EmployeeScreen University » Legislative Updates

2/2/2012 Public Records Under Further Attack

Nick Fishman — Thu, 02 Feb 2012 21:43:01 +0000

This week the Committee on Transportation and Infrastructure is considering a long-term reauthorization and reform of federal transportation programs as part of the American Energy and Infrastructure Jobs Act. Subtitle D of the proposed changes creates a national clearinghouse for records related to alcohol and controlled substances testing of commercial motor vehicle operators. Great idea, right? Alcohol and controlled substance records are critical pieces of the background screening process for commercial drivers.

There is just one big problem. As currently written, third party providers are denied access to the clearinghouse records. So for employers who rely upon third parties to screen drivers on their behalf, any benefit from a national clearinghouse will be lost. If the legislation goes forward without amendment, access will be limited to employers and individual drivers. In fact, to add insult to injury, third party access by anyone other than an employer or individual may carry with it civil and criminal penalties. Special interests are at work here (surprise surprise), and if allowed to go unchecked, significant information sources will be denied those who have a legitimate use. Third parties are enlisted by companies both large and small to help employers maintain a safe workplace and safe highways and roads by screening applicants.

Meanwhile, down the hall at Ways and Means, U.S. Congressman Sam Johnson (R-TX), Chairman of the House Committee on Ways and Means Subcommittee on Social Security, held a hearing on Thursday, February 2, 2012 questioning the accuracy and uses of the Social Security Administration’s Death Master File. This file is a key source of information in the background screening process, as it can reveal when an applicant is using the social security number of someone who is deceased. Sound far-fetched? It happens. Trust me.

Ironically, Chairman Johnson argues that the Death Master File should no longer be public in order to cut down on identity theft. He introduced H.R. 3475, the ‘Keeping IDs Safe Act of 2011,’ a bill that would stop Social Security from making this information public. This disconnect between a well-intended proposal and the actual use and benefit of the availability of public records is becoming the norm. Every week we are hearing about new efforts to limit use of public records, remove identifiers, and restrict access.

Rest assured that background screening companies and organizations like the National Association of Background Screeners are working to educate and amend legislation, but it is an uphill battle. We appreciate the support of employers in advancing our joint cause.

12/13/2011 Reminder of New California Employer Obligations On Credit Reports

Nick Fishman — Tue, 13 Dec 2011 18:37:52 +0000

We wanted to a reminder you that the state of California’s new restrictions on the use of employment credit reports are set to take effect January 1, 2012. Employers may still consider a credit report under the following circumstances only if the candidate is specifically informed that such a report will be run for one of the specific purposes (listed below) 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

I have underlined the text above to highlight the fact that this requirement is different than that currently required on a California applicant release and disclosure form. The employer must now specifically inform the applicant that a credit report will in fact be run and that it will be used for one or more of the above purposes. The specific purpose must be noted.

11/7/2011 Wisconsin Prepares to Ban Felons From Working at Schools

Nick Fishman — Mon, 07 Nov 2011 20:52:29 +0000

” The bill, when signed, will allow a school district to deny employment, fire or refuse to hire someone who has a felony record — even if the conviction occurred decades ago and is not related to the job.”

This story is popping up all over my Google alerts and I felt compelled to post. The above quote is from fdlreporter.com and refers to a proposed Wisconsin law that would ban all felons from working in schools.

Am I in favor of it? I think I am. However, I’m not sure that this policy won’t be fought tooth and nail by folks such those at the EEOC. Particularly, the part about the age of the offense and its relevance to the job. This might actually be a case that just needs to be heard.

Would any of us entrust our children to schools who knowingly hired felons? How about those who conducted substandard background checks and weren’t given comprehensive information? (Okay, that’s all schools.)

So is the EEOC willing to go to bat on this one? We shall see.

10/20/2011 Update of New California E-Verify Law

Nick Fishman — Thu, 20 Oct 2011 17:47:12 +0000

We reported earlier this week that the state of California had banned the use of E-Verify for the state’s employers. It has since been pointed out and confirmed that state has not banned the use of E-Verify, but instead banned anyone in the state (i.e. state, county, local governments) from mandating its’ use.

We apologize for the oversight on our behalf.

10/17/2011 State of California Bans Use of E-Verify

Nick Fishman — Mon, 17 Oct 2011 16:32:32 +0000

Author’s Note as of 10/20/2011: There has since been an update on this story which can be found at http://www.employeescreen.com/iqblog/update-on-new-e-verify-law-in-california/

This comes from TLNT’s John Hollon.

For better or for worse, California always seems to want to go its own way.

So it is with the controversial federal E-Verify system that “provides an automated link to federal databases to help employers determine employment eligibility of new hires and the validity of their Social Security numbers.”

While states such as Arizona, Louisiana, and South Carolina are passing laws to mandate the use of E-Verify as a check against illegal immigration, California is going the other way.

According to the Los Angeles Times, ” (state) legislation signed into law … prohibits the state, cities and counties from mandating that private employers use E-Verify,” forcing cities and other local municipalities that have been working to comply with the E-Verify requirements to reverse course and undo what they have previously done in order to comply with state law.

Gripes about reliability of E-Verify system

And the reason for the E-Verify ban in California, at least publicly, is the gripe that many have had about it nationwide — the unreliability of the federal E-Vertify system. According to the newspaper:

The state ban (of E-Verify) received broad support, including the California Chamber of Commerce and the California Farm Bureau Federation, which questioned the accuracy of the databases used by the federal system.

Assemblyman Paul Fong (D-Sunnyvale), who introduced the bill, said he felt that mandatory E-Verify was an unnecessary burden on businesses.

“It was costly, time-consuming. It’s unfair for big businesses and definitely for small businesses,” he said. “Why make a flawed system mandatory?”

Fong said the system often misidentifies U.S. citizens and legal immigrants. One such worker is Jessica St. Pierre, 22, who said she was fired from her job at a telecommunications company because her name was not correctly entered into the E-Verify system. It took her four months to get another job.”

SHRM’s problems with E-Verify

The Society for Human Resource Management has lobbied for a national verification system, but has specifically criticized the reliability of E-Verify, outlining “problems with the system, including identity fraud — which poses substantial problems for employers who are held accountable for enforcing the law — mistakes in data accuracy and burdens on legal U.S. workers.”

In addition, “A SHRM survey showed that 92 percent of employers want to participate in an electronic verification program provided ‘the system is accurate, efficient and easy to use.’ ”

Despite the public pronouncements, California’s ban of E-Verify is less about the reliability of the federal system and more about a state (and a legislature) that is overwhelmingly dominated by Democrats making a political statement against imposing sanctions that might limit opportunities for illegal workers.

But no matter what the reason behind the E-Verify ban, California’s legislative actions will surely reignite the national debate about immigration, E-Verify, and the long-standing inability of the federal government to fairly and consistently enforce workplace immigration laws.

For more of the Los Angeles Times story, click here.

About the author: John Hollon is Vice President for Editorial of TLNT.com, and the former Editor of Workforce Management. He has written extensively about human resources and talent management, including here at TLNT. Contact him at john@tlnt.com, and follow him on Twitter at http://twitter.com/johnhollon

10/11/2011 California Governor Bans Use of Employment Credit Reports

Nick Fishman — Tue, 11 Oct 2011 13:23:48 +0000

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.

Any employer that operates in the state of California and utilizes credit reports or might do so in the future should consider evaluating their employment screening policies.

7/21/2011 Why Most Employers Shouldn’t Care About New Adverse Action Requirements

Nick Fishman — Thu, 21 Jul 2011 16:32:23 +0000

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.

These rules only apply if you are evaluating a credit score. Remember that employment credit reports (most commonly used on employment background checks) do not include a credit score.

Why are we bothering you with this useless information if it doesn’t affect you? Well, to let you know if you hear about it, that it most likely doesn’t affect you. If you are reviewing credit scores, you might want to read the information below provided by Seyfarth Shaw labor and employment attorney, Pam Devata.

The FCRA requires a person taking adverse action based in whole or in part on a consumer report to provide an adverse-action notice. Section 1100F of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act) amended Section 615(a) of the FCRA to require users of credit scores to include those scores, and related information, in adverse-action notices provided to consumers. The requirement to disclose credit score information in FCRA adverse-action notices also applies to adverse-action decisions not related to credit.

Consequently, when a user takes any adverse action based in whole or in part on information contained in a consumer report, regardless of the weight of the credit score in the decision, the user must provide the consumer with the following:

* The credit score;

* The range of possible credit scores under the model used;

* All of the key factors that adversely affected the credit score

(not to exceed four factors, unless one factor is the number of inquiries made with respect to the report, in which case the key factors may not exceed five);

* The date on which the credit score was created; and

* The name of the person or entity that provided the credit score.

New Risk-Based Pricing Notice Requirements:

Risk-based pricing refers to the practice of setting or adjusting the price and other terms of credit offered or extended to a particular consumer to reflect the risk of nonpayment by that consumer. The FCRA also requires a creditor to provide a risk-based pricing notice to a consumer when the creditor uses a consumer report in connection with a credit application or review of an existing account and, based on the report, grants credit or amends existing credit on terms that are materially less favorable than the most favorable terms obtained by a substantial portion of consumers. The Federal Reserve Board (the

“Board”) and the Federal Trade Commission (“FTC”) recently amended their respective risk-based pricing rules to require disclosure of credit scores and information relating to credit scores in risk-based pricing notices if a credit score of the consumer is used in setting or adjusting the material terms of credit.

The Board’s and the FTC’s rules require the same additional information to be included in a risk-based pricing notice as is required for the adverse-action notices. In addition, the risk-based pricing notices must include a prescribed statement explaining credit scores that includes a disclosure that the credit score was used in setting the credit terms. For example, a statement such as:

* “Your credit score is a number that reflects the information in

your credit report. We used your credit score to set the terms of credit we are offering you. Your credit score can change, depending on how your credit history changes.”

The Board’s and the FTC’s rules also recommend that the risk-based pricing notices contain optional contact information for the entity that provided the credit score.

Common Questions:

The new rules raise a lot of questions, many of which are addressed in the commentary to the rules, such as: (1) whether credit score disclosures are required when only the credit score of a guarantor, co-signer, surety, or endorser is used (no disclosure is required); (2) whether there are safe-harbor model notices that can be used (yes there are); and (3) what to do when dealing with proprietary scores, three-party financing transactions, more than one applicant, no credit score, and multiple credit scores (the commentary addresses these questions as well).

Two of the more common questions, however, concern “what is a credit score” and “when is a credit score used.” The commentary makes clear that a score that is not used to predict creditworthiness, such as an insurance score, is not a “credit score” and need not be disclosed. The commentary also makes clear that “use” occurs at a very low threshold and if the credit score played any role in the decision (for example, if the credit score led the user of the credit score to investigate further and the results of that investigation played a role in the decision), then the credit score was used and must be disclosed.

Many of these same questions can also be answered by reviewing the “Forty Years of Experience with the Fair Credit Reporting Act” report that the FTC issued today and is available at http://www.ftc.gov/os/2011/07/110720fcrareport.pdf. This report is the most up-to-date FTC guidance on interpreting the FCRA.

7/21/2011 Connecticut Passes Law to Curb Use of Credit Reports

Nick Fishman — Thu, 21 Jul 2011 16:04:39 +0000

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.

Connecticut now joins a growing list of states that have adopted similar measures including Oregon, Washington, Hawaii, Illinois, Maryland.

Employers note that this law will go into effect on October 1, 2011.

I know that mine might be an unpopular point of view in our industry, but I actually think that recently bills passed in Illinois, Maryland and Connecticut are effective models to curb the misuse of this background screening instrument. While I believe that credit reports are an integral part of the screening process for some, it should not be a requirement for all positions. Quite honestly, it is those that have been misusing these reports for positions where credit really shouldn’t be required that has caused the states to take these actions. I feel like the exemptions that are carved out effectively allow those that should be conducting credit reports do so. I also think that disallowing private action is fair to employers.

There, I’ve been holding that in for about a year. I feel better already. Feel free to rip me and my position now.

7/26/2011 EEOC Hearing Scheduled on Use of Criminal Background Checks

Nick Fishman — Tue, 05 Jul 2011 18:56:16 +0000

The Equal Employment Opportunity Commission (EEOC) will hold a meeting on the use of criminal records foremployment screening purposes on Tuesday, July 26, in Washington, D.C. The National Association of Professional Background Screeners (NAPBS), which we are members of, is preparing comments for submittal to the EEOC on the relevance and benefits of access to criminal history records by employers. NAPBS is also partnering with other associations and coalitions as we move toward the July meeting date. This will be a full Commission meeting, meaning all five Commissioners and EEOC’s General Counsels will attend. This includes Chairwoman Jacqueline Berrien, Commissioner Chai Feldblum, Commissioner Stuart Ishimaru, Commissioner Vicky Lipnic and Commissioner Constance Barker. A formal agenda has not yet been released but it is excepted there will be multiple panels including academics, lawyers, victim’s groups (i.e., those who have been denied employment due to their criminal history), government officials, litigants from the El v. Septa case and others.

Given the importance of this meeting to our industry, to our clients and our blog followers, we want to ensure that you are aware of this upcoming meeting and have the opportunity to join in our efforts to ensure that the interests of the providers and users of criminal records are represented.

The role of the use of criminal records in employment screening will be the focus of this meeting and as employers have an important stake in what is being considered during the meeting, we encourage you to add this date to your calendar and make plans to attend the hearing on July 26 if possible. The meeting will be open to the public and it will not be webcast or televised, although a transcript will be available after the meeting.

7/1/2011 New Law in Indiana Gives Safe Harbor to Some Ex-Convicts

Nick Fishman — Fri, 01 Jul 2011 17:23:11 +0000

Effective today, July 1, 2011, a new Indiana law takes effect which will allow ex-convicts with non-violent criminal records to hide their past from potential employers.

The law, which applies to anyone convicted of a misdemeanor or a Class D felony that didn’t result in injury, gives the ex-offender the legal right to petition the court to limit access to their criminal histories for eight years if they don’t commit any more crimes.

Indiana officials are making it known to those that successfully petition the court to wipe out their record that they can tell employers that they have not been convicted of criminal activity on a job application.

However, there’s a rub. While the conviction would be cleared from the actual court, it cannot be purged from criminal record databases that previously catalogued such information. This will can create an interesting situation for both employers and applicants when the actual background check is conducted.

Interestingly enough, this development would actually benefit those that do not take extra steps to verify criminal records at the source when they have been found on a criminal record database. Those that engage in the best practice of confirming these records at the court will be unable to report the record because it cannot be substantiated.

It will be interesting to see how this unfolds. Stay tuned.