California Freeze Is Being Heard Today
May 17, 2012
A couple of weeks ago we posted about California SB1384 –a fast moving bill that would expand the definition of a nationwide specialty consumer reporting agency and would require companies fitting that description to place a freeze on consumer files upon request by a consumer.
This bill is scheduled to be heard today, despite the many concerns and issues including those listed here:
• Under California law, consumers already have a right to place a credit freeze with a consumer credit reporting agency. Expanding that to include non-credit consumer information could have significant consequences to employers and consumers.
• Consumers would be able to suspend access to non-credit consumer report information (i.e. his/her criminal history, evictions etc.) thereby denying business (end users of consumer reports) access to information critical in making risk and hiring decisions.
• Freezing access to non-credit consumer reports may restrict or deny access to public information by businesses—even those that already have the consumer’s consent as mandated by the FCRA.
• Before a freeze could be lifted, the business may have already moved on to an applicant whose history could be vetted more immediately.
• 11 states specifically prohibit freezing of non-credit consumer information; several other states specifically exempt non-credit consumer information from their credit freeze legislation.
• Significant consumer protections already exist in California and under the Federal Fair Credit Reporting Act (FCRA) via oversight by the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB).
Due Diligence, Background Checks and Employment Conference
March 14, 2012
It is no secret that both state and federal governments have been scrutinizing the practice of employment background screening like never before and that they have been actively pursuing legislation and litigation to limit the use of this hiring tool. See list below for examples:
dozens of new federal and state laws that affect hiring practices, employee rights and labor relations;
increased enforcement actions and lawsuits brought by the Equal Employment Opportunity Commission (EEOC) challenging the use of credit and criminal history;
a growing risk of discrimination charges (the EEOC received 99,947 discrimination charge filings in 2011—the highest number in its 46-year history);
legislative attempts to expand “protected class” status to the unemployed and ex-offenders;
an explosion of “failure to hire” suits due, in part, to the tight job market and a greater number of rejected applicants;
an increase in lawsuits for violations of the Fair Credit Reporting Act;
legal action related to the use of arrest records (PepsiCo recently lost a $3.1 million settlement related to this);
costly challenges related to obtaining proper consent to conduct background checks (First Transit lost a $5.9 million settlement for failure to do so);
“Ban the Box” initiatives at the state and local levels;
new state laws restricting the use of credit reports;
the prevalence of social media and other new technologies as screening tools;
Over the past couple of years, I have had the pleasure and privilege of working closely with a group of organizations and individuals determined to make sure that employers voices are being heard and that their concerns are being addressed.
I have not publicly broadcast my involvement in this group because I didn’t want to tip my hat as to strategies we were pursuing and tactics we intended to utilize along the way. And while, we have only just begun, we are at a point where our efforts are becoming more public.Read More
Colorado Closes In On Employment Credit Report Restrictions
February 24, 2012
The Colorado Senate Judiciary Committee approved Senate Bill 3 “The Employment Opportunity Act” which prohibits pre-employment credit checks that some companies use to determine hire eligibility. The bill is borne out of notion that people are being unfairly denied employment based on their credit when their financial well-being has nothing to do with the job they are seeking.
This bill’s sponsor, Senator Morgan Carroll (D) asserts that, “Credit scores were never intended to be used in hiring practices,” and goes on to say that, “Tying credit scores with employment opportunity creates a vicious circle that unfairly punishes struggling Coloradans. We should be doing everything in our power to get citizens back to work, and this legislation ensures that we are removing unnecessary punitive barriers and helping citizens get back on their feet.”
Note: The Senator holds a common misconception that employment credit reports contain a credit score.Read More
The Verifier: Background Screening Newsletter, Fall 2011
November 30, 2011
We just published The Verifier XXIV, Fall 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:Read More
State of California Bans Use of Employment Credit Reports
October 11, 2011
It’s official. The state of California becomes the seventh state to prohibit employers from using credit reports to make employment decisions. California Governor Jerry Brown signed AB 22 which will take effect on January 1, 2012. Like it’s counterparts in the states of Maryland, Oregon, Hawaii, Illinois, Washington and Connecticut there are some exceptions. Employers may consider a credit report under the following circumstances only if the candidate is informed that a report will be sought and they have obtained written permission:
A managerial position
A position in the state Department of Justice
A sworn peace officer or other law enforcement
A position for which the information contained in the report is required by law to be disclosed or obtained
A position that involves regular access to confidential information such as credit card account information, Social security number, or Date of birth
A position which the person can enter into financial transactions on behalf of the company
A position that involves access to confidential or proprietary information
A position that involves regular access to cash totaling ten thousand dollars ($10,000) or more of the employer, a customer, or client, during the workday
On a personal level, everyone saw this coming. Former Governor Arnold Schwarzenegger vetoed similar measures during his tenure on two occasions. And the rising tide of similar legislation in other states only bolstered the state assembly’s efforts to make this happen.
While I was once opposed to this type of legislation, I have slowly warmed to the concept. The truth is that employers that do not use credit reports for the exempted purposes probably shouldn’t have been using them to make hiring decisions in the first place.Read More
Latest Ruling Again EEOC: A Series of Costly Mistakes Leads to Tax Payer Waste
August 23, 2011
Jon Hyman of Ohio Employer’s Law Blog fame just posted about yet another embarrassing episode for the EEOC. This time they were ordered to pay Cintas Corporation nearly $3 million dollars for overzealous legal tactics. This on the heels of the PeopleMark ruling earlier this year which resulted in a $750,000 judgment against the agency. Jon also recently wrote about another ruling that went against the EEOC in the Kaplan Higher Education case which deals with the use of an employer’s use credit reports as part of the background screening process. And at the same time they are unfairly saddling these corporations with unfounded lawsuits, they are wasting time and tax payer money which affects us all. See Jon’s complete post below.
A Michigan federal judge has slammed the EEOC for its “reckless sue first, ask questions later strategy.” After 11 years of litigation, the court awarded the EEOC’s target, Cintas Corporation, $2,638,443.93 in attorneys’ fees, costs, and expenses from the agency.
The court justified its astronomical award based on the EEOC’s failure to investigate before filing suit, and dilatory tactics before and after filing suit:Read More
The Verifier Background Screening Newsletter, Summer 2011
July 26, 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:Read More
Why Most Employers Shouldn’t Care About New Adverse Action Requirements
July 21, 2011
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.Read More
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.Read More