|What is this about:||The Department of Public Works Bureau of Contract Administration (the “Department”), which bears administrative responsibilities for the Fair Chance Initiative for Hiring (“LAFCIH”) issued its rules and regulations (the “Regs”) to guide covered employers (and city contractors/subcontractors) in meeting compliance requirements. As reported in our previous alert, effective January 22, 2017, the LAFCIH prohibits inquiring about an applicant’s criminal history until a conditional job offer has been extended and imposes significant compliance obligations.|
|Notable amplifications and clarifications:||1) “Applicant” means an individual who submits an application or other documentation for employment to an employer regardless of location.
2) “Employee” means any individual who performs at least two hours of work on average each week within the geographic boundaries of the City for an employer. Average week is determined by the last four complete weeks before the position is advertised.
3) An individual who lives in the City and performs work for an employer from home, including telecommuting, is an employee
4) An individual who works from a home that is outside of the City is not an employee even if he/she works for a Los Angeles-based company unless the individual also works at least two hours on average per week within the geographic boundaries of the City.
5) The LAFCIH applies to employees regardless of an employer’s designation of an employee as an independent contractor and labeling a worker as an independent contractor is not conclusive for the purpose of the LAFCIH.
|Criminal history:||According to the Regs, “a conviction shall include a plea, verdict, or finding of guilt regardless of whether the sentence is imposed by the court. In the State of California, an employer is prohibited from asking about any arrest information, unless it results in a conviction, and otherwise specified.” Note: the definition above cites California Labor Code §432.7(a)(1). The first sentence is correct; however, the second sentence is not, as that statute expressly allows inquiries about pending cases, stating that “nothing [in this section] shall prevent an employer from asking about an arrest for which the employee or applicant is out on bail or on his or her own recognizance pending trial.” Nevertheless, the Regs, in a section titled “Employer Assessment of Criminal History,” go on to remind employers that “arrests cannot be considered in employment decisions.”|
|Other guidance items:||The Regs amplify other definitions and aim to explain the various employer requirements, including, but not limited to, the application and interview procedure, assessment of criminal history, the “Fair Chance” process, notice and posting, recordkeeping, enforcement, and exceptions. See below for some links regarding this new guidance:Read the Regs here
Access the notice to applicants/employees regarding the LAFCIH here
The Department’s sample letter to rescind a job offer here.
The City of Los Angeles passed the “Fair Chance Initiative for Hiring (LAFCIH),” a new “ban-the-box” legislation that goes into effect January 22, 2017, with monetary fines for non-compliance starting July 1, 2017. The LAFCIH applies to most private sector employers that (1) are located in or doing business in the City of Los Angeles; and (2) employ 10 or more people. The law covers both applicants and incumbent employees in virtually any type of employment situation.
The ordinance prohibits covered private employers from inquiring about an applicant’s criminal history until a conditional offer of employment has been extended, and imposes significant compliance obligations, including a requirement that before making an adverse decision based on a criminal record, the employer “performs a written assessment that effectively links the specific aspects of the applicant’s criminal history with risks inherent in the duties of the employment position sought by the applicant.” At a minimum, the employer must consider factors identified by the Equal Employment Opportunity Commission in its 2012 Enforcement Guidance and any other factors that may be required by rules or guidelines promulgated by the city’s Department of Public Works, Bureau of Contract Administration [Department] which will be administering the LAFCIH.
The employer must then engage in a “fair chance process,” allowing the candidate to provide information or documentation regarding the accuracy of the criminal record or other information that the employer should consider, such as evidence of rehabilitation or other mitigating factors. The proposed position must be held open for at least five business days after the candidate has received the employer’s notification and assessment. If the candidate provides additional information or documentation, the employer is required to consider the new information and perform a written re-assessment.
Additionally, the LAFCIH provides that all covered employers include the following language in any advertisement or solicitation seeking applicants: “The employer will consider for employment qualified applicants with criminal histories in a manner consistent with [the Los Angeles Fair Chance Initiative for Hiring].” There is also a notice posting requirement, which must be in a conspicuous place at every workplace, job site, or other location in the City of Los Angeles under the employer’s control that is visited by applicants. Copies of the notice must be sent to each labor union or representative of workers that has a collective bargaining agreement or other agreement applicable to employees in Los Angeles.
Employers are required to maintain all records and documents related to an individual’s application for employment, including any written assessments and re-assessments for a period of three years after the receipt of the job application.
As with other “ban-the-box” legislation, the LAFCIH makes it unlawful for an employer to retaliate or otherwise take adverse action against an individual who has complained about the employer’s non-compliance or anticipated non-compliance; opposed any practice made unlawful by the ordinance; participated in any proceedings related to enforcement of the law, or otherwise sought to enforce or assert his/her rights under the LAFCIH.
The LAFCIH does not apply in the following circumstances: (1) when the employer is required by law to obtain information regarding an applicant’s criminal convictions; (2) when the applicant will be required to possess or use a firearm in the course of his/her employment; (3) when the applicant is prohibited by law from holding the position sought due to a conviction, regardless of whether the conviction has been expunged, sealed, eradicated, or dismissed; or (4) when the employer is prohibited by law from hiring an applicant who has been convicted of a crime.
With this new ordinance, Los Angeles joins the fast-growing list of localities (Austin, Baltimore, Buffalo, Chicago, Columbia (MO), the District of Columbia, Montgomery County (MD), New York City, Philadelphia, Portland, Prince George’s County (MD), Rochester, San Francisco, and Seattle) and nine states (Connecticut, Hawaii, Illinois, Massachusetts, Minnesota, New Jersey, Oregon, Rhode Island, and Vermont) that have enacted similar laws for private employers.
Companies covered by the LAFCIH should immediately review and revise, if applicable, their applications, offer letters, background check forms, and notices, and ensure that their employment screening policies incorporate the ordinance’s pre-adverse and adverse action procedures and documentation, and record keeping requirements.
Since “ban-the-box” legislation is gaining momentum at a rapid pace, all nationwide employers may want to conduct an assessment of their employment screening practices to ensure their compliance with applicable laws and regulations.
Assembly Bill A2298Â which prohibits employment discrimination against a current or prospective employee based on information in a credit report advanced to a second reading on December 14, 2015. The proposed legislation prohibits an employer from requiring a credit check on a current or prospective employee, unless the employer is required to do so by law, or reasonably believes that an employee has engaged in a specific activity that is financial in nature and constitutes a violation of law. The bill does not prevent an employer from performing a credit inquiry or taking action if credit history is a bona fide occupational qualification of a particular position or certain employment classifications. An earlier version of the legislation passed the Senate in May 2012 in a 22-16 vote but was never voted on in the full Assembly.
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.
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.
Oregon became the eighth state to ban the box after the state legislature passed House Bill 3025 and Governor Kate Brown signed the bill into law on June 26.
Beginning January 1, 2016, employers in the state may not require an applicant to disclose a criminal conviction on an employment application or at any time prior to an initial interview. If no interview takes place, disclosure may not be mandated prior to a conditional offer of employment. That means employers are only permitted to ask about criminal convictions during an interview or after it occurs.
Employers must notify an applicant that they will be subject to a criminal background check or required to disclose any convictions but “nothing in [the law] prevents an employer from considering an applicant’s conviction history when making a hiring decision” as long as the employer times the questions in compliance with the statute.
HB 3025 applies to all employers in the state with just four exceptions. Law enforcement agencies, employers in the criminal justice system, and employers seeking “a nonemployee volunteer” are all exempt. Positions where federal, state, or local law requires consideration of an applicant’s criminal history are also not covered by the statute.
Tasked with enforcement: the Oregon Commissioner of the Bureau of Labor and Industries. The law did not create a private right of action allowing individuals to file suit. Importantly for employers in the state, the legislature elected not to preempt municipalities from enacting their own stricter version of the law. For example, the Portland City Council is currently considering its own take on a “ban the box” law that would apply to employers in the city.
Oregon’s passage of the measure adds the state to the fast growing list of jurisdictions to ban the box. There are over 100 cities and counties, and 18 states representing nearly every region of the country that have adopted the policies — California (2013, 2010), Colorado (2012), Connecticut (2010), Delaware (2014), Georgia (2015), Hawaii (1998), Illinois (2014, 2013), Maryland (2013), Massachusetts (2010), Minnesota (2013, 2009), Nebraska (2014), New Jersey (2014), New Mexico (2010), Ohio (2015), Oregon (2015), Rhode Island (2013), Vermont (2015), and Virginia (2015). Six states—Hawaii, Illinois, Massachusetts, Minnesota, New Jersey, and Rhode Island—have removed the conviction history question on job applications for private employers, which advocates embrace as the next step in the evolution of these policies.
Federally, the U.S. Equal Employment Opportunity Commission (EEOC) endorsed removing the conviction question from the job application as a best practice in its 2012 guidance making clear that federal civil rights laws regulate employment decisions based on arrests and convictions.
Employers should keep a close eye on their local authorities to ensure continuing compliance as the list of jurisdictions continues to grow.
Read House Bill 3025.
Enacted in 1970, the Fair Credit Reporting Act (FCRA) provides federal regulation of consumer reporting agencies that provide consumer reports to third parties.
In the 45 years since the FCRA took effect, several states have passed their own version of the statute to provide additional protections for consumers. Colloquially referred to as “mini” FCRAs, the laws can be found in Arizona, California, Maine, Massachusetts, Minnesota, New Jersey, New York, Oklahoma, and Washington.
Joining the group: Georgia, where House Bill 328 took effect on July 1. The new law applies to consumer reporting agencies (CRAs) that “conduct business” within the state, defined as those entities that “provide information to any individual, partnership, corporation, association, or any other group however organized that is domiciled within this state or whose principal place of business” is located within Georgia’s borders.
A CRA encompasses any person or entity “which, for monetary fees or dues or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties.”
For its part, a consumer report broadly includes “any written, oral, or other communication of any information bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for purposes of credit, insurance, or employment.”
As it closely tracks the federal FCRA, Georgia’s law provides that a CRA that furnishes consumer reports for employment purposes in compliance with the federal statute will be in compliance with the state version.
While Georgia’s new law already took effect, other states have struggled with application of their mini FCRAs.
For example, in 2013, a federal court judge California ruled that one of the state’s two FCRA corrollaries, the Investigative Consumer Reporting Agencies Act (ICRAA), was unconstitutionally vague in Roe v. LexisNexis Risk Solutions, Inc. The case involved an anonymous plaintiff who sued when she failed to obtain employment. She argued she didn’t get the job as a result of an allegedly inaccurate background check furnished by the defendant to her prospective employer in violation of both the FCRA and the ICRAA.
The defendant argued that the ICRAA was unconstitutionally vague as applied and the court agreed. In addition to the FCRA and the ICRAA, California had previously enacted the Consumer Credit Reporting Agencies Act (CCRAA), a law that governs consumer credit checks. The interplay between the CCRAA and ICRAA resulted in confusion for covered entities, the court found, as criminal background information about consumers was regulated by both laws, leaving companies uncertain about which statute’s requirements actually applied.
Although the plaintiff appealed the decision to the Ninth Circuit Court of Appeals, the federal appellate panel dismissed the appeal for procedural reasons; on remand, the federal district court later dismissed the case with prejudice in December 2013. However, the opinion in Roe remains valid law in the state, leaving a shadow of uncertainty hanging over the ICRAA.
Read Georgia’s House Bill 328.
Read Roe v. LexisNexis Risk Solutions, Inc.
Even for those not partaking in marijuana, the various California laws regulating its use can be confusing – particularly for employers.
The trend in state legislatures to permit the recreational and/or medicinal use of marijuana began with California’s Compassionate Use Act in 1996, which allowed state residents to use the drug for medical purposes and decriminalized possession of less than 28 grams. Complicating the matter, however: marijuana use remains prohibited by federal law.
With limited use of marijuana legal in the state, how can employers find out about a worker’s use of the drug or limit it without running afoul of state law?
Employers have two options, either try to get their hands on historical information, such as criminal convictions, or seek out current input via drug testing.
Criminal history related to drugs in many instances is off-limits for employers. Job applicants cannot be required to disclose an arrest that did not result in a conviction or participation in a pretrial or post-trial diversion program. Any criminal history that has been expunged, sealed, or dismissed will be unavailable as are marijuana-related convictions dating back more than two years.
While California has not banned the box for private employers, local jurisdictions such as San Francisco have, requiring employers to wait until after a live interview or determining that an applicant meets the qualifications for the position before inquiring into criminal history. Background checks – whether performed in-house or by a third party – require compliance with federal law (the Fair Credit and Reporting Act (FCRA) as well as California’s counterpart, the Investigative Consumer Reporting Agencies Act (although the legality of the state statute is unclear, see story below for more detail). And such investigations into applicants’ history are a current target for the Equal Employment Opportunity Commission – which has filed multiple lawsuits (http://www.scherzer.com/eeoc-loses-again-in-challenge-to-background-checks/) against employers alleging their background checks constitute disparate impact discrimination against protected groups like African-Americans – and a popular basis for class actions. Recent cases have settled with multi-million awards, including a $2.5 million payout by Domino’s Pizza and a $6.8 million deal between Publix Super Markets and a class of applicants alleging the company violated the FCRA.
Drug tests can be viable option for employers. Once a job offer has been made, an employer may require an applicant to pass a drug test as a condition of employment (as long as all potential employees are subject to the same requirement). After a worker has been hired, drug tests may be used if an employer has a reasonable suspicion that the employee is under the influence. Certain jobs – such as those in the transportation industry like truck drivers – may permit such testing more freely. If a test comes back positive, employers do have the discretion to discipline, terminate, or choose not to hire an applicant even if the individual legally holds a medical marijuana card issued by the state. In addition, despite the requirements under the Americans With Disabilities Act and California state law to provide reasonable accommodations to employees considered disabled, neither federal nor state law requires employers to permit marijuana use as such an accommodation.
A recent decision from the Office of the Chief Administrative Hearing Officer provides an important reminder: keep up on I-9 compliance or face a sizable civil penalty.
Pursuant to 8 U.S.C. Section 1324(a)(1)(B) of the Immigration Reform and Control Act, employers must examine and document the identity and immigration documents of employees. Since the Act’s 1986 enactment, the Employment Eligibility Verification Form, colloquially known as the I-9, is used to verify the identity and employment authorization of individuals hired for work in the United States. Both the employee and the employer must complete the form. In addition, employers must examine the worker’s documentation establishing his or her identity and employment authorization to determine if the documents “reasonably appear to be genuine.”
In 2013, the agency transitioned employers to use of a new form with additional fields (including employee telephone number and e-mail address), new formatting, and clarified instructions. Failure to complete an I-9 form can lead to an enforcement action from Immigration and Customs Enforcement (ICE) with penalties ranging from $110 to $1,100 per form.
Recently, a California-based event design and construction company learned that lesson the hard way when the agency charged the employer with 818 violations of the statute, seeking $812,665.25 in civil penalties.
The company’s “employment verification procedures are sufficiently defective to foreclose a claim of either good faith or substantial compliance,” Administrative Law Judge Ellen K. Thomas wrote, finding that the company engaged in the majority of the violations alleged.
The judge found most of the violations occurred in Section 2 of the I-9, which requires a representative from the employer to review the documents presented by the employee to prove identity and work authorization and then sign, under penalty of perjury, that he or she reviewed the documents. ICE found that 797 of the company’s I-9 forms were left blank. Characterizing the employer attestation in Section 2 as “the very heart” of the verification process, the ALJ fined Hartmann $700 for each violation, or $557,900.
Judge Thomas found other serious violations in the company’s I-9 forms, including failing to ensure that in Section 1 employees checked a box attesting to status as a U.S. citizen, lawful permanent resident, or alien authorized to work (with the need to add an alien registration number if either lawful permanent resident or alien authorized to work were selected). Many employees also failed to sign Section 1, the court found, and the company neglected to have employees list a driver’s license expiration date in Section 2.
The company tried to mitigate the fine by arguing that it improved its processes after receiving notice from ICE, but the judge was not persuaded, particularly as the company made no effort until after the federal agency came knocking. “[T]he company does appear to need additional motivation to conform its employment verification processes to what the law requires,” Judge Thomas wrote, issuing a total fine of $605,250.
To avoid a similar fate, compliance with I-9 requirements should be taken seriously and employers should ensure that the appropriate forms are being correctly filled out.
Read the decision.