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Compliance Corder covers articles related to employment decisions due diligence.

CFPB’s database is now searchable by state and includes complaints about credit reporting

On May 31, 2013 the Consumer Financial Protection Bureau (“CFPB”) announced that its Consumer Complaint Database, now searchable by state, has been expanded to include credit reporting and money transfer complaints. In addition to these two new categories, the database, which can be accessed at http://www.consumerfinance.gov/complaintdatabase/, includes complaints relating to credit cards, mortgages, student loans, bank accounts and services, and consumer loans.

When submitting a complaint about credit reporting, consumers can select from five common issues, which are all searchable on the updated database: incorrect information on a credit report; problems with a credit reporting agency’s investigation; improper use of a credit report; not being able to get a credit report or credit score; and problems with credit monitoring or identity protection services.

June 20th, 2013|Categories: Compliance Corner for Employment Decisions|Tags: , , |

EEOC files suits against two employers for use of criminal background checks

The Equal Employment Opportunity Commission (the “EEOC”) announced on June 11, 2013 that it filed lawsuits against two large employers accusing them of using criminal background checks to illegally discriminate against African American workers. The EEOC alleged that the companies, by requiring contracted employees and prospective employees to submit to criminal background checks, violated Title VII of the Civil Rights Act of 1964’s prohibition against race discrimination.

“Title VII of the Civil Rights Act of 1964 prohibits discrimination against job applicants and employees on account of their race,” said EEOC Chair Jacqueline A. Berrien.  “Since issuing its first written policy guidance in the 1980s regarding the use of arrest and conviction records in employment decisions, the EEOC has advised employers that under certain circumstances, their use of that information to deny employment opportunities could be at odds with Title VII.”  The EEOC issued updated enforcement guidance on employer use of arrest and conviction records in April 2012.

June 20th, 2013|Categories: Compliance Corner for Employment Decisions|Tags: , , |

Nevada is the latest state to restrict employment-purpose credit reports

On May 25, 2013, SB 127 was signed into law adding Nevada to the fast-growing list of states that restrict employment-purpose credit reports.  Nevada’s new law, which goes into effect October 1, 2013, follows closely the recently enacted legislation in Colorado.  Eight other states (California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington) have similar laws that limit the employers’ use of credit history in personnel decisions.  Aggressive legislative efforts are likely to continue, as Florida, New Jersey, and Pennsylvania are considering similar legislation. But the most restrictive bill yet is pending before the New York City Council. It would prohibit employers from using credit reports in hiring except in few instances where such checks are required by law.

June 5th, 2013|Categories: Compliance Corner for Employment Decisions|Tags: , , , |

Minnesota becomes the latest state to restrict employment criminal checks

On May 13, 2012, Minnesota became the latest state to restrict criminal background checks for employment purposes with its Criminal Background Check Act  (S.F. No. 523). Under the new law, which will go into effect on January 1, 2014, public and private employers may not inquire about, consider or require disclosure of an applicant’s criminal history until after the applicant has been granted an interview or before a conditional offer of employment is made. Since 2009, Minnesota law prohibited only public employers from asking about criminal records on job applications.

According to a report from the National Employment Law Project (the “NELP”) dated in April 2013, six states and 50 localities have adopted “Ban the Box” legislation.  And pending before Congress is the federal HR 6220 or “Ban the Box Act” introduced last July by Representative Hansen Clarke (D-MI-13) which similar to these state and local laws, would make it illegal for an employer to ask about criminal history in an interview or on an employment application.

May 31st, 2013|Categories: Compliance Corner for Employment Decisions|Tags: , , , |

Colorado joins list of states that restrict credit report use for employment

Although the FCRA allows employers to consider credit reports for employment purposes, state laws that are more protective of employee rights trump the federal law. Eight states (California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington) and at least one locality, the City of Chicago, limit the employers’ consideration of credit history in personnel decisions. And Colorado was just added to this list with its   S.B. 18 that was signed into law on April 19, 2013. Aggressive legislative efforts are likely to continue. The most restrictive bill yet is pending before the New York City Council. It would prohibit employers from using credit reports in hiring except in few instances where such checks are required by law.

May 6th, 2013|Categories: Compliance Corner for Employment Decisions|Tags: , , , |

Proposed New Jersey bills restrict use of criminal records in employment decisions

In February 2013, identical bills aimed at reducing employment discrimination against individuals with criminal histories were introduced in the New Jersey Senate (S2586) and the New Jersey Assembly (A3837). Both bills propose the adoption of the Opportunity to Compete Act (the “Act”) which would impose multiple restrictions and requirements on employers in connection with seeking and using criminal background information about job applicants. If the Act is adopted, New Jersey will join a growing list of states, cities, and localities which have passed similar anti-discrimination legislation.

March 29th, 2013|Categories: Compliance Corner for Employment Decisions|Tags: , , |

Congress questions legality of “The Work Number” operated by Equifax

Seven members of Congress wrote a letter last month to Equifax asking for more information about its employment verification subsidiary, The Work Number, which according to a statement made by Jackie Speier (D-California), “appears to have operated under the radar, with little public awareness of the vast trove of

[payroll and other] sensitive data it was gathering.”  Speier asserted that “Equifax needs to explain exactly how it is using this data, and provide evidence that The Work Number does not pose a threat to the privacy of 190 million Americans.”

While companies say that they sign up with The Work Number because it gives them a convenient way to outsource employment verifications, the seven members of Congress are disturbed by the fact that “… this massive database appears to generate revenue using consumers’ sensitive personal information for profit.”

March 29th, 2013|Categories: Compliance Corner for Employment Decisions|Tags: , |

Revamped Form 1-9 makes its debut

On March 8, 2013, the U.S. Citizenship and Immigration Services (the “USCIS”) announced that its newly revised Form I-9 is to be used immediately. Notably, as indicated in the Federal Register, the USCIS granted companies until May 7, 2013 to implement the new form, which purportedly has been designed to minimize completion errors. This 60-day grace period allows employers time to adjust their human resource processes, and modify their software. The USCIS has also updated its “Handbook for Employers – Guidance for Completing the Form I-9” (3.8.13 version) to correspond to the new form, and is holding webinars to educate companies in the form’s usage.

The USCIS noted that employers do not need to complete the new form for employees for whom they already have a proper Form I–9 on file, unless re-verification applies. Unnecessary verification may violate the anti-discrimination provision of section 274B of the INA, 8 U.S.C. 1324b, which is enforced by the DOJ’s Office of Special Counsel for Immigration Related Unfair Employment Practices.

March 29th, 2013|Categories: Compliance Corner for Employment Decisions|Tags: , , |

No shortcuts to assuring maximum possible accuracy under the FCRA

When Congress formulated the Fair Credit Reporting Act (“FCRA”) more than 30 years ago, it noted that the law was enacted in order to protect consumers against “the trend toward…the establishment of all sorts of computerized data banks

[that placed a consumer] in great danger of having his life and character reduced to impersonal ‘blips’ and key punch holes in a stolid and unthinking machine which can literally ruin his reputation without cause [116 Cong. Rec. 36570].” This intent has been clearly supported by the amendments that followed allowing greater and more effective protection. But despite the leaps and bounds in legislation, much controversy still exists about the level of protection that this law provides to consumers.  And confusion abounds about the compliance requirements for consumer reporting agencies (“CRAs”) on whom the FCRA places “grave” compliance obligations. “There is a need to insure that consumer reporting agencies exercise their ‘grave’ responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy [15 U.S.C. § 1681(a)(4) (2006)].”

The FCRA mandates that “[w]henever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates [15 U.S.C. § 1681e(b)].” So what does this mean? Courts have taken two positions in interpreting the language of this section. The “consumer-friendly” version holds CRAs liable for reports that are technically accurate, but may be misleading or incomplete. (Koropoulos v. Credit Bureau, Inc., 734 F.2d 37, 40; D.C. Cir. 1984: “Congress did not limit the Act’s mandate to reasonable procedures to assure only technical accuracy; to the contrary, the Act requires reasonable procedures to assure maximum accuracy.”) The “business friendly” interpretation requires only technical accuracy in the CRA’s reporting.  [Todd v. Associated Credit Bureau Servs., Inc., 451 F. Supp. 447, 449 (E.D. Pa. 1977)].

While this case law is helpful in understanding the CRA’s liability under the statute, there is no doubt that a comprehensive guidance on the methodology to assure maximum accuracy is still much needed especially in view of the proliferation of the so-called “national databases” in the recent years. But despite the lack of clear guidance, a reputable CRA knows that “to assure” means “to earnestly inform or tell positively; state with confidence.” And reporting a record that was identified by name only or relying solely on private database record information in an employment background check does not pass the reasonable procedures test by any standard.

In an Internet marketplace that touts instant results, a CRA’s practice of sending searchers to the courthouse, pulling dozens of cases, and reviewing legal documents to ascertain correct subject identification and record information may be counterintuitive for many employers. And it takes time and money to assure the most accurate and up-to-date results. On the other hand, in a world of over a million people, is a quick and cheap database background search of any real value?

January 7th, 2013|Categories: Compliance Corner for Employment Decisions|Tags: , |

California limits social media use by employers and educational institutions

Effective January 1, 2013, California will join Maryland and Illinois in significantly restricting employers’ access to their employees’ and job applicants’ social media accounts. Signed into law by Governor Jerry Brown on September 27, 2012 and fittingly announced via Twitter, AB 1844 provides that an employer cannot require or request an employee or applicant to do any of the following:

  • disclose a username or password for the purpose of accessing personal social media;
  • access personal social media in the presence of the employer;
  • divulge any personal social media, except as provided in subdivision.

The law also prohibits an employer from discharging, disciplining, or otherwise retaliating against an employee or applicant for not complying with a request or demand by the employer that violates these provisions. However, an employer is not prohibited from terminating or taking an adverse action against an employee or applicant if otherwise permitted by law.

The law does preserve an employer’s rights and obligations to request that an employee divulge personal social media information reasonably believed to be relevant to an investigation of allegation(s) of employee misconduct or violation of applicable laws and regulations, provided that the information is used solely for purposes of that investigation or a related proceeding. An employer is also not precluded from requiring or requesting that an employee disclose a username or password for the purpose of accessing an employer-issued electronic device.

A companion law, AB 1349 that establishes similar requirements for postsecondary education institutions in regard to their students also goes into effect on January 1, 2013.

January 7th, 2013|Categories: Compliance Corner for Employment Decisions|Tags: , , |
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