Watch Where You Step: 5 Sticky Legal Situations Employers Should Avoid

Angela Preston

BTW July

When it comes to hiring, the legal landscape is changing fast. Blow-your-hair-back, in-your-face, what-just-hit-me kind of fast. Hiring new employees is a process that has always involved legal risks. But the application, interview, and screening process is increasingly complicated for employers. So far, 2013 has been a banner year for litigation, legislation, and regulation. Recent developments at the local, state and national level make it difficult to keep up, even if keeping up is your full time job. Feeling overwhelmed? Don’t feel bad-this list of top 5 provides a quick recap of any legal changes you might have missed.

Take a look at the top 5 legal areas to be cautious of in hiring and background screening:

1. EEOC Guidance and the Use of Criminal Records

The EEOC published new guidance on the use of criminal background checks in April of 2012. The EEOC’s new guidance was an attempt to address its concern that criminal background checks have an unintended discriminatory impact on blacks and Hispanics. If anyone questioned how far the EEOC would take enforcement efforts, the question was answered in June of this year, when the Commission announced two major cases–a class action lawsuit against Dollar General and another major case against BMW. Both cases center on the companies’ use of criminal records to disqualify candidates.

The EEOC is aggressively pursuing and investigating suspected cases of disparate impact involving criminal backgrounds.

J.B. Hunt recently settled a similar claim with changes to their policies last month. Rather than living in fear and wondering if your company will be the next target, take a look at the new guidance, review your hiring policies and criteria for criminal history, and make sure that you are considering the long-established factors established in Green v. Missouri Pacific Railroad: the nature and gravity of the offense, the time that has passed since the conviction, and the nature of the job held or sought. Also take note of a new test in the guidance—an “individualized assessment”. The EEOC’s expectation of an individualized assessment creates an additional layer of review for employers who use criminal backgrounds as part of a routine background check. The details are tricky, and you can reference my prior posts on the recent cases and additional tips for compliance here.

2. FCRA Violations for Notice Provisions and Adverse Action

As the country continues to pull itself out of an economic slump, the competition for jobs is still fierce. Heated competition abounds for the best positions, and candidates are far more likely to ask questions when they lose out on a good job opportunity.

Rejected job applicants are being actively recruited by plaintiff’s firms specializing in consumer protection, and we have seen a spike in class actions being brought against employers and background screening providers based on Fair Credit Reporting Act violations.

The cases tell the story—big settlements in Joshaway v. First Student ($5.9M), Hall v. Vitran Express ($2.6M) and the highly publicized K-Mart settlement ($3M) that I blogged on in February of this year. The issues center on appropriate written disclosures, the timing of conducting the background check (it must be after obtaining authorization and disclosure), and the adverse action process—which must include both a pre-adverse and adverse action notice, a copy of the report, and the CFPB Summary of Rights. Accuracy under the FCRA has also been scrutinized, so make sure that your background provider is doing things right as well. See my list of dos and don’ts for FCRA compliance here.

3. Ban the Box Laws at the State and Local Level

Ban the box has been spreading like wildfire. If you are a frequent reader of this blog, you will know that Rhode Island, Minnesota, the City of Seattle, and Buffalo have all enacted new ban the box laws in the past two months. If you haven’t heard of ban the box, it is the catch phrase that describes a movement to remove the checkbox from an employment application that asks “have you ever been convicted of a felony?” The idea is to give ex-offenders a better chance at being hired. By deferring questions about a criminal past until later in the process, proponents argue that the candidates have a better chance of explaining past behavior and being hired. Unfortunately, not all ban the box laws are the same. Some states ban questions until after an interview, others simply require taking the question off of the application form, and other jurisdictions require you to wait until post-offer. Some jurisdictions have special forms and questionnaires that look an awful lot like the EEOC’s “individualized assessment”. The influx of new laws poses a risk to employers who are not keeping up. The patchwork of state and local laws makes it really hard—especially for employers doing business in multiple jurisdictions or in border communities. Not to mention conflict of law issues. Now is a good time to re-evaluate your process to consider when you are inquiring about criminal history, whether the information is job related and supported by your policy, and whether you fit into one of the common exemptions i.e. for law enforcement or vulnerable populations.

4. Social Media and State Laws

Social media continues to be a hot topic—if for no other reason than the irresistible urge that we all have to jump online and snoop. I’ve said this before—think twice before you Google.

The problem for employers is this: if you use social media information, you may learn things about a candidate that are illegal to consider in the hiring process.

Things like religious affiliation. Marital status. Age. Sexual orientation. And on and on. To further complicate matters, depending on who is doing the searching, and what sources are being used, the FCRA protections for job applicants may kick in, and you may be required to document adverse action and produce consent forms. In June we hosted a webinar dedicated solely to social media–if you missed it, you can download it here. Another related topic–this year the NLRB has been actively protecting the right to gripe on Facebook, citing the National Labor Relations Act Section 7 protections for engaging in concerted activity. And the states have been busy in 2013 passing laws that ban an employer’s right to ask for passwords or, in some cases, the right to “friend” or “Link In” with co-workers. California, Illinois, Arizona, Michigan, New Jersey, Maryland, and Delaware all have laws preventing employers from requesting social media passwords from employees and/or job candidates. The trend seems to favor employees and applicants—at least when it comes to hiring and firing.

5. Credit Reports

In May of this year, Colorado and Nevada joined the growing list of states that restricted the use of credit reports in hiring. Colorado was the 9th, and Nevada was the 10th state to ban credit, joining California, Connecticut, Washington, Hawaii, Oregon, Illinois, Maryland and Vermont.

The lock down on credit is another trend spurred by the theory that people who have lost their jobs are more likely to have bad credit, and people with lower credit scores are less likely to become re-employed.

Most states have exceptions for certain types of positions, and would require an employer to show that the use of credit reports is job related and necessary for the specific position. But one of the biggest potential pitfalls for an employer is the threat of a class action or even an individual claim alleging that the use of credit was discriminatory, based on a theory that certain protected classes statistically have bad credit. We expect the EEOC to revisit the issue of credit in employment in the near future. In addition, there is a federal bill pending in Congress that institute a federal ban on the use of credit in hiring. More on this to come.








Angela Preston
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Angela Preston

Vice President of Compliance & General Counsel at EmployeeScreenIQ
Angela Preston has more than 20 years as a licensed attorney and over 10 years in the background screening area. She serves on the Board of Directors of the National Association of Professional Background Screeners (NAPBS), is a member of the NAPBS Background Screening Credentialing Council (BSCC), and is actively involved in the Society for Human Resource Management (SHRM) and ASIS International. Angela is also a member of the Ohio State and Columbus Bar Associations. Angela has direct oversight and management of compliance programs, and will provide guidance in complex legal matters including state and federal legislation, EEO law, client education, adjudication, pre/adverse action process, NAPBS Accreditation and client and vendor contract management.
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