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Compliance Employment Background Checks

You may already know that Fair Credit Reporting Act (FCRA) litigation has picked up some steam over the past year. While recent class actions continue to grab the headlines, an appellate ruling in a four-year-old case is causing a buzz.

Injury In Fact?

Spokeo makes an encore appearance here in BTW as the defendant in a case that has been festering in the 9th Circuit Court of Appeals. It’s an FCRA case, and the issue is damages.

The last time we checked in with Spokeo, the company was losing the battle with the Federal Trade Commission (FTC) over whether or not it was a consumer reporting agency that could be held accountable for providing employment reports under the FCRA. The company paid a substantial fine ($800K) for its trouble, and was sued for allegedly reporting misinformation to employers and recruiters on its website.

A complaint, originally brought by Thomas Robins on behalf of a class of similarly situated individuals, alleged that inaccurate information on Spokeo’s website was a “willful” violation of the FCRA. Spokeo was initially successful in arguing that the plaintiff’s claims were without merit since Robins, while admittedly unemployed, had not suffered any “actual or imminent harm”—a required element of a cause of action under the statute. Read more about that decision almost two years ago here.

At long last we have a decision on the appeal. In a surprising decision, the appellate court overturned the decision, lowering the threshold of actual damages for future FCRA claims.

How low, you ask?

How about NO damages? Zero. Zip. It doesn’t get much lower than that.

The Facts About Mr. Robins

Robins alleged that his Spokeo profile included a laundry list of inaccuracies: wrong age, wrong marital status, and wrong photo. Not all of the information was negative or even unflattering. Interestingly, the website reported that he had a graduate degree (he did not), that his economic health was “very strong” and that his “wealth level” was in the “top 10%”—all false, according to the plaintiff.

Call me crazy, but if I found out that a website was misleading the world into thinking I was a member of the highly paid, elite, upper echelon of society, I might not complain. But Robins made a good point—while being financially stable is not considered a negative (at least by most people), it doesn’t exactly help your job prospects to have a web site touting your great wealth.  The unemployed Robins claimed that the inaccurate information was costing him jobs, “causing actual harm to Plaintiff’s employment prospects” as well as “anxiety, stress, concern and/or worry about his diminished employment prospects.”

The Appellate Decision

Spokeo argued throughout the litigation that Robins had no claim under the FCRA because he made no showing of actual harm. But the Appellate court found otherwise. It held that because the allegations were for willful violations and statutory damages, and statutory causes of action do not require a showing of actual harm when a plaintiff sues for willful violations, no actual harm was needed.

The court cited the statute’s language at 15 U.S.C. § 1681n(a):

Any person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer in an amount equal to . . . damages of not less than $100 and not more than $1,000 . . . .”).[i]

The court’s decision hinged on the claim of willful violations and a claim for statutory damages only. It completely sidestepped the issue of whether Robin’s alleged harm to his employment prospects or related anxiety could be sufficient injuries in fact. Robins and Spokeo now go back to the drawing board—in district court.

Word to the wise: This case is sure to add fuel to the fire for FCRA claims, opening the door for additional plaintiffs making claims for willful violations without having suffered any actual harm or injury in fact.

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Compliance Criminal Background Check

To hire, or not to hire…that is indeed the question. Employers review qualifications, skills, and typically, the results of an employment background check to determine if a candidate is not only eligible for a position, but if they would be a good fit for the company.

For most companies, it goes without saying that you should conduct employment background checks to verify education and employment, confirm credentials, and search criminal history. However, when the background check results come in and a criminal record is found on your candidate’s background check—what steps should you take?

Our new guide, Keep It Legal: 5 Steps to Compliance When Your Candidate Has a Criminal Record, will help you to develop a policy designed to improve your hiring practices and keep legal peril at bay.

Download the article to learn more about:

  • EEOC and FCRA regulations and other legal considerations
  • Developing a hiring matrix with consistent guidelines
  • Navigating the ins and outs of individualized assessments
  • The two-step adverse action process
  • Handling candidates who dispute background check results





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Schneiderman_Eric-NY-AG-AP-photo-580x455

Last week a press release from the New York Attorney General’s office raised some eyebrows about background screening practices—not an uncommon headline these days. The release announced that “four of the nation’s largest background check agencies” entered into an agreement with New York A.G. Eric T. Schneiderman concerning compliance with New York laws designed to protect job applicants from discrimination.

The agreement prohibits the firms from engaging in the automatic disqualification of applicants who have criminal backgrounds—something that we can all agree is a bad practice. Based on the information contained in the press release, the named companies were called out for sending automatic rejection letters to candidates with criminal records.

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Compliance Employment Background Checks

For those interested in staying up-to-date with the latest in compliance for pre-employment background screening and the laws that affect your use of employment background checks, follow our publication, BTW: Your Guide to Staying Out of Hot Water. This compliance resource has been created by our VP of Compliance and General Counsel, Angela Preston, and is a must-read for human resources and security professionals.

Our February issue of BTW features Avoid a Lawsuit: 5 Things Employers Should Know About the FCRA. Angela shares the five things employers must be aware of in their background screening program in order to avoid becoming one of many companies facing a lawsuit. Read More.

And speaking of lawsuits, Whole Foods Market is the latest example of a company being targeted by the FCRA for their improper use of employment background checks. Read More.

This issue also brings the story, State of Texas vs. the EEOC: Is Timing Everything? The state of Texas recently went after the EEOC for its guidance on criminal background checks, but the outcome has not proven successful. Read More.

Lastly, in response to several questions we receive on the EEOC Guidance, Angela provides answers for specific questions related to the guidance in this month’s Ask Angela response, Two Years Later: Questions on the EEOC Guidance.

Read the February issue of BTW here.

 

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wholefoods3

Whole Foods Market was just inducted into a growing club where no one wants to be a member. The giant food retailer is the latest target of a class action law suit for alleged violations of the Fair Credit Reporting Act (FCRA). Whole Foods is in good company, joining other reluctant club “members”—national companies like Disney, Domino’s Pizza, CVS, K-Mart. One of the big trends we are following in 2014 is the deluge of FCRA-related employment background screening lawsuits. This week the trend continues.

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EEOC Guidelines Employment Background Checks

Despite the two years that have passed since the EEOC clarified its guidance on the use of criminal background checks, there’s still a lot of confusion out there. I am hearing from many employers struggling with how to draft and implement a background screening policy that 1) protects their organization 2) is fair to job applicants, and 3) will stand up to an EEOC enforcement action. Below are a just a few of the questions that I’ve been hearing recently.

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Avoid an FCRA Lawsuit

It’s not easy to keep up with the legal trends in employment background screening. One of those trends is the recent wave of lawsuits being filed against employers for violations of the Fair Credit Reporting Act (FCRA). The FCRA is a federal consumer protection statute that regulates the screening process. It’s not a new law, but the explosion of litigation and the increased scrutiny of employment background checks is new, and should be on every employer’s radar.

Investing in preventive FCRA compliance measures can really pay off, since recent settlements are costing employers millions of dollars. As a starting point, check out the top five things employers should know about the FCRA.

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timinig is everything

The Equal Employment Opportunity Commission (EEOC) says that the state of Texas needs to work on its timing. The agency has filed a motion to dismiss in the lawsuit that Texas brought against the EEOC late last year, claiming that the state has no right to sue and that the timing of the claims are premature. For those of you just tuning in, the entire State of Texas sued the EEOC last November, slamming the agency’s guidance on the use of criminal background checks. The case further ignited the firestorm of controversy that has surrounded the EEOC’s guidance since it was first issued in April of 2012.

The Texas Lawsuit

The state of Texas is not alone in its objection to the guidance. The agency has been aggressively targeting employers for disparate impact discrimination, and it recently filed high profile class actions against BMW and Dollar General Stores citing the guidance. Employers and courts have been critical of the agencies’ tactics, which have basically been sue first and sort it out later. In July of last year, nine states’ Attorneys General sent a complaint letter to the EEOC, calling their tactics “misguided and a quintessential example of gross federal overreach.”

The Texas suit takes the EEOC to task for stepping on the state’s toes and creating direct conflict with Texas laws that mandate criminal background checks. Both state agencies and private employers in Texas are prohibited from hiring convicted felons or certain types of ex-offenders for certain jobs—namely, jobs that require high levels of security and public trust. The state says that the EEOC’s guidance is harmful and could endanger public safety:

“If state agencies choose to comply with the EEOC’s interpretation, they not only violate state law, but also must begin evaluating and hiring felons to serve in law enforcement, teach in local elementary schools, nurse veterans and the disabled, counsel juvenile detainees, and coach little league.”

The Motion to Dismiss

In its Motion to Dismiss, the EEOC says that Texas got it all wrong. The brief cites 47 cases and starts out with six pages of background information–a sweeping tutorial on the agency’s long standing disdain for the use of criminal background information and disparate impact theory.

When it finally gets to the argument, there are three main points. The first argument is that the guidance is only “guidance.” As such, it has no legal effect. This is one of the standard responses that we hear from the EEOC—a response that conveniently creates an endless loop of circular logic, deflecting criticism by denying that it has any real authority. The agency lacks authority to issue substantive rules, therefore it has no ability to bind the plaintiff to any legal obligation. Tell that to Dollar General and BMW.

The second argument follows along the same line of reasoning—the state has no standing to sue, because it has suffered no real injury. The EEOC is saying the Texas’ claims are speculative, and there is no actual harm. Similarly, the third argument is ripeness–there has been no final agency action, and thus the claims are not ripe for litigation.

What’s Next

Procedurally, the EEOC is trying to stop this case dead in its tracks. The idea behind a motion to dismiss is that the claims made by the plaintiff are so lacking in merit that no answer is needed. The strategy here is to get the judge to agree that there is no reason to bother drafting an answer. There is a strong presumption against granting this type of motion, but at this point, it’s all up to the judge. Stay tuned on this one—we’ll keep you posted.








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Background Checks in Healthcare

With recent news coverage putting the spotlight on stricter background checks for senior caregivers and screening requirements (or lack thereof) for Obamacare navigators, the healthcare industry should be increasingly aware of the need for more comprehensive employment background checks.

Employers in the healthcare industry should be concerned about not only the safety of employees, but particularly the safety and wellbeing of the people they care for—the patients. Whether it’s a hospital, nursing home, or hospice, the healthcare industry is another industry in which employment background checks are more than just an asset—they are vital to protecting patients. EmployeeScreenIQ data shows that of those we screen in the healthcare industry, we find a 21% criminal hit rate, which is lower than our average hit rate of 28%, but this is obviously still a significant number of job candidates.

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Let me officially be the last person to wish you a Happy New Year! I have to admit that I’m not a big fan of New Year’s resolutions.  Why should you wait until January 1st to do something you should have been doing when you recognized a problem? Case in point, my least favorite New Year’s resolution is for those that vow to work out more. From February 15th through December 31st, there’s never a problem waiting for equipment at my gym. However, show up during the first 45 days of the year and a 45 minute workout turns into an hour and a half snore-fest. Don’t get me wrong. I’m all for getting into shape, but 45 days does not make a year.

All that said, I have a challenge for you (since I don’t believe in New Year’s resolutions:)). I strongly encourage all human resources professionals resolve to evaluate your company’s employment background screening program from top to bottom in 2014.  The sooner, the better. And lest you think this is a sales pitch, it most definitely is not.  What I am talking about is evaluation of your processes.

Top 10 Items to Consider When Evaluating Your Employment Background Screening Program

  • When was the last time you evaluated your background screening policies and procedures?
  • Are all incoming employees subject to an employment background check?
  • Is the background screening criteria used relevant to the position you are hiring for?
  • Have you clearly defined parameters for what information constitutes a non-hirable offense by position?
  • Are you affected by the myriad “Ban the Box” Laws throughout the country which prohibit you from asking if the candidate has been convicted of a crime on the job application?
  • If so, have you worked that question into a different part of the hiring process?
  • Are you using the proper disclosure forms required by state and federal laws?
  • Are you sure that you are following proper Adverse Action procedures when you deny employment based on the outcome of an employment background check?
  • When was the last time you audited your background screening company for accuracy and compliance?
  • Have you developed the proper procedures to comply with the EEOC requirement for individualized assessment?

Why Should You Care?

Not more than a month went by in 2013 when we didn’t see a marquee press release announcing a multi-million dollar suit being filed against an employer for allegations of violating the Fair Credit Reporting Act in conjunction with their employment background screening practices or discrimination in hiring practices for the same.

Whether these companies being sued are guilty or not, the cost to defend these allegations and the negative publicity surrounding these cases should be a big red flag for all. Class action attorneys have found a new target and they are circling like sharks. Most employers are doing things properly, but there has never been a better time to make sure that you brush up on your responsibilities when it comes to employment background checks.









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