Scherzer International Hosts C5LA Executive Leadership Lunch

C5LA Youth Leaders with SI employees on March 28th, 2017

On March 28th, Scherzer International had the pleasure of hosting an amazing group of students from the C5LA Youth Foundation. The students began their visit in the company’s conference room, where managers and executives gave presentations describing their duties, their department’s role in the company, and their personal academic and career paths. The session wrapped up with a lively discussion driven by the C5LA students’ questions about background checks, running a business and innovation.

Afterwards, students and staff gathered in the break room for a social lunch to get a sense of the company’s culture and work environment.  After filling up on lunch and conversation, the students were given a tour of SI’s office to see what happens “behind the scenes” when preparing background reports.

Our C5LA guests wrapped up their visit by hearing from our HR manager who described SI’s summer internship program, which has included C5LA students in past years, some of whom have chosen to return to SI as full time employees. Everyone at SI agrees that any one of the students who visited us in March would be a great asset to the team!

Larry and Carole Scherzer both serve on the C5LA foundation’s Board of Directors and are strong supporters of the organization’s mission and programs. C5LA aims to provide underserved adolescents throughout the Los Angeles area with the resources and opportunities necessary for them to successfully pursue a college education and lead in their communities.

About the C5LA visit, Larry Scherzer said, “It was very moving to see such bright, ambitious students engaging with SI’s employees and taking such interest in our business. I keep thinking about one of C5LA’s theme songs, Ain’t No Mountain High Enough.”

Scherzer International makes a conscious effort to give back to the community as much as possible. The company regularly participates in fundraisers and toy drives benefiting organizations such as the Arthritis Foundation and Child and Family Guidance Center.

April 11th, 2017|Educational Series, Press Release, SI Information|

The EU-US Privacy Shield for transatlantic data transfers makes its debut

Announced on February 2, 2016 by the European Commission, the new political agreement called the Privacy Shield, reflects the requirements set out by the European Court of Justice in its ruling on October 6, 2015, which declared the old Safe Harbor privacy framework invalid.

The new arrangement calls for strong data privacy and security measures and robust enforcement of U.S. companies handling Europeans’ personal data, clear safeguards and transparency for U.S. government access, and effective protection of EU citizens’ rights with several redress possibilities.

The College of Commissioners is now preparing an adequacy decision regarding the Privacy Shield–the Article 29 Working Party (the “Working Party”), a data protection authority, is requesting that all documents be provided  by the end of February 2016 so that it can complete its assessment of the new framework at a special plenary meeting shortly thereafter. In a statement issued February 3, 2016, the Working Party provided some assurances that during this period of transition, transfer mechanisms, such as standard contractual clauses (which are data transfer agreements approved by the Commission) and binding corporate rules (generally described as internal data processing rules binding on all members of a global corporate group) to permit intragroup transfers of personal data) can still be used as transfer tools to the U.S.

Organizations that certified compliance under the Safe Harbor regime must continue to meet their obligations in connection with previously transferred personal data to avoid enforcement actions by the Commerce Department or the Federal Trade Commission, which consider the Safe Harbor as still binding. In the interim, implementing the above-mentioned clauses should also be considered to the extent they supplement the Safe Harbor platform. It appears that the Privacy Shield, at least initially, will rely significantly on the Safe Harbor framework, and it is likely that the Department of Commerce will offer a means for Safe Harbor certified organizations to transition to the Privacy Shield.

February 24th, 2016|Educational Series, European Union, Guidence|

CFPB publishes annual guide about consumer reporting agencies

Every year, the Consumer Financial Protection Bureau (the “CFPB”) updates and publishes a guide to consumer reporting companies, The guide includes information in connection with requesting a consumer report from the three largest nationwide consumer reporting companies and dozens of specialty reporting companies, tips regarding specialty reports, updated information about authentication of identity when requesting a consumer report, information on companies that provide free credit scores, and rights with respect to consumer reports.

The CFPB notes that in prior years, its guide referred to consumer reporting businesses as “agencies” or “bureaus,” and that these terms can be confusing because they may imply these businesses are government entities. They are not—these companies are private-sector, for-profit entities, and in this year’s guide, the CFPB refers to them as “companies” for better clarity.

February 23rd, 2016|Educational Series|

Philadelphia expands its ban-the-box ordinance

On December 15, 2015, Philadelphia Mayor Michael Nutter signed Bill 150815 expanding the city’s ban-the-box legislation. The new ordinance, which goes into effect on or about March 14, 2016, amends Chapter 9-3500 of the Philadelphia Code entitled “Fair Criminal Records Screening Standards,” by modifying certain definitions and adding additional requirements regarding the screening of job and license applicants for criminal history. With limited exceptions, the new ordinance applies to employers having any employees within the city of Philadelphia. (The prior ordinance covered employers with 10 or more employees.)  The highlights of the law include:

  • questions about criminal records must be removed from the job application–the ordinance specifically notes that multi-state applications may not include the question with a disclaimer for Philadelphia applicants not to answer;
  • employment materials cannot contain questions or refer to  the applicant’s willingness to submit to a background check before a conditional offer has been extended;
  • criminal record inquiries must be postponed until after a conditional offer has been made;
  • notice of the background check must state that any consideration of the results will be tailored to the job;
  • employment decisions can only include a conviction that occurred less than seven years ago–employers may add to the seven year period any time of actual incarceration served because of the offense;
  • screening process must include individualized assessment for each applicant;
  • if the applicant is rejected based on a criminal conviction, he/she must be advised of the specific reason and provided with a copy of the record.
December 22nd, 2015|Educational Series, Employment Decisions|

Importance of background checks in employment decisions

Performing a background check as part of the hiring process, promotion, or retention in today’s world is essential. Stakeholders expect it. Regulators mandate it.

In a turbulent economy, the pool of job candidates is greater than ever and misrepresentations abound. For many firms, once an offer of employment has been extended, it is common practice to check the candidate’s background. Depending on the risk level of the position and its requirements, background checks can run the gamut from reference calls done internally, to using a consumer reporting agency to perform comprehensive searches to determine the existence of potentially negative information, such as criminal matters, civil litigation, bankruptcy filings, tax liens, judgments, regulatory actions, driving violations, and adverse media publicity, and to verify academic, licensing, employment and other professional qualifications and claims.

The law is clear–an employer who hires or retains a dangerous or incompetent employee can be held liable for that employee’s wrongful acts, if committed in the course and scope of his or her employment. The theories of negligent hiring and retention go even further–someone who is injured by an employee can sue the employer even if the employee’s conduct is outside of the employer’s control. For instance, one court found the owner of an apartment complex liable for a handyman’s assault of a tenant after working hours. The liability existed because the owner failed to screen the handyman’s background, which included a long list of violent crimes.

Underpinning the negligent hiring and retention theories is the negligence of the employer—that is, the employer knew or should have known the employee was unfit for the job, posed an unreasonable risk of harm to others, and did nothing about it. Virtually every state recognizes these theories as causes of action, or if not, has a similar legal theory. One of the best ways to reduce the risk of negligent hiring and retention liability is to perform adequate background checks as part of the hiring process and in connection with promotions or retention.

A well-designed background screening program that is compliant with applicable laws and regulations makes good business sense, as an individual’s prior history is often a predictor of future performance, workplace behavior and cultural fit. Various studies have shown that the cost of a bad hire is one to five times the salary of the job in question, considering the direct and indirect cost involved in recruiting, hiring, training, development, administration, management, and potential litigation, as well as the wasted wages and benefits. Comprehensive background screening can help identify individuals who may have a propensity for violence, theft, fraud, dishonesty, substance abuse, absenteeism, and other misconduct, and at the same time, find the candidates that can make the employer more successful.

Many employers are also required by government regulation, their insurance carriers, and/or their clients to conduct background checks. A comprehensive background check is clearly worth the investment. Employers never want to say “we should have known,” as an uninformed employment decision can result in significant financial losses and quickly tarnish an employer’s reputation.

November 5th, 2015|Educational Series, Employment Decisions|

Right to be Forgotten movement gains backers in the U.S.

Seeking to expand recognition of the Right to be Forgotten to the United States, a consumer group has filed a petition with the Federal Trade Commission (the “FTC”) requesting that Google be required to remove links upon request.

Last year, the European Court of Justice ordered Google to remove links about the financial history of a Spanish attorney, finding that the links to stories about his debts were “inadequate, irrelevant or no longer relevant, or excessive,” establishing the Right to be Forgotten (“RTBF”). Over the last 12 months, Google has received 274,462 removal requests and evaluated 997,008 URLs for removal from its search results.

In the hopes of bringing the RTBF to the United States, Consumer Watchdog recently filed a petition with the FTC. The group argued that by providing the ability to request removal of links to European consumers in Europe, Google engaged in unfair and deceptive practices in violation of the Federal Trade Commission Act. Not offering Americans the right to request removal – while providing it to millions of users across Europe – is unfair, the group argued to the FTC. And Google’s claims in its privacy policy that “[p]rotecting the privacy and security” of customer information “is a top priority,” are deceptive because the company limits protections by denying the RTBF, the consumer group added.

Consumer Watchdog listed several examples of U.S. citizens who have been harmed without the RTBF in this country, ranging from a guidance counselor who was fired after photos of her as a lingerie model from 20 years prior surfaced online to a woman whose mug shot appeared online after she was arrested defending herself against an abusive boyfriend. The group also told the FTC that Google already removes certain types of links from search results in this country (such as revenge porn), meaning it has the capability to remove other links as well.

“As clearly demonstrated by its willingness to remove links to certain information when requested in the United States, Google could easily offer the RTBF or the Right To Relevancy request option to Americans,” Consumer Watchdog wrote. “It unfairly and deceptively opts not to do so.”

The RTBF doesn’t implicate First Amendment concerns or constitute censorship, the group said, because the content remains on the Internet. The right “simply allows a person to request that links from their name to data that is inadequate, irrelevant, no longer relevant, or excessive be removed from search results,” according to the petition. “Americans deserve the same ability to make such a privacy-protecting request and have it honored.”

Further, the right isn’t automatic. “Removal won’t always happen, but the balance Google has found between privacy and the public’s right to know demonstrates Google can make the RTBF or Right To Relevancy work in the United States,” Consumer Watchdog concluded.

Meanwhile, the issue of expanding the RTBF has also come up in Europe. In July, a French regulatory authority ordered Google to remove all the links from its search pages including Google.com in the U.S. – not just the European pages. Google refused to comply and filed an appeal of the order. “We believe that no one country should have the authority to control what content someone in a second country can access,” Google’s global privacy counsel Peter Fleischer wrote on the company’s blog.

Read Consumer Watchdog’s petition to the FTC.

September 23rd, 2015|Criminal Activity, Educational Series, Employment Decisions|

DOL offers new guidance on old question of employee or independent contractor

For the last few years, one of the top priorities for the Department of Labor (the “DOL”) has been the fight against the misclassification of employees as independent contractors. In the agency’s latest effort, it released new guidance for employers when classifying workers, using six factors to consider.

The Administrator’s Interpretation 2015-1 focuses on the issue of whether the worker is “economically dependent on the employer or truly in business for him or herself.” The more the worker relies upon an employer for income stream, business skills, and supplies, the more likely he or she is an employee – and entitled to all of the benefits included in that classification, such as overtime or worker’s compensation.

In “The Application of the Fair Labor Standards Act’s ‘Suffer or Permit’ Standard in the Identification of Employees Who Are Misclassified as Independent Contractors,” the DOL started with the Fair Labor Standards Act’s (the “FLSA”) definition of “employ:” “to suffer or permit to work.” Under this broad definition, “most workers are employees,” the agency stated unequivocally.

With that in mind, the DOL turned to the six factors of the economic realities test commonly used by courts when considering whether a worker is an employee or an independent contractor. The agency noted that the labels used by an employer are not determinative of the nature of the relationship and neither are tax filings.

“All of the factors must be considered in each case, and no one factor (particularly the control factor) is determinative of whether a worker is an employee,” the DOL wrote. “Moreover, the factors themselves should not be applied in a mechanical fashion, but with an understanding that the factors are indicators of the broader concept of economic dependence. Ultimately, the goal is not simply to tally which factors are met, but to determine whether the worker is economically dependent on the employer (and thus its employee) or is really in business for him or herself (and thus its independent contractor).”

Is the work an integral part of the employer’s business? If a worker is economically dependent upon the employer, he or she is likely an employee, while a “true independent contractor’s work, on the other hand, is unlikely to be integral to the employer’s business.” Recognizing the increasing use of telecommuting and other flexible work schedules in today’s economy, the DOL added that work can be integral even if it is performed away from the employer’s premises.

The second factor considers whether the worker’s managerial skill affects the worker’s opportunity for profit or loss. A worker in business for him or herself not only has the opportunity to profit but also to experience a loss, the DOL explained. The question isn’t whether a worker is on the job more hours or earns more money but if the worker makes decisions and exercises skill and initiative – hiring other workers or advertising his services, for example – to move the business forward.

In the third factor, the worker’s relative investment as compared to the employer’s investment should be evaluated. “The worker should make some investment (and therefore undertake at least some risk for a loss) in order for there to be an indication that he or she is an independent business,” according to the guidance. Simply purchasing tools or other equipment may not constitute an investment, the agency added, when considered relative to the employer’s investment.

Fourth: does the work performed require special skill and initiative? Technical skills alone will not indicate that a worker is an independent contractor, the DOL said. Instead, business skills, judgment, and initiative should be evaluated. For example, a highly skilled carpenter who provides his services to a construction company may simply be providing skilled labor as an employee. On the other hand, if the carpenter decides which jobs to take, advertises his services, and determines what materials to order, he is more likely to be classified as an independent contractor.

The length of the relationship between the worker and the employer is the focus of factor five. A permanent or indefinite relationship signals an employee, the DOL said. “After all, a worker who is truly in business for him or herself will eschew a permanent or indefinite relationship with an employer and the dependence that comes with such permanence or indefiniteness,” the agency wrote. The length of time should be considered in the context of the industry, however – seasonal positions may not always indicate an independent contractor relationship, for example.

In the sixth factor, the DOL advised employers to think about control. While the control factor should not receive more weight than the other factors in the economic realities test, the nature and degree of the employer’s control should be considered in light of the ultimate determination whether the worker is economically dependent on the employer or an independent contractor. Employers do not need to look over a worker’s shoulder every day to make them an employee, the guidance cautioned, as technological advancements permit many employees to work off-site and unsupervised.

Employers should review the new guidance and be prepared for agency oversight on the issue of worker classification, keeping in mind that the DOL repeatedly emphasized that “most workers are employees.”

Read the Administrator’s Interpretation No. 2015-1.

September 23rd, 2015|Educational Series, Employment Decisions|

Revised FCRA Summary of Rights form released

Did you know that a revised version of the Fair Credit Reporting Act (the “FCRA”) Summary of Rights form was released a few months ago?

If the answer is “no,” don’t worry. The form was not published in the Federal Register and appeared under the radar without an announcement.

The FCRA mandates that employers are required to provide a disclosure and obtain written authorization from any applicant or employee prior to conducting a background check. If the employer decides to take an “adverse action” against the applicant or employee based on the results of the background check, the employer must provide the individual with a copy of the background check and the Summary of Rights form under the FCRA.

The revised form does not require a lot of adjustments for employers. Some of the government addresses found on the last page were changed and all references to Maine’s laws were removed. Earlier this year, the state repealed its mini-FCRA to adopt the federal FCRA.

View the new Summary of Rights form.

September 23rd, 2015|Educational Series, Employment Decisions|

FTC launches new resource for identity theft victims

The FTC has launched IdentityTheft.gov, a new resource that makes it easier for identity theft victims to report and recover from the crime. A Spanish version of the site is available at RobodeIdentidad.gov.

The new website provides an interactive checklist that explains the recovery process and helps victims understand the steps that should be taken upon learning that their identity has been stolen. It also provides sample letters and other helpful resources. In addition, the site offers specialized tips for specific forms of identity theft, including medical and tax-related, and contains advice for people who have been notified that their personal information was exposed in a data breach.

Identity theft has been the top consumer complaint reported to the FTC for the past 15 years, and in 2014, the Commission received more than 330,000 complaints from consumers who were victims.

June 12th, 2015|Educational Series|

Going global: international background checks

As the business world increasingly goes global, even small or medium-sized companies may have international outposts or employees located beyond the U.S. border. In addition, with security – both physical and digital – an important issue, employers want to know everything they can about their employees.

Many employers are turning to international background checks. But a criminal record or a credit report like those used in the United States can get lost in the translation.

First up: cultural norms. What may seem perfectly routine and acceptable in the United States may confuse or offend those in other countries. For example, things like credit checks and drug tests are virtually unheard of abroad and cultural differences may yield what might by American standards be unusual answers in a personality test. A second important consideration: the law. Just as the U.S. has the Fair Credit Reporting Act (FCRA) and other regulations setting the boundaries of background checks, foreign jurisdictions have their own laws of the land. The French Labor Code, for example, requires that its “works council” review employment screening procedures prior to an employer’s use.

One huge legal complication can be found in the area of privacy law. The European Union imposes restrictions on obtaining information about employees or applicants, the way in which such information can be used, and how the information can be shared or transmitted. To alleviate some of the liability concerns, the U.S. has entered into a Safe Harbor framework with the European Commission, which requires compliance with seven principles of data security. And while the EU leads the pack, other countries (like Australia, Canada, Hong Kong, and Japan) also pose challenges with their strict regulation of privacy.

Having an applicant sign a consent form to release information may be of little help as several EU countries also recognize a presumption against enforcement of such agreements on the basis that employees and applicants have limited bargaining power in the employment context. Alternatively, employers may have better luck by having applicants do the work themselves, providing their own background information to avoid implicating data privacy laws. Of course, this raises authentication and accuracy questions.

The collection of criminal information can also present logistical challenges. Many countries do not have an organized court system, and records, if available, may have to be searched on a regional or town-by-town basis, or at multiple agencies (like the police, the court venue and a government agency, for example). Certain countries offer what is known as a “police certificate” which will confirm the information about an applicant found in police records. Some countries, like Poland, have banned the collection of criminal records altogether; Spain prohibits the possession of records but an applicant could, in theory, show an employer his or her record.

If the screening is being conducted by a consumer reporting agency located in the United States, the FCRA requirements also come into play. International background checks are not impossible, but they do pose a number of legal and cultural risks that can be tackled with the right planning and professional assistance from an experienced background screening company.

February 23rd, 2015|Criminal Activity, Educational Series, Employment Decisions, Fraud|