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Employment law is the comprehensive legal framework that regulates the employment relationship, including how employers hire, manage, compensate, discipline, and terminate workers. It consists of federal and state statutes, regulations, and court decisions that establish standards for wages and hours, workplace safety, discrimination, employee benefits, family and medical leave, immigration‑related work authorization, and workers’ rights.

According to the U.S. Department of Labor, employment law encompasses major labor standards such as the Fair Labor Standards Act (minimum wage and overtime), OSHA (workplace safety), ERISA (retirement and benefits), FMLA (family and medical leave), and protections for migrant workers . The Legal Information Institute adds that employment law also includes civil rights protections, disability rights, unemployment benefits, and post‑employment benefits .

2021 UPDATE OF FCRA LITIGATION AND THE EFFECT ON EMPLOYMENT BACKGROUND SCREENING

Fair Credit Reporting Act (FCRA) lawsuits continue to rise with the number of complaints filed in federal courts showing a +5.3% increase in 2020 over 2019[1]. This continues a trend for FCRA litigation as it has consistently shown year-over-year growth since 2010. An issue that garners much attention in FCRA litigation is whether an employer’s disclosure and authorization forms violate the FCRA. Two federal appellate decisions address this issue and provide important guidance for employers on how to draft FCRA disclosure and authorization forms.

FCRA Disclosure and Authorization Forms

Employers that want to obtain a background check report about a job applicant or current employee must comply with the FCRA and provide to the individual a standalone document with a clear and conspicuous disclosure of the employer’s intention to do so, and obtain the individual’s authorization. By way of background, the principal appellate opinion on disclosure and authorization forms is the Ninth Circuit’s Gilberg v. California Check Cashing Stores, LLC, No. No. 17-16263 (January 2019). The Gilberg opinion made clear that any extraneous information in an FCRA disclosure form violates the FCRA’s requirement that the disclosure must be “in a document that consists solely of the disclosure” (the standalone requirement). The employer in Gilberg was found to have violated the standalone requirement by:

  1. Combining the authorization and disclosure into one document; and
  2. Including several state-related disclosures in the form.

Two important cases from 2020 that further addressed the requirements and limitations for the content of an FCRA disclosure form were issued by the Ninth Circuit in Walker v. Fred Meyer, Inc., No. 18-35592 (March 20, 2020) and Luna v. Hansen & Adkins Transport, Inc., No. 18-55804, (April 24, 2020).

In Walker v. Fred Meyer, the court indicated that background check disclosures may contain some concise explanatory language, but there is a limit to what is explanatory and what is unlawfully extraneous. Among other allegations, the plaintiff in Walker claimed that the FCRA disclosure violated the standalone requirement because, in addition to mentioning consumer reports, it also mentioned investigative consumer reports (a type of consumer report). The Ninth Circuit rejected this claim and ruled that mentioning investigative background checks in the disclosure does not violate the FCRA’s standalone requirement because investigative consumer reports are a subcategory or specific type of consumer report and as long as the investigative background check disclosures are limited to (1) disclosing that such reports may be obtained for employment purposes and (2) providing a very brief description of what that means.

The Ninth Circuit reviewed the employer’s disclosure in Walker in detail, which consisted of five paragraphs, and held that the first three paragraphs did not violate the standalone requirement, but that the last two paragraphs did because they may pull the individual’s attention away from their privacy rights protected by the FCRA. Here are the offending paragraphs in their entirety:

“You may inspect GIS’s files about you (in person, by mail, or by phone) by providing identification to GIS. If you do, GIS will provide you help to understand the files, including communication with trained personnel and an explanation of any codes. Another person may accompany you by providing identification.”

“If GIS obtains any information by interview, you have the right to obtain a complete and accurate disclosure of the scope and nature of the investigation performed.”

The plaintiff in Walker also claimed that the language of the employer’s authorization form, which was in a separate document was confusing and underscored the confusing and distracting nature of disclosure form, thus violating the FCRA’s standalone requirement. The Ninth Circuit rejected this argument because it found that the authorization form is not relevant to the FCRA disclosure form’s standalone requirement where the authorization is not included in the disclosure and is in a separate authorization form.

In Luna v. Hansen, the plaintiff claimed that the FCRA’s physical standalone requirement for hard-copy forms was a temporal one, i.e., the disclosure form should be presented to the individual separate from all other employment-related forms. The plaintiff in Luna had received one packet containing all forms. The Ninth Circuit rejected this argument and held that as long as the background check disclosure itself is in a standalone form, it can be presented with and at the same time as other employment documents.

Key Takeaways

Given the steady uptick in FCRA litigation, it is advisable for employers to review their FCRA disclosure and authorization forms on at least a yearly basis, or whenever important appellate opinions are issued, to ensure compliance with the FCRA. The attached forms from the Gilberg and Walker opinions provide clear examples of what to avoid in FCRA disclosure forms. In general, the guidance provided in the above-referenced opinions indicate that:

  • background check disclosure forms may contain some concise explanatory language, but there is a limit to what is explanatory and what is unlawfully extraneous;
  • background check disclosure forms may be presented at the same time as other materials, including application materials, as long as the background check disclosures are on a separate form; and
  • language in a separate authorization form has no impact on the disclosure form’s compliance with the FCRA standalone requirement.

[1] WebRecon Stats for Dec 2020 and Year in Review

Disclaimer: This communication is for general informational purposes only and does not constitute legal advice. No recipient should act, or refrain from acting, based on any information provided here without advice from a qualified attorney licensed in the applicable jurisdiction.

March 23rd, 2021|Categories: Compliance Corner for Employment Decisions|Tags: , , |

Q1 2020: UPDATE OF LAWS AFFECTING EMPLOYMENT BACKGROUND SCREENING

As the year and a new decade unfold, we bring you this update on ban-the-box legislation and laws that restrict credit report usage in employment decisions. And no update would be complete without a reminder about a standard-setting federal appellate opinion from 2019 interpreting the Fair Credit Reporting Act (FCRA) disclosure requirement for an employment background check.

Let’s start with a reminder

In January 2019, the Ninth Circuit’s opinion in Gilberg v. California Check Cashing Stores, LLC made clear that any extraneous information in an FCRA disclosure form regarding an employment background check — even if the information is related to state-mandated expansions of consumer rights — violates the FCRA’s requirement that the disclosure must be “in a document that consists solely of the disclosure.

Even seemingly innocuous content, such as asking for an acknowledgment that the candidate received the FCRA summary of rights or including a statement that hiring decisions are based on legitimate non-discriminatory reasons may run afoul of the FCRA. And any state and local notices regarding the background check must be provided in separate documents, as applicable to each candidate.

Experts believe that the number of class-action lawsuits brought under the FCRA for technical errors will continue to increase. But there is an easy way to comply:

Present the disclosure to the candidate in a separate, standalone, conspicuous document. Make it clear and simple. Keep it short.

Ban-the-box laws continue to proliferate

“Ban-the-box” measures – which generally prohibit employers from inquiring about a candidate’s criminal history (including performing background checks) until later in the hiring process – continue to proliferate. Currently, 14 states (California; Colorado; Connecticut; Hawaii; Illinois; Maryland (effective February 29, 2020); Massachusetts; Minnesota; New Jersey; New Mexico; Oregon; Rhode Island; Vermont and Washington) and 22 local jurisdictions (Austin, TX ; Baltimore, MD; Buffalo, NY; Chicago, IL; Cook County, IL; Columbia, MO; District of Columbia; Grand Rapids, MI; Kansas City, MO; Los Angeles, CA; Montgomery County, MD; New York City, NY;  Philadelphia, PA; Portland, OR; Prince George’s County, MD; Rochester, NY; Saint Louis, MO (effective January 1, 2021); San Francisco, CA; Seattle, WA; Spokane, WA; Waterloo, IA (effective July 1, 2020 but lawsuit filed to strike down the ordinance); and Westchester County, NY) have such laws in place for private employers.

Be mindful of credit restrictions

Less popular than state and local legislatures on ban-the-box and prohibitions on salary history inquiries, credit check restrictions remain an important consideration for employers. Ten states California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington – as well as Chicago, District of Columbia, New York City, and Philadelphia all place restrictions on employers’ use of credit reports with exceptions for the use of such checks when required by law or the responsibilities of the position.      

Arguably, the most imposing local credit report law to date continues to be the New York City’s Human Rights amendment that went into effect on May 6, 2015, and made requesting and using consumer credit history for hiring and other employment purposes, with certain exceptions, an unlawful discriminatory practice. The law provides that a “consumer credit report” includes “any written or other communication of any information by a consumer reporting agency that bears on a consumer’s creditworthiness, credit standing, credit capacity or credit history.”Many legal experts hold that the broad scope of this definition not only prohibits obtaining a consumer credit report but also searches of liens, judgments, bankruptcies, and financially-related lawsuits if there is no exemption. There is no case law on this matter. 

On the national level, the U.S. House of Representatives on January 29, 2020, passed legislation that prohibits employers from using credit reports for employment decisions, except when required by law or for a national security clearance. The bill also prohibits asking questions about applicants’ financial past during job interviews or including questions about credit history on job applications. The U.S. Senate, however, is not expected to introduce the legislation.

March 6th, 2020|Categories: Compliance Corner for Employment Decisions|Tags: , , , |

Independent contractors and the FCRA

Must employers provide the protections required by the Fair Credit Reporting Act (FCRA) to prospective independent contractors? 

Not according to a new decision from an Iowa court (see Smith v. Mutual of Omaha Insurance Company, No. 4:17-cv-00443 (S.D. Iowa Oct. 4, 2018)) which grappled with the question in the context of a lawsuit filed by an individual against an insurance company where he applied to contract as a salesperson but was rejected because of a falsely reported felony in his background check. The plaintiff accused the insurance company of violating the FCRA by failing to provide him with the statutorily required prior notice that the background check resulted in his not being hired.    

The insurance company asked the court to dismiss the lawsuit, claiming that the FCRA only requires such notice when an applicant seeks to be hired as an employee, and not as an independent contractor. Since the plaintiff applied for an independent contractor position, he was not entitled to the protections of the statute, the insurance company argued. 

The plaintiff countered that he was applying to be an employee of the insurance company and that it was too early to dismiss the case, as further discovery was needed. In the alternative, he argued that the FCRA should still govern his relationship even as an independent contractor.

In ruling on the FCRA issue, Judge John Jarvey began with the language of the law. The FCRA is a broad statute, Judge Jarvey said, and some of its most stringent protections apply when a background check is being obtained “for employment purposes.” 

The definitions section of the FCRA, at 15 U.S.C. § 1681a(h), states that “

[t]he term ‘employment purposes’ when used in connection with a consumer report means a report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.” This text “makes clear that the pre-adverse action notice requirement only applies when a consumer report is used for employment purposes,” Judge Jarvey wrote. “The meaning of ‘employment purposes’ is specifically defined in the statute, and it is defined as being ‘used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.’”  District courts in Ohio and Wisconsin have reached the same conclusion, Judge Jarvey noted, citing the decisions for support. 

Notably, the Federal Trade Commission (FTC) in its 2011 staff report entitled “40 Years of Experience with the Fair Credit Reporting Act” provided a seemingly contrasting interpretation. The FTC stated that “the term ‘employment purposes’ is interpreted liberally to effectuate the broad remedial purpose of the FCRA and may apply to situations where an entity uses individuals who are not technically employees to perform duties. Thus, it includes a trucking company that obtains consumer reports on individual drivers who own and operate their own equipment; a title insurance company that obtains consumer reports on individuals with whom it frequently enters into contracts to sell its insurance, examine title, and close real property transactions; or a nonprofit organization staffed in whole or in part by volunteers.” 

The FTC’s view can be reconciled with that of Judge Jarvey’s by taking the approach that the applicability of FCRA’s requirements depends on the facts and circumstances of the particular relationship, rather than the formal designation of someone as an independent contractor. 

Given the still remaining disputed issue of whether or not the plaintiff would have been an employee or an independent contractor for the insurance company, the court ordered limited discovery on the issue and declined to dismiss the suit. 

January 2nd, 2019|Categories: Compliance Corner for Employment Decisions|Tags: , , |

California’s overlapping background check laws

For many years, employers have struggled with California’s overlapping statutes governing the use of background checks. Now, the state’s highest court has weighed in, ruling that compliance with the requirements of both laws is mandatory, even where the laws overlap.

A little history is necessary to understand the situation. In 1970, Congress passed the Fair Credit Reporting Act (FCRA). The law defined the term “consumer report” to include an individual’s “credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.” The FCRA distinguished between consumer reports that contained information obtained by personal interviews and consumer reports gathered by other means.

The California legislature responded with two state analogues in 1975: the Investigative Consumer Reporting Agencies Act (ICRAA) and the Consumer Credit Reporting Agencies Act (CCRAA). Modeled on the FCRA, the statutes had similar purposes and were intended to serve complementary goals.

As originally enacted, the ICRAA applied to consumer reports that included character information obtained only through personal interviews. It defined an “investigative consumer report” as one “in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through any means.” The statute requires that the person procuring the report provide the consumer a “clear and conspicuous disclosure in writing” and that the consumer in turn provide a written authorization for the report’s procurement.

Lawmakers took a slightly different approach with CCRAA, which defined a “consumer credit report” as “any written, oral or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, or credit capacity, which is used or is expected to be used … for … employment purposes.” The definition excluded “any report containing information solely on a consumer’s character, general reputation, personal characteristics, or mode of living which is obtained through personal interviews with neighbors, friends, or associates of the consumer reported on, or others with whom he is acquainted or who may have knowledge concerning any such items of information.”

In 1998, the California legislature amended ICRAA to eliminate the personal interview limitation and expand the statute’s scope to include character information obtained under CCRAA or “obtained through any means.”

Since then, CCRAA continues to govern consumer reports that include character information obtained from a source other than personal interviews, as long as those reports contain information “bearing on a consumer’s credit worthiness, credit standing, or credit capacity.”

What does all this mean for employers? And how did the California Supreme Court get involved?

The two statutes came to the attention of the court when a group of current and former school bus drivers filed suit against their employers, First Student and First Transit, as well as the investigative consumer reporting agency (ICRA) that conducted background checks on the drivers. Eileen Connor led the class action.

After First Student acquired the company where Connor worked as a driver, it requested that the ICRA run background checks to confirm that Connor and the other workers were properly qualified to perform their job duties. The background reports elicited information about the employees’ criminal records, sex offender registries, address history, driving records and employment history.

Prior to conducting the background checks, First Student sent Connor a “Safety Packet” booklet. The booklet included an “Investigative Consumer Report Disclosure and Release” that provided authorization for the ICRA to prepare a consumer report or investigative consumer report. The notice included a checkbox that generally described Connor’s rights under ICRAA, informed her that she could check the box if she wanted to receive a copy of the report and released First Student from all claims and damages arising out of or relating to its background investigation if the box was checked.

Connor filed suit, arguing that the notice failed to satisfy ICRAA’s specific requirements and that First Student neglected to obtain her written authorization to conduct the background check, as required by ICRAA.

First Student asked the court to dismiss the suit, arguing that ICRAA is unconstitutionally vague as applied to the lawsuit because it overlaps with CCRAA and that the notice satisfied CCRAA.

The California Supreme Court found that while the statutes overlap to some degree, achieving compliance with both did not render ICRAA unconstitutional. The two statutes were not intended to be exclusive of each other, the court said, and potential employers can comply with both statutes without undermining the purpose of either.

“If an employer seeks a consumer’s credit records exclusively, then the employer need only comply with CCRAA,” the court explained. “An employer seeking other information that is obtained by any means must comply with ICRAA. In the event that any other information revealed in an ICRAA background check contains a subject’s credit information and the two statutes thus overlap, a regulated party is expected to know and follow the requirements of both statutes, even if that requires greater formality in obtaining a consumer’s credit records.”

First Student complained that because the ICRAA and CCRAA cover the same subject matter, it was unclear which statute applied in the context of employment background checks. But the court disagreed. Connor’s report, for example, fell within the scope of both statutes and “such a duality does not make legal compliance particularly difficult, must less impossible,” the court said.

“Any partial overlap between the statutes does not render one superfluous or unconstitutionally vague,” the court wrote. “They can coexist because both acts are sufficiently clear and each act regulates information that the other does not.”

The California Supreme Court opinion was a loss for First Student and the ICRA, as the court found the defendants had no excuse for not complying with both statutes. For employers more generally, the decision sends an important message: compliance with the requirements of both ICRAA and CCRAA is mandatory, even where the two statutes overlap.

October 1st, 2018|Categories: Compliance Corner for Employment Decisions|Tags: , , , , |

Amendment to San Francisco’s Fair Chance Ordinance goes into effect October 1, 2018

In April 2018, the San Francisco Board of Supervisors passed an amendment to the Fair Chance Ordinance (FCO), which takes effect on October 1, 2018. The full text of the amendment can be found here.

The FCO notice/poster has also been updated and can be accessed here. Employers must provide this notice to applicants and employees prior to conducting a criminal background check, and post it in English, Spanish, Chinese, and any other language is spoken by at least 5% of the employees at the workplace or job site.

September 28th, 2018|Categories: Compliance Corner for Employment Decisions|Tags: , , |

Reminder to California employers about requirements when taking adverse action based on a criminal record

With the enactment of an updated ban-the-box statute (the Fair Chance Act) on January 1, 2018, employers in California may need a refresher on how to take adverse action based on the criminal record of an applicant.

For those businesses located in Los Angeles, the requirements take on an additional level of complication due to slight differences in the city’s ordinance.

Pursuant to California law, employers with five or more employees must wait until after a conditional offer of employment has been made to ask any questions about a criminal history. This means inquiries about convictions, running a background check or other efforts to find out about an applicant’s criminal past.

As an aside, several types of criminal records are not allowed to be used by employers in the hiring process (including juvenile records, diversions and deferrals, non-felony marijuana convictions that are more than two years old and arrests that did not lead to a conviction).If the employer decides not to hire the applicant, it must conduct an individualized assessment of the conviction at issue to evaluate whether it has a “direct and adverse relationship with the specific duties of the job that justify denying the applicant the position.”

The applicant needs to be notified of the potential for adverse action based on the conviction. Such notice must identify the conviction at issue and include a copy of any background check report; the employer must also provide a deadline for the applicant to submit additional information with regard to the conviction (such as rehabilitation efforts or other mitigating circumstances).

Federal law also kicks in. For those employers that intend to rely in whole or in part on a background check report to take adverse action such as rescinding a conditional job offer, the Fair Credit Reporting Act (FCRA) mandates that applicants be given a pre-adverse action notice, a copy of the report and a notice of rights.

Once the applicant has provided any information and the employer makes a final decision, a second notice is required. This time, the notice should inform the applicant of the final adverse action, explain any procedure in place for the applicant to challenge the decision or request reconsideration and describe the applicant’s right to file a complaint with the state’s Department of Fair Employment and Housing (DFEH). If the FCRA has been triggered by the use of a background check report, the employer must also provide the applicant with an adverse action notice that contains FCRA-required text.

While this process may seem onerous, employers that hire workers in Los Angeles face additional requirements under the city’s Fair Chance Initiative for Hiring Ordinance (FCIHO). The law, which took effect on January 22, 2017, applies to employers with 10 or more workers (defined to include individuals who perform at least two hours of work on average in Los Angeles and are covered by the state’s minimum wage law).

The FCIHO has a narrower definition of a “conditional offer of employment” than that under state law – here, an offer of employment to an applicant “is conditioned only on an assessment of the applicant’s criminal history, if any, and the duties and responsibilities of the employment position.”

Regardless of the source of criminal history, if an employer elects not to hire an applicant, 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” must be performed.

This assessment needs to be provided to the applicant as part of the “fair chance process,” along with any other documentation or information used by the employer as well as a pre-adverse action notice. Again, if a background check report was used, the FCRA requirements apply. The applicant also receives an opportunity to share information the employer should consider before making a final decision, such as evidence of rehabilitation.

After at least five business days, the employer may make a final decision. If the applicant provided additional documentation or information, the employer is obligated to consider it and conduct a written reassessment. If the employer decides to take adverse action against the applicant anyway, the employer must notify the applicant and provide a copy of the reassessment along with the adverse action notice.

June 21st, 2018|Categories: Compliance Corner for Employment Decisions|Tags: , , , , , |

Reminder to New York City employers about requirements when taking adverse action based on a criminal record

Let’s say you are an employer in New York City with a position to fill. During the hiring process, you learn that an applicant has a criminal conviction. What should you do if you elect not to hire her and want to avoid breaking the law?

The answer is not simple.

In New York State, it is unlawful to deny employment or take an adverse action against an applicant because of a criminal conviction unless a direct relationship exists between the criminal offense(s) and the specific position sought, or the employment of the individual would involve an “unreasonable risk” to property or to the safety and welfare of specific individuals or the general public.

Before an adverse employment decision may be based on a conviction record, Article 23-A of the New York State Correction law provides a list of factors that employers must consider:

  • New York’s stated public policy “to encourage the licensure and employment of those with previous criminal convictions.”
  • The specific duties and responsibilities related to the employment sought or held.
  • The bearing, if any, the criminal offense(s) for which the individual was convicted will have on her fitness or ability to perform one or more of the position’s duties or responsibilities.
  • The time elapsed since the occurrence of the criminal offense(s).
  • The age of the individual at the time of the occurrence of the criminal offense(s).
  • The seriousness of the criminal offense(s).
  • Any information produced by the individual (or on her behalf) addressing rehabilitation and good conduct. Any certificate of relief from disabilities or certificate of good conduct creates a presumption of rehabilitation with regard to the offense specified in the certificate.
  • The legitimate interest of the employer in protecting property and the safety and welfare of specific individuals or the general public.

An employer must apply each of these factors on a case-by-case basis before making an adverse employment decision. If all the factors are properly weighed and an employer makes a reasonable, good faith decision that the criminal offense bears a direct relationship to the job duties or that the applicant’s employment would involve an unreasonable risk to safety and welfare, it is not illegal to deny employment.

New York law does require that if employment is denied because of a conviction record, a statement setting forth the reasons for the denial must be provided upon request of the applicant, in writing and within 30 days.

Another wrinkle for employers who use a third-party to perform a background check: the federal Fair Credit Reporting Act (FCRA). If an employer elects not to hire an employee based in whole or in part on the background check, the statute requires the applicant receive a copy of the background check report, a notice of intent to take adverse action and a notice of rights.

Employers in New York City, however, have additional legislation to contend with. The Fair Chance Act (FCA), enacted in 2015, applies to employers with at least four employees. Covered employers are prohibited from inquiring about a job applicant’s criminal history until after a conditional offer of employment has been extended.

Assuming the offer has been made and an employer has learned of a conviction that proves troubling, the FCA sets forth several requirements for an employer to rescind the offer without running afoul of the statute.

After the factors of Article 23-A have been applied, an employer must follow a “fair chance process.” This involves providing applicants with a copy of their background check report – and if a third party was used to perform the check, the FCRA notice of rights and a notice of intent to take adverse action, per the FCRA – and any other information relied upon in connection with the employment decision, such as Internet searches or written summaries of oral conversations.

In addition, employers must provide an analysis of the Article 23-A factors (the New York City Commission for Human Rights (NYCCHR) provides a Fair Chance Act Notice Form for employers to use)) and the opportunity for the applicant to address the criminal history at issue and present any mitigating information or material prior to the employment offer being revoked.

The prospective position must be held open for at least three business days from the applicant’s receipt of the necessary documentation to allow time for a response. Further, if the employer used a third-party background check company, the FCRA also mandates that applicants receive a reasonable period of time to respond (the Federal Trade Commission has suggested that five business days would be sufficient in most circumstances).

The Notice Form requires employers to evaluate each Article 23-A factor and select which exception – direct relationship or unreasonable risk – it is relying upon, with the burden on the employer (and space provided on the Notice Form) to articulate its conclusion. In addition to the Notice Form, employers that made use of a background check report must provide an applicant with an adverse action notice required by the FCRA.

If an employer rescinds a conditional offer after receiving information about the applicant’s criminal history, the FCA established a rebuttable presumption that the withdrawal was due to criminal history.

To rebut the presumption, an employer must demonstrate that the revocation was due to a permitted reason, such as the results of a medical examination (where an exam is otherwise permitted), material information the employer could not have known before the conditional offer was made and would have kept the employer from making the offer in the first place or evidence that the employer did not have knowledge of the applicant’s criminal history prior to revoking the conditional offer.

Some employers are exempt from the FCA when hiring for certain positions if federal, state or local laws require a criminal background check or prohibit employment based on certain criminal convictions. Companies in the financial services industry or employers hiring police and peace officers, for example, may not be subject to the law’s requirements. Those employers who believe they are exempt must inform an individual upon application and keep a record of their use of the exemption.

June 21st, 2018|Categories: Compliance Corner for Employment Decisions|Tags: , , , , |

The legalities of monitoring employees online

As a general principle, employers are legally permitted to monitor their employees online during business hours. Keeping a close eye on workers can help maintain company confidentiality, limit workers from surfing the web on company time and ensure the prevention of harassment.

But such monitoring does come with caveats, as well as risks.

For example, screening employee email on the employer’s network may be permissible but may require advance notice. In states such as Connecticut and Delaware, laws are in place that require employers to provide prior notice before electronically monitoring employees. A union contract may also place certain limits on monitoring and public-sector employees may have some rights under the Fourth Amendment with regard to unreasonable search and seizure.

Federal law can also come into play. Although the Electronic Communications Privacy Act (ECPA) generally prohibits the monitoring of electronic communications, it contains a “business purpose exception” that permits employers to monitor the electronic communications of workers if the company has a “legitimate business purpose.” The statute also allows monitoring with consent and many companies do this by including such permission as part of the onboarding process for new employees before granting access to the company’s networks or systems.

Another wrinkle: third-party communications. States such as California and Illinois mandate that all parties to a communication provide consent to its interception in transit. For employers, that means providing notice to recipients of employee emails and obtaining their consent before scanning a message from a friend or third party. Many companies post a notice on the company’s website and/or include a statement in employee emails that all messages are subject to monitoring and any response implies consent with the employer’s practices.

Even with all these issues, monitoring emails may be more straightforward than focusing on employee social media accounts. The Stored Communications Act (SCA) addresses the situation of accessing electronic communications stored by a provider (such as Gmail or Microsoft), as distinct from an employer accessing emails on its own system. Under the SCA, employers can be liable for the unauthorized access and disclosure of electronic communications in storage on corporate servers of a provider.

Further, roughly half the states ban employers from either requiring or requesting a worker to verify a personal online account like a Facebook profile, blog or Instagram or to log on to their social media account. While technology is available for employers to get around these laws (using keystroke logging software, for example, or taking screenshots), some of the information being monitored by an employer could itself be protected – such as union organizing activities under the National Labor Relations Act, attorney-client communications or in some states, geolocation data.

Mobile devices add another layer to the analysis. For workers using employer-provided mobile phones or devices, the employer has the right to legally monitor use from contact lists to photos and videos to Internet visits and emails. As for bring-your-own-device (BYOD) situations, the terms are generally dictated by the employer’s BYOD policy, but this is an emerging area of law and therefore murky.

All of these legal considerations are centered in the United States. Companies that operate outside the U.S. borders will have international law to contend with as well, notably the European Union General Data Protection Regulation (GDPR) and regulations found in its member states. As a general matter, EU law and the GDPR offer employees a greater level of privacy than that found in the United States. Last year, the EU’s highest court did rule that companies can monitor employee email – if workers are notified in advance.

Perhaps most importantly, employers should recognize that like all things related to technology, the legalities of monitoring employees online are constantly evolving. Being able to adapt to changing laws, regulation and technology will keep employers on their toes.

May 4th, 2018|Categories: Compliance Corner for Employment Decisions|Tags: , |

The challenges of employment applications for multi-state employers

One of the hottest trends in employment in recent years has been the passage of “ban-the-box” and salary inquiry prohibitions in states and cities across the country.

Limitations on salary inquiry have popped up in recent years as part of the legislative fight against wage discrimination and the gender pay gap. Proponents of such prohibitions argue that salary history questions feed into the discrepancy between what male and female employees are paid by continuously repeating history.

Currently, California, Delaware, Massachusetts, Oregon and Puerto Rico have banned inquiries about prior salary, as have cities including New Orleans, New York, and Philadelphia, with dozens of other states and local governments considering such measures.

The colloquial term “ban-the-box” refers to a box that applicants check to indicate they have a criminal record on standardized application forms. About 20 states and more than 150 local entities have already enacted legislation addressing inquiries into criminal history. The trend even went federal in 2015 with the Fair Chance Act introduced in Congress. Although the measure did not pass, it demonstrated the popularity of the movement.

The proposed federal legislation also shined a light on the situation facing multistate employers, with different laws in different states and in some situations, different laws in different cities or municipalities within the same state. One law may contain an outright ban on inquiries into salary or criminal history while another may place restrictions on the timing of the questions. Some laws define covered employers to include businesses with five or more, employees; another may not apply its limitations to employers with less than 50 workers.

As an example, although the state already limited employers’ ability to ask job applicants about any juvenile court matters, the California legislature broadened its ban-the-box protections for employees with a new law in 2017. Employers in the state are restricted from making hiring decisions based on an applicant’s convictions records and forbidden from considering conviction history until a conditional offer of employment has been extended.

If an employer elects not to hire an applicant because of a prior conviction, the employer is required to conduct an individualized assessment to determine whether the history has a “direct and adverse relationship” with the job duties that justifies denial of the position. Written notice must be provided to an applicant that his/her conviction history has disqualified the applicant from employment, along with five days to respond and dispute the decision. A second notice must be provided with the final decision not to hire.

In contrast, Vermont’s ban-the-box measure takes a different approach, allowing employers to question applicants about their criminal records during the job interview, albeit providing an applicant with the opportunity to explain their record. And under New York City’s law, an employer commits a per se violation of the statute by using recruiting materials of any kind (including advertisements, solicitations or applications) that express, directly or indirectly, any limitation or specification regarding criminal history.

While the overarching principle remains consistent, the details of the laws vary from jurisdiction to jurisdiction. For multi-state employers, coping with such a patchwork of legal requirements poses a serious challenge.

As the number of state and local jurisdictions with laws addressing salary inquiries or criminal history continues to expand, multi-state employers should brace themselves for a giant compliance puzzle – and consider getting help from an expert.

May 4th, 2018|Categories: Compliance Corner for Employment Decisions|Tags: , , |

New Regulations for California Employers Regarding Criminal Background Checks

What this is about:
The Department of Fair Employment and Housing (the “DFEH”) recently enacted regulations (“Regs”) for California employers that impose new requirements when considering criminal history information in employment decisions.

Effective date:
July 1, 2017

What this means:
Substantially based on the enforcement guidance issued by the Equal Employment Opportunity Commission in April 2012, the Regs prohibit employers from using a candidate’s criminal history in personnel decisions, if such information will have an adverse impact on individuals in a legally protected class. The Regs also expand the types of records that California employers are already prohibited from considering. Namely, any non-felony conviction for possession of marijuana that is older than two years is now off-limits.

Requirements:
If an employer obtains conviction information from a source other than the candidate — consumer report or internally performed search — the employer must first notify the candidate that he/she has been screened out because of a conviction before taking any adverse action. This notice requirement differs from that of the Fair Credit Report Act (the “FCRA”), which mandates notices only if the employer takes adverse action based on information contained in a third-party report. Ban-the-box city ordinances, such as those in Los Angeles and San Francisco, have yet different requirements, providing that a notice may be required if the adverse action is based on criminal history information from any source, including disclosure by the candidate.

The Regs also mandate that the candidate is given a reasonable opportunity to demonstrate that the exclusion should not be applied due to his/her particular circumstances, and consideration whether any additional information provided by the candidate or otherwise obtained by the employer warrants an exception.

According to the Regs, the candidate bears the initial burden of proof for establishing that the employer’s background screening policy has an adverse impact on a protected class. If an adverse impact is demonstrated, the burden shifts to the employer to show that its policy is “job-related and consistent with a business necessity,” and based on an individualized assessment, considering factors such as:

  • the nature and gravity of the offense or conduct
  • the time passed since the offense was committed and/or completion of the sentence
  • the nature of the job sought or held

Recommendations:
Employers in California should review their policies on the use of criminal history information in employment decisions and modify any practices to ensure compliance with the new Regs, the FCRA, analogous state law, and applicable local ban-the-box ordinances.

June 27th, 2017|Categories: Compliance Corner for Employment Decisions|Tags: , , |
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