qualified for every job.  I hope the EEOC is willing to openly and honestly listen to all sides today.

Background Checks Uncover Dirt on Candidates

Background checks uncover dirt on candidates

Background checks on this year’s field of 36 City Council candidates uncovered a felon, alcohol-related offenses, assault arrests, deadbeat parents, financial woes and a particularly vindictive divorce.

Each municipal election cycle, the Tulsa World relies upon records and databases from courts, jails, law enforcement and government agencies to vet those seeking public office.

The checks revealed current and past issues with 13 of the 36 candidates.

The city’s municipal primary is set for Sept. 13 and general election Nov. 8.

District 1: Democrat Jason Trent Jr., 45, is a convicted felon.

In 1994, Trent pleaded guilty in Tulsa County District Court for failing to return rental property, including a TV and VCR.

Trent was fitted with an ankle monitor, which he eventually cut off and left for Oklahoma City.

As a result, Trent was charged with escape, which he pleaded guilty to in 1995 and spent about 18 months at Jess Dunn Correctional Center in Taft.

“This all goes back to when I was addicted to crack cocaine and making a lot of bad choices,” he said.

“I’ll be honest with you, I was a straight up (screw) up.”

Trent said he has been “clean and sober” for 15 years, but when the Tulsa World brought up a 2001 charge for marijuana possession, he said he meant he was clean off of crack cocaine for that period.

Trent added he hasn’t used any illegal substances since that 2001 arrest.

In that case, Trent pleaded guilty in Tulsa County on charges of speeding, driving with a suspended license, obstructing a police officer and marijuana possession. He received a one-year suspended sentence.

More

7/21/2011 Why Most Employers Shouldn't Care About New Adverse Action Requirements

Effective July 21, 2011, Fair Credit Reporting Act (“FCRA”) adverse-action and risk-based pricing notices must disclose any numerical credit score that contributed to the: (1) adverse action; or (2) extension of credit on terms materially less favorable than those available to a substantial portion of customers.

If you are hearing this for the first time, you aren’t alone.  And here’s why most of you shouldn’t care.

These rules only apply if you are evaluating a credit score.  Remember that employment credit reports (most commonly used on employment background checks) do not include a credit score.

Why are we bothering you with this useless information if it doesn’t affect you?  Well, to let you know if you hear about it, that it most likely doesn’t affect you. If you are reviewing credit scores, you might want to read the information below provided by Seyfarth Shaw labor and employment attorney, Pam Devata.

The FCRA requires a person taking adverse action based in whole or in part on a consumer report to provide an adverse-action notice. Section 1100F of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act) amended Section 615(a) of the FCRA to require users of credit scores to include those scores, and related information, in adverse-action notices provided to consumers. The requirement to disclose credit score information in FCRA adverse-action notices also applies to adverse-action decisions not related to credit.

Consequently, when a user takes any adverse action based in whole or in part on information contained in a consumer report, regardless of the weight of the credit score in the decision, the user must provide the consumer with the following:

*          The credit score;

*          The range of possible credit scores under the model used;

*          All of the key factors that adversely affected the credit score

(not to exceed four factors, unless one factor is the number of inquiries made with respect to the report, in which case the key factors may not exceed five);

*          The date on which the credit score was created; and

*          The name of the person or entity that provided the credit score.

New Risk-Based Pricing Notice Requirements:

Risk-based pricing refers to the practice of setting or adjusting the price and other terms of credit offered or extended to a particular consumer to reflect the risk of nonpayment by that consumer. The FCRA also requires a creditor to provide a risk-based pricing notice to a consumer when the creditor uses a consumer report in connection with a credit application or review of an existing account and, based on the report, grants credit or amends existing credit on terms that are materially less favorable than the most favorable terms obtained by a substantial portion of consumers. The Federal Reserve Board (the

“Board”) and the Federal Trade Commission (“FTC”) recently amended their respective risk-based pricing rules to require disclosure of credit scores and information relating to credit scores in risk-based pricing notices if a credit score of the consumer is used in setting or adjusting the material terms of credit.

The Board’s and the FTC’s rules require the same additional information to be included in a risk-based pricing notice as is required for the adverse-action notices.  In addition, the risk-based pricing notices must include a prescribed statement explaining credit scores that includes a disclosure that the credit score was used in setting the credit terms. For example, a statement such as:

*          “Your credit score is a number that reflects the information in

your credit report.  We used your credit score to set the terms of credit we are offering you.  Your credit score can change, depending on how your credit history changes.”

The Board’s and the FTC’s rules also recommend that the risk-based pricing notices contain optional contact information for the entity that provided the credit score.

Common Questions:

The new rules raise a lot of questions, many of which are addressed in the commentary to the rules, such as: (1) whether credit score disclosures are required when only the credit score of a guarantor, co-signer, surety, or endorser is used (no disclosure is required); (2) whether there are safe-harbor model notices that can be used (yes there are); and (3) what to do when dealing with proprietary scores, three-party financing transactions, more than one applicant, no credit score, and multiple credit scores (the commentary addresses these questions as well).

Two of the more common questions, however, concern “what is a credit score” and “when is a credit score used.”  The commentary makes clear that a score that is not used to predict creditworthiness, such as an insurance score, is not a “credit score” and need not be disclosed.  The commentary also makes clear that “use” occurs at a very low threshold and if the credit score played any role in the decision (for example, if the credit score led the user of the credit score to investigate further and the results of that investigation played a role in the decision), then the credit score was used and must be disclosed.

Many of these same questions can also be answered by reviewing the “Forty Years of Experience with the Fair Credit Reporting Act” report that the FTC issued today and is available at http://www.ftc.gov/os/2011/07/110720fcrareport.pdf.  This report is the most up-to-date FTC guidance on interpreting the FCRA.

Why Most Employers Shouldn’t Care About New Adverse Action Requirements

Effective July 21, 2011, Fair Credit Reporting Act (“FCRA”) adverse-action and risk-based pricing notices must disclose any numerical credit score that contributed to the: (1) adverse action; or (2) extension of credit on terms materially less favorable than those available to a substantial portion of customers.

If you are hearing this for the first time, you aren’t alone.  And here’s why most of you shouldn’t care.

These rules only apply if you are evaluating a credit score.  Remember that employment credit reports (most commonly used on employment background checks) do not include a credit score.

Why are we bothering you with this useless information if it doesn’t affect you?  Well, to let you know if you hear about it, that it most likely doesn’t affect you. If you are reviewing credit scores, you might want to read the information below provided by Seyfarth Shaw labor and employment attorney, Pam Devata.

The FCRA requires a person taking adverse action based in whole or in part on a consumer report to provide an adverse-action notice. Section 1100F of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act) amended Section 615(a) of the FCRA to require users of credit scores to include those scores, and related information, in adverse-action notices provided to consumers. The requirement to disclose credit score information in FCRA adverse-action notices also applies to adverse-action decisions not related to credit.

Consequently, when a user takes any adverse action based in whole or in part on information contained in a consumer report, regardless of the weight of the credit score in the decision, the user must provide the consumer with the following:

*          The credit score;

*          The range of possible credit scores under the model used;

*          All of the key factors that adversely affected the credit score

(not to exceed four factors, unless one factor is the number of inquiries made with respect to the report, in which case the key factors may not exceed five);

*          The date on which the credit score was created; and

*          The name of the person or entity that provided the credit score.

New Risk-Based Pricing Notice Requirements:

Risk-based pricing refers to the practice of setting or adjusting the price and other terms of credit offered or extended to a particular consumer to reflect the risk of nonpayment by that consumer. The FCRA also requires a creditor to provide a risk-based pricing notice to a consumer when the creditor uses a consumer report in connection with a credit application or review of an existing account and, based on the report, grants credit or amends existing credit on terms that are materially less favorable than the most favorable terms obtained by a substantial portion of consumers. The Federal Reserve Board (the

“Board”) and the Federal Trade Commission (“FTC”) recently amended their respective risk-based pricing rules to require disclosure of credit scores and information relating to credit scores in risk-based pricing notices if a credit score of the consumer is used in setting or adjusting the material terms of credit.

The Board’s and the FTC’s rules require the same additional information to be included in a risk-based pricing notice as is required for the adverse-action notices.  In addition, the risk-based pricing notices must include a prescribed statement explaining credit scores that includes a disclosure that the credit score was used in setting the credit terms. For example, a statement such as:

*          “Your credit score is a number that reflects the information in

your credit report.  We used your credit score to set the terms of credit we are offering you.  Your credit score can change, depending on how your credit history changes.”

The Board’s and the FTC’s rules also recommend that the risk-based pricing notices contain optional contact information for the entity that provided the credit score.

Common Questions:

The new rules raise a lot of questions, many of which are addressed in the commentary to the rules, such as: (1) whether credit score disclosures are required when only the credit score of a guarantor, co-signer, surety, or endorser is used (no disclosure is required); (2) whether there are safe-harbor model notices that can be used (yes there are); and (3) what to do when dealing with proprietary scores, three-party financing transactions, more than one applicant, no credit score, and multiple credit scores (the commentary addresses these questions as well).

Two of the more common questions, however, concern “what is a credit score” and “when is a credit score used.”  The commentary makes clear that a score that is not used to predict creditworthiness, such as an insurance score, is not a “credit score” and need not be disclosed.  The commentary also makes clear that “use” occurs at a very low threshold and if the credit score played any role in the decision (for example, if the credit score led the user of the credit score to investigate further and the results of that investigation played a role in the decision), then the credit score was used and must be disclosed.

Many of these same questions can also be answered by reviewing the “Forty Years of Experience with the Fair Credit Reporting Act” report that the FTC issued today and is available at http://www.ftc.gov/os/2011/07/110720fcrareport.pdf.  This report is the most up-to-date FTC guidance on interpreting the FCRA.

7/21/2011 Connecticut Passes Law to Curb Use of Credit Reports

On July 13, 2011, Connecticut governor Daniel P. Malloy signed into law a bill which will prohibit most employers from evaluating a candidate’s credit report as part of the employment screening process.  The law is akin to a similarly a passed measure in the state of Maryland earlier this summer in that it carves out a number of exemptions and that it does not allow a private right of action.

According to labor and employment attorney Pam Devata of Seyfarth Shaw, “The Act also provides limited exceptions that allow employers to request or use credit information where a credit report is ‘substantially related to the employee’s current or potential job.’  This exception generally applies to those positions involving money-handling and other confidential job duties. For instance, employers may request credit information for employees in managerial positions that involve the direction and control of the business; employees who have access to financial information; employees with fiduciary duties to the employer; employees who have an expense account or corporate debit or credit card; employees with access to an employer’s nonfinancial assets valued at $2,005 or more (i.e., museum and library collections, prescription drugs, and other pharmaceuticals); and employees with access to confidential or proprietary business information. Notably, where an employer chooses to request credit information pursuant to the substantial purpose exception, it must disclose its intent to do so in writing to the employee or applicant.”

Violators will be subject to $300 fine per incident but will not face a private action from offended parties.

Connecticut now joins a growing list of states that have adopted similar measures including Oregon, Washington, Hawaii, Illinois, Maryland.

Employers note that this law will go into effect on October 1, 2011.

I know that mine might be an unpopular point of view in our industry, but I actually think that recently bills passed in Illinois, Maryland and Connecticut are effective models to curb the misuse of this background screening instrument.  While I believe that credit reports are an integral part of the screening process for some, it should not be a requirement for all positions.  Quite honestly, it is those that have been misusing these reports for positions where credit really shouldn’t be required that has caused the states to take these actions.  I feel like the exemptions that are carved out effectively allow those that should be conducting credit reports do so.  I also think that disallowing private action is fair to employers.

There, I’ve been holding that in for about a year. I feel better already.  Feel free to rip me and my position now.

Connecticut Passes Law to Curb Use of Credit Reports

On July 13, 2011, Connecticut governor Daniel P. Malloy signed into law a bill which will prohibit most employers from evaluating a candidate’s credit report as part of the employment screening process.  The law is akin to a similarly a passed measure in the state of Maryland earlier this summer in that it carves out a number of exemptions and that it does not allow a private right of action.

According to labor and employment attorney Pam Devata of Seyfarth Shaw, “The Act also provides limited exceptions that allow employers to request or use credit information where a credit report is ‘substantially related to the employee’s current or potential job.’  This exception generally applies to those positions involving money-handling and other confidential job duties. For instance, employers may request credit information for employees in managerial positions that involve the direction and control of the business; employees who have access to financial information; employees with fiduciary duties to the employer; employees who have an expense account or corporate debit or credit card; employees with access to an employer’s nonfinancial assets valued at $2,005 or more (i.e., museum and library collections, prescription drugs, and other pharmaceuticals); and employees with access to confidential or proprietary business information. Notably, where an employer chooses to request credit information pursuant to the substantial purpose exception, it must disclose its intent to do so in writing to the employee or applicant.”

Violators will be subject to $300 fine per incident but will not face a private action from offended parties.

Connecticut now joins a growing list of states that have adopted similar measures including Oregon, Washington, Hawaii, Illinois, Maryland.

Employers note that this law will go into effect on October 1, 2011.

I know that mine might be an unpopular point of view in our industry, but I actually think that recently bills passed in Illinois, Maryland and Connecticut are effective models to curb the misuse of this background screening instrument.  While I believe that credit reports are an integral part of the screening process for some, it should not be a requirement for all positions.  Quite honestly, it is those that have been misusing these reports for positions where credit really shouldn’t be required that has caused the states to take these actions.  I feel like the exemptions that are carved out effectively allow those that should be conducting credit reports do so.  I also think that disallowing private action is fair to employers.

There, I’ve been holding that in for about a year. I feel better already.  Feel free to rip me and my position now.

Author Bios

Jason B. Morris, President & Chief Operating Officer
Jason Morris co-founded EmployeeScreenIQ in 1999 and currently serves as the company’s President and Chief Operating Officer. Morris is a Licensed Private Investigator in the states of OH, NJ and NV. Morris is a frequent speaker at industry events that focus on background checks, global screening, recruitment and staffing. With over 15 years of experience in employment screening, Morris also serves as an Expert Witness in the areas of background checks, employment screening and the FCRA. He serves as a past board member of the National Association of Professional Background Screeners (NAPBS). Morris was the 2005-2006 Co-Chairman for the organization and remains an active member.

As Co-Chairman of NAPBS, Morris made frequent presentations to government agencies including members of the U.S. House of Representatives and the U.S. Senate. Morris has lobbied on behalf of the screening industry and has consulted with officials from the Federal Trade Commission (FTC), Department of Homeland Security (DHS) and the US Department of Justice (DOJ). Morris’ comments were published on the US Department of Justice website regarding pending legislation on the Federal Register. Active in community and philanthropic causes, he is a current board member of The American Cancer Society, Cuyahoga County. Morris is a criminal justice studies graduate of Kent State University.

Nick Fishman, Chief Marketing Officer and Executive Vice President
Nick Fishman co-founded EmployeeScreenIQ in 1999 and serves as the company’s Chief Marketing Officer and Executive Vice President. Nick oversees all of EmployeeScreenIQ’s sales and marketing activities, including business development and brand building initiatives. Nick is the chief pioneer and architect of EmployeeScreen University, a first-of-its-kind online, educational learning resource for human resource, security and risk-management professionals. He is a frequent speaker on industry issues including: New Technologies in Employment Screening, Best Practices and Industry Trends. Nick is also a frequent blogger on the company’s “IQ Blog”, conducts regular podcast interviews with industry insiders and serves as editor of the company’s quarterly newsletter, The Verifier.

Nick currently serves on the Accreditation Marketing Committee for the National Association of Professional Background Screeners (NAPBS) and has also served as the organization’s co-chair of the Public Awareness Committee. Prior to his work with EmployeeScreenIQ, Nick helped Fortune 500 organizations build their brands through sports sponsorships including the Olympics, the National Football League, NASCAR and Major League Baseball.Nick holds a Bachelor of Arts in Political Science from The Ohio State University and has extensive experience in the development of sales and marketing campaigns for both, large and small organizations.

Kevin W. Bachman, Vice President, Quality Service
Kevin Bachman serves as Vice President of Quality Service for EmployeeScreenIQ. Prior to this role, he served as the Director of Client Relations. Kevin is responsible for overseeing the company’s overall commitment to Total Quality Service. He is a member of the National Association of Professional Background Screeners (NAPBS), serving on the Best Practices Committee. He is a frequent contributor and author of company white papers and other industry trends, seeking to educate clients on proper screening tools and the creation of thorough background check programs. He is active in several charities and strongly supports the American Cancer Society, Meals on Wheels and the United Way. Kevin holds a Bachelor’s of Communications and Master’s in Communications Management from John Carroll University.

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