Federal and State Legislation

NY, NY: If You Can Hire There, You Can Hire Anywhere (Part I, The Fair Chance Act)

New York City

I love New York. So do lots of other people who are clamoring to work in the Big Apple, where employment rose by 91,400 in the past year. The city has two brand new background screening laws that are about to shake up the status quo for employers. If you hire, recruit, or screen prospective candidates or employees in New York City, listen up.  Things are about to get complicated.

The two laws are the Stop Credit Discrimination in Employment Act (SCDEA) which went into effect on September 3, 2015 and the Fair Chance Act (FCA), which deals with criminal history and takes effect on October 27, 2015.  Today we’re tackling the FCA—look for Part II on the SCDEA tomorrow. (more…)

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California Criminal Background Check Law


California Background Check Laws – Summary

There is some important information that employers need to know about performing employment background checks in California. It’s important to understand that comparatively speaking, relevant screening laws tend to favor job seekers over employers. This is because California employers are limited in what information they can use and how they use it in their hiring decisions.

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Nevada Removes 7 Year Limit on Criminal Records


Conducting employment background checks in the Nevada just got a little easier. The state has expanded the scope for pre-employment criminal background checks, lifting a 7-year reporting limit on criminal convictions. Nevada Senate Bill 409 was signed by Governor Sandoval last week. The law takes effect immediately. Under the new law, background screening companies are now able to report convictions older than 7 years in Nevada.

Additionally, SB 409 specifically allows gaming operators and employers to conduct more thorough background checks on prospective employees, allowing screening companies to prepare a report at the request of the gaming licensee which may include bankruptcy information older than 10 years and other civil judgments older than 7 years.

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New FINRA Rule on Background Checks



FINRA (the Financial Industry Regulatory Authority) has issued a rule change for background screening requirements that goes into effect on July 1, 2015. FINRA Rule 3110(e) is based on similar provisions in NASD Rule 3010(e) and NYSE Rule 345.11. For those of us who are acronym challenged, that’s the National Association of Securities Dealers and the New York Stock Exchange, respectively.

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New York City Prohibits Use of Employment Credit Reports

New York City

Earlier this week, the New York City Council passed a bill that makes it unlawful for employers to request or use an job applicant’s credit history for employment purposes as part of their background screening practices. Intro Bill 261-A amends the City’s Human Rights Law to make it an unlawful discriminatory practice for an employer to use an individual’s consumer credit history in making employment decisions. The bill is expected to be signed by Mayor Bill DeBlasio and will be effective 120 days following approval.

The city council created a limited set of exemptions for sensitive positions (see below), however it’s worth noting that these exemptions are much more narrow than those provided in similar state laws.

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Litigation Update: FCRA Claim Against Paramount is Thrown Out

Background Checks Paramount Gets FCRA Claim Thrown Out

Finally, a voice of reason. Employers got some good news from a judge in the Northern District of California last week, when the court granted Paramount Picture’s motion to dismiss a class action claim for alleged Fair Credit Reporting Act (FCRA) violations. The case was one of the many class actions that have been flooding the federal courts, disputing the validity of the disclosure form used for running a background check. This wave of litigation has erupted over the past twelve months, putting employers on the defensive against FCRA claims seeking millions in statutory and punitive damages.  The judge’s decision to dismiss the case against Paramount is a welcome development, and may be a turning point for employers facing FCRA class actions of this type.

The plaintiff alleged that Paramount violated the FCRA’s requirements for disclosure of consumer reports. The specific code section, 15 U.S.C. § 1681b, provides that before conducting a background check, an employer must make a “clear and conspicuous disclosure”, “in a document that consists solely of the disclosure” (emphasis added). The plaintiff alleges that Paramount violated the above provision of the FCRA by including some extraneous information in its disclosure form—namely a certification that the information provided by the plaintiff was true and correct.

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Government Study on Background Checks Addresses Incomplete FBI Criminal Records

Missing Data

The Government Accountability Office (GAO) has been busy. At the request of Congress, it’s been looking into criminal background checks. Last week the GAO released a report of findings from a two year study titled “CRIMINAL HISTORY RECORDS: Additional Actions Could Enhance the Completeness of Records Used for Employment-Related Background Checks.” The report lives up to that lengthy title–it is the most comprehensive accounting of the current state of FBI background checks, criminal record databases, and practices since 2006. It reveals when and why states conduct FBI record checks, and looks at whether states have improved upon reporting complete records into the FBI database. It also looks at the practices of private companies that conduct criminal record checks.

Congress has good reason to be concerned. Every year, more state and federal agencies are turning to statewide databases and the FBI records to screen employees for safety and security reasons. The number one concern is this: incomplete records.

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New Jersey’s Ban the Box Law Effective March 1, 2015

New Jersey

The New Jersey ban the box law, titled The Opportunity to Compete Act, went into effect on March 1, 2015. The law impacts both private and public employers hiring in the Garden State. Like most ban the box laws, the statute does not prohibit employers from asking candidates about their criminal past nor does it prohibit criminal background checks, but it does change the timeframe within which an employer can make an inquiry about criminal history.


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Litigation Update: FCRA Class Action Filed Against Time Warner

bart_frivolous_lawsuit-300x164 Litigation Update

Time Warner Cable has been named in a Fair Credit Reporting Act (FCRA) class action lawsuit filed last week in the Eastern District of Wisconsin. The class action complaint was filed on February 6, 2015, alleging that the company violated portions of the Fair Credit Reporting Act in its employment background screening process. The Plaintiff is a frequent flier—he’s the same guy who was named in one of the FCRA class action cases we reported on last week. Same law firm, same plaintiff, same allegations. Once again, the case focuses on the portion of the FCRA that requires a “clear and conspicuous disclosure” about the background check that is made in writing “in a document that consists solely of the disclosure.” (more…)

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Litigation Update: Michaels Stores Hit Again for Background Checks

Michaels Litigation Update

Michaels Stores was hit with another FCRA class action case last week. You might recall that the arts and crafts retailer was named in a similar suit just a few months ago*. The current complaint is once again about the Fair Credit Reporting Act (FCRA) disclosure requirement under 15 USC 1681b(b)(2)(a). Specifically at issue is the requirement that disclosure is made in a document that consists solely of the disclosure. The complaint alleges that in the company’s employment background screening process, the disclosure is “embedded within one long continuous web page that applicants fill out” that includes application information and a liability release. (more…)

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