EmployeeScreenIQ Blog

There have been a myriad of questions that have arise since Massachusetts governor Deval Patrick signed into law new reforms to the Commonwealth’s Criminal Offender Record Information (CORI) law that will have a significant impact on the state’s employers who conduct criminal background checks. To sort through the mess, we enlisted the help of Seyfarth Shaw labor and employment attorney, Pam Devata. Clearly, these reforms represent an effort to help those with criminal records find employment, but will this come at the expense of employers ability to make an informed hiring decision?

Check out our podcast below.

Listed below are some of the most critical changes that will take effect February 6, 2012:

• Employers can no longer ask if an individual has been convicted of a crime on the initial job application (please note that this requirement is set to take effect November 4, 2010)
• Felony convictions older than or prison sentences completed more than 10 years ago will be removed from the system as will misdemeanors older the 5 years
• An employers can only take adverse action after they have presented the candidate with the CORI report
• Any employer that conducts five or more background checks on an annual basis must have a written criminal offender record policy
• Employers must dispose of an individual’s CORI report not more than 7 years after their last date of employment

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Illinois Governor Pat Quinn signed a bill that takes away the right of the state’s employers to review a job candidate’s credit report as part of the employment screening process. Or does it? The new law will officially take affect on January 1, 2011, but is sure to create confusion because while it bans the use of credit reports for most, it allows their use for certain industries and positions. Check out some of the exemptions: “those with management responsibility, signing authority over as little as $100 or access to personal, financial and confidential information. It exempts law enforcement and financial institutions and has no effect on other kinds of background checks.” So is it illegal to run credit reports or not?

This move is sure to raise concerns in the business community among those who were using these reports responsibly to protect themselves and their customers alike.

To sort through the mess, we spoke with Seyfarth Shaw labor and employment attorney, Pam Devata. Check out our podcast below.

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We just published our 21st quarterly newsletter, The Verifier, an educational tool and information resource for human resource professionals or anyone interested in keeping abreast of recent employment background screening industry developments. We’ve got some great new content including:

Articles:

• Trends in Employment Screening: 2010 Results
• Background Check Urban Legends
• Credit Reports and the Hiring Process

Legislative Updates:

• Illinois law which severly restricts the use of credit report
• New Reforms to the state of Massachusetts’ CORI background screening system

Multimedia

• EmployeeScreenIQ’s podcasts from the 2010 Annual SHRM Conference

And much, much more. Check it out.

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Yesterday, Illinois Governor Pat Quinn signed a bill that takes away the right of the state’s employers to review a job candidate’s credit report as part of the employment screening process.  Or does it? The new law will officially take affect on January 1, 2011, but is sure to create confusion because while it bans the use of credit reports for most, it allows their use for certain industries and positions.  Check out some of the exemptions: “those with management responsibility, signing authority over as little as $100 or access to personal, financial and confidential information. It exempts law enforcement and financial institutions and has no effect on other kinds of background checks.”  So is it illegal to run credit reports or not?

This move is sure to raise concerns in the business community among those who were using these reports responsibly to protect themselves and their customers alike.

This morning, the Chicago Tribune wrote a scathing editorial about the impact this has on Illinois businesses.

Quinn signed a bill making it illegal for them to use credit histories to evaluate job seekers.

Do companies need this information? That doesn’t matter now. The governor and legislators have substituted their judgment for the judgment of the companies that actually put people to work in this state.

Why would an employer want to run a credit report on you? A simple background check can make a difference. Some experts say there is evidence that workplace theft and fraud correlates with the financial distress indicated by bad credit. Moreover, it’s a useful tool for verifying work histories and other resume information.

The bill that Quinn has signed into law acknowledges as much. It allows employers to do credit checks in cases of hiring and promotion for many posts, including those with management responsibility, signing authority over as little as $100 or access to personal, financial and confidential information. It exempts law enforcement and financial institutions and has no effect on other kinds of background checks.

In practice, the new law will introduce a batch of red tape. It won’t create a single new job. It will simply curb the discretion of an employer who might prefer to hire someone who has paid his bills over someone who hasn’t.

Quinn says it will put a stop to the practice of denying jobs and promotions “based on information that is not an indicator of a person’s character or ability to do a job well.” Evidently, our governor thinks those responsible for hiring and promotion base their decisions on irrelevant criteria, and everybody else needs to be protected from them.

A few states have passed similar measures, and other legislatures are considering them, mostly on the theory that someone who fell behind on their bills during the terrible recession shouldn’t be barred from a job for that reason. Guess what? Employers know we had a terrible recession. They know that good people sometimes fall behind because of the loss of a job or a health crisis. But they are now prohibited from making such judgment calls.

There’s no reason why those recruiting workers shouldn’t do so with the additional confidence that credit reports might provide. Illinois, with 10.4 percent unemployment, is sending one more signal that it doesn’t trust the people who put people to work.

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On August 6, 2010 Massachusetts governor Deval Patrick signed into law new reforms to the Commonwealth’s Criminal Offender Record Information (CORI) law that will have a significant impact on the state’s employers who conduct criminal background checks.  Clearly, these reforms represent an effort to help those with criminal records find employment, but will this come at the expense of employers ability to make an informed hiring decision?

Listed below are some of the most critical changes that will take effect February 6, 2012:

• Employers can no longer ask if an individual has been convicted of a crime on the initial job application (i.e. Ban the Box programs)
• Felony convictions older than or prison sentences completed more than 10 years ago will be removed from the system as will misdemeanors older the 5 years
• An employers can only take adverse action after they have presented the candidate with the CORI report
• Any employer that conducts five or more background checks on an annual basis must have a written criminal offender record policy
• Employers must dispose of an individual’s CORI report not more than 7 years after their last date of employment

For more depth of information about these reforms please check out Seyfarth Shaw attorney, Pam Devata’s legal alert.

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The folks at HR.BLR just published “Smart Practice for Screening Job Candidates” that is worth checking out.  See list below.

Tips for Background Checks

To minimize your liability and still be thorough, follow these smart practices regarding background checks:

1.    Follow a clear policy that requires background checks for all staff. Don’t forget to include background checks for part-time workers, temps, contractors, and volunteers. All checks do not have to be equally extensive, though. High-risk positions, such as those involving financial responsibility, require more extensive checks. Certain positions, such as truck drivers, security guards, law enforcement officers, healthcare providers, and childcare workers, are governed by special laws with their own background check requirements.

2.    Use a job application that requires the applicant to detail all employment, certifications, licenses, education, and other relevant qualifications for the job. The application should require that the applicant sign a certification that the information is accurate.

3.    Use a background check authorization and release form. This form must be separate from the application. In California, whether you conduct the background check yourself or hire an outside agency, you must obtain the individual’s written permission in a separate document.

4.    Don’t rely solely on online research. Conducting Internet research, such as Googling the applicant or looking at the person’s Facebook page, runs the risk not only of being incomplete but also of supplying erroneous information. You might also learn information that you are not permitted to consider without violating discrimination laws, such as whether an applicant is pregnant. Although you may disregard that information when deciding not to hire someone, it could be hard to prove that the information was not a factor if your decision is challenged.

5.    Provide applicants all required notifications. California law has stricter notice requirements than federal law. You must notify the applicant that he or she has a right to know the scope of the investigation and to get a copy of the report. If you use an outside agency, you must supply its contact information. If you rely on information in an agency’s report to decide against the applicant, you must tell the applicant about it before taking the adverse action. You must provide the applicant a copy of the report as well as notice of how to dispute it. If you conducted the check yourself, you must give the applicant copies of public records that you relied on and a notice of his or her rights within a reasonable time.

6.    Know the limits of what you can ask about an applicant’s history. In general, California follows federal law in permitting screening services to report negative information (for example, low credit scores, poor references, and court cases) for only the previous 7 years and bankruptcies for the previous 10 years. Under federal law, criminal convictions can be reported indefinitely, but in California, criminal convictions can be reported only for 7 years (2 years for marijuana convictions), except for certain jobs. You can’t ask applicants if they have ever been arrested, but you can ask if they have been convicted of a crime or have a pending criminal case.

7.    Document your employment decisions. Regardless of whether the material in the background check was key to your decision, if your decision is challenged, you will be in a better position to defend yourself if you have documented the process well.

8.    Store and dispose of all records related to the background check properly. Records containing confidential information gained during background investigations should be stored separately, and access to those files should be limited. Federal law requires the proper disposal of background check information. Paper files should be shredded. When your company disposes of old computers, you must ensure that the information has been erased in such a way that it cannot be reconstructed.

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Several communities in the state of California have passed or are considering banning the box legislation, a measure that will remove the check box on a job application in which a job candidate must divulge if they have been convicted of a felony.  As other states such as Connecticut, New Mexico and Massachusetts have enacted such laws, we’ve haven’t had a strong opinion one way or the other.  Why?  Because even if you don’t ask the question on the application, you can still conduct an employment background check and determine if the person has a criminal record.  I guess we would have to say we like this measure, because we probably conduct more background checks as a result of candidates not being initially rejected.  On the employer side, they are probably spending more money on background checks and recruiting than they ordinarily would.

Our opinion changes dramatically when you talk about doing so in the state of California as they do not report, nor allow employers to use criminal records older than seven years.  Therefore, if you take the conviction box off the application and the person committed a felony longer than seven years ago, you’ll never know it happened.  This certainly puts employers at a disadvantage when trying to make an informed hiring decision.  In my opinion, the state should pick a lane.  Either allow records to be reported regardless of age or continue the practice of asking the candidate if they have been convicted of a felony on the job application.

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In a move sure to anger employers and HR professionals conducting background checks in the state of New York, the state has announced that they will be raising the fee to access their Office of Court Administration criminal records database from $55.00 to $65.00 effective July 1, 2010.

See New York Assembly Bill AO976

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This is a reminder to all employers in the state of Oregon that Senate Bill 1045 that restricts an employer’s use of credit history in employment screening decisions goes into effect July 1, 2010.

Seyfarth Shaw labor and employment attorney, Pam Devata was kind enough to pass on an important guide on who this law affects and how to comply.  See below.

You may recall that Oregon Revised Statute 659A.885 specifically prohibits an employer from obtaining or using credit history for employment purposes of an applicant or employee unless that credit history information is “substantially job-related, and the employer’s reasons for the use of such information are disclosed to the employee orprospective employee in writing.”

The regulations provide guidance on the following:

- The regulations define “employer” to mean “any person who in this state, directly or through and agent, engages or uses the personal service of one or more employees, reserving the right to control the means by which such service is or will be performed.”  Thus, the law likely only applies to employers in Oregon.

-The burden of proving that the employer disclosed its reasons for the use of credit information is solely on the employer.

-”Substantially job-related” is defined as:

(a) An essential function of the position at issue requires access to financial information

not customarily provided in a retail transaction that is not a loan or extension of credit;

(b) Financial information customarily provided in a retail transaction includes

information related to the exchange of cash, checks and credit or debit card numbers; or

(c) The position at issue is one for which an employer is required to obtain credit history

as a condition of obtaining insurance or a surety or fidelity bond.

-Employers may not retaliate against applicants or employees claiming a violation of the law

-It is also an unlawful employment practice for any person to “aid, abet, incite, compel or coerce the doing of any of the acts in violation of OL 2010. Ch. 102.”  As such, CRAs should be careful about assisting employers with adjudication guidelines or hiring criteria dealing with the use of credit information in Oregon.

Interestingly, the regulations do not give any guidance on when an employer has to give the required disclosure of the reasons for the use of credit information, only that the employer bears the burden of doing so.

Oregon has provided a Technical Assistance for Employers hotline at 971-673-0824. The new rules are available online at http://www.oregon.gov/BOLI/LEGAL/docs/RulesSoS0052010.pdf.

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Connecticut governor Jodi Rell has vetoed a bill that would have barred the state from conducting a criminal background check on employees until the last step of the hiring process.  And while the state has only 55,000 employees, the governor’s actions will set a positive precedent for the state’s employers.

Proponents of the bill said that finding a job these days is hard enough and that those with criminal records are unfairly discriminated against at the onset of the hiring process.  They say that conducting the background check after the best candidate has been identified will decrease the chance that a criminal record will have an adverse affect on the person’s job prospects.  Maybe so, but the other side of that argument is that you’ve gone down the long and costly road of identifying  the right candidate only to find that they have something in their past that would prohibit their employment and now you are back at step one.

“Applicants are already protected by statutory provisions which prohibit the denial of employment solely based on a conviction,” Rell said, adding there is no evidence managers are inappropriately using the information in their hiring decisions.

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