Publix Settles for $6.8 Million in FCRA Class Action

“I release Publix Super Markets, Inc., its employees, its authorized agents and representatives from any liability in connection with any decisions made concerning my employment based on information reported.” The inclusion of this language in their background check disclosure form is costing Publix millions of dollars. Facing a potential 90,000+ class members and an indisputable violation of the FCRA, Publix has decided to settle for $6.8 million.

Long story short, your disclosure form cannot consist of anything more than stating your intent to procure a consumer report for employment purposes per the FCRA. The inclusion of release language, i.e. “I hereby release company from liability”, will open your business up to a potential class action suit much like this one. Publix isn’t the only company to have made this mistake recently. This class action lawsuit follows closely on the heels of many similar cases. Whole Foods, ClosetMaid, O’ Reilly’s Automotive Stores Inc., CEC Entertainment Inc., and ESA Management are just a few of the companies who failed to provide a standalone disclosure and/or included release language.

While the disclosure and authorization can be put together, employers may want to separate the two. As it stands, there are no rules against release language on your authorization form. Before implementing any changes, however, it would be prudent to discuss them with your legal counsel. Also, it would be wise for all employers to review their current disclosure and authorization forms with their legal counsel to make sure you are not making a similar mistake.

You can find the Fair Credit Reporting Act in its entirety here.

FCRA Compliance: Reviewing Your Disclosure and Authorization Forms

    We would like to stress the importance of carefully reviewing the Disclosure and Authorization forms ("Authorization") that are sent to job applicants prior to obtaining background checks. You should ensure that these Authorizations do not include any indemnification or release provisions. 

    Recently an individual in California filed a class action lawsuit seeking to hold both a prospective employer and the CRA that provided a consumer report to that employer liable for failing to comply with the requirements of Section 604(b)(2) of the Fair Credit Reporting Act (FCRA).

    The Authorization that the employer used contained language asking applicants to indemnify and release both the CRA and the employer from any claims that may arise from the collection, disclosure or use of the information provided on the Authorization form. Similar release language, sometimes called a hold-harmless clause, has been the subject of many claims against employers. 

    Class action lawsuits alleging violations of the FCRA are on the rise. Therefore, please be certain that the Disclosure and Authorization forms that you provide to job applicants do not include any type of indemnity, release, or hold-harmless language."

Thanks for your attention to this important compliance matter.

Washington D.C. Ban-the-Box Legislation Set to Take Effect in October

Ban-the-box legislation originally prohibited employers from including the question “have you been convicted of a crime” and its associated check box. This was in an effort to rehabilitate former offenders. The thought process is that without an opportunity to gain employment, many are doomed to become repeat offenders. While recent laws in the same vein are being referred to as ban-the-box laws, this is a bit of a misnomer. The movement towards more regulations on background screening has evolved to include more stipulations than just removing a check box from an application.

The latest to join the recent push for more regulations on background screening is Washington D.C. The bill signed by Mayor Vincent Gray last month will go into effect after a 30-day period of congressional review. It is scheduled to go into effect October 21, 2014. This law, dubbed the Fair Criminal Record Screening Amendment Act of 2014, applies to all D.C. employers with 10 or more employees.

The law states:

•          Employers may not make any inquiry about an arrest or criminal accusation against the applicant, which is not pending and did not result in a conviction.
•          An employer must not make any inquiry about an applicant’s criminal history until after making a conditional offer of employment.
•          A conditional offer can only be rescinded if there is a “legitimate business reason”

Exceptions where inquiry into an applicant’s criminal may precede a conditional offer:

•          Where any federal or District law or regulation requires the consideration of an applicant’s criminal history for the purposes of employment
•          Where a position designated by the employer is part of a federal or District government program or obligation that is designed to encourage the employment of those with criminal histories

Penalties for violation:

•          For employers that employ 11-30 employees, a fine of up to $1,000
•          For employers that employ 31-99 employees, a fine of up to $2,500
•          For employers that employ 100 or more employees, a fine of up to $5,000

It is crucial that D.C. employers update their hiring practices no later than October 21^st.  Ensure that the application has been reviewed and modified accordingly. Also, make sure that a criminal background check is not performed before a conditional offer has been made. Lastly, the exclusion of an applicant based on criminal conduct must be job related and consistent with business necessity. If you are not sure what that means, refer to this EEOC guidance.

There are now 13 states and around 70 cities and counties in the U.S. that have enacted some form of “Ban-the Box” legislation. We will continue to report new developments so that you may remain informed and in compliance with the local laws that apply to you and your organization. Another good resource for staying up-to-date is www.nelp.org.

S2Verify Has Received NAPBS Accreditation

We are proud to announce that we have received accreditation by the National Association of Professional Background Screeners’ (NAPBS®) Background Screening Credentialing Council (BSCC). This endorsement from the NAPBS validates our commitment to service excellence. This accreditation serves as proof of our business and process standards. It reflects the values our company has maintained since its inception in 2009.

To become BSCC-accredited, consumer reporting agencies must pass a rigorous on-site audit, conducted by an independent auditing firm, of its policies and procedures. The audit focuses on six critical areas: consumer protection, legal compliance, client education, product standards, service standards, and general business practices. Only about 10% of background screening providers in the United States are NAPBS accredited. We are so honored to be in elite company and recognized as one of the leaders in our industry. 

For more information about NAPBS accreditation and what it entails, click here. 

Ban-the Box Update (August 2014)

Many cities and states are adopting or expanding "Ban the Box" regulations. Here is the latest.

San Francisco

                Today, August 13^th, San Francisco’s Fair Ordinance goes into effect. They certainly are not the first to enact what many are calling “Ban the Box” legislation. This ordinance applies to both the public and private sector. San Francisco employers need to ensure they are up to code on their background screening.

Illinois

                Another change employers should be aware of is Illinois’ expanded “ban the box” legislation that now includes private employers. This makes Illinois the fifth state in the nation to require both public and private employers to limit inquiry about convictions. The other states are Minnesota, Hawaii, Massachusetts, and Rhode Island. Illinois is calling their “Ban the Box” legislation the Job Opportunities for Qualified Applicants Act. It takes effect on January 1, 2015. 

New Jersey

                Governor Chris Christie signed the Opportunity to Compete Act on August 11^th. This law expands New Jersey’s “Ban the Box” regulations to the private sector, much like Illinois’ Job Opportunities for Qualified Applicants Act. It is set to take effect on March 1, 2015. This makes New Jersey the 13^th state to adopt “Band the Box” legislation, and the 6^th state to expand the regulations to the private sector.

“Ban the Box” legislation is spreading like wildfire. As a background screening provider, the only thing we can do is keep you updated on the latest employment screening standards.

While S2Verify cannot provide legal advice, we can suggest you discuss with counsel, the following guidelines:

•          Do not ask about arrests that did not lead to a conviction

•          Do not ask about an individual’s conviction history at the beginning of the hiring process (such as the application)

•          Only after a conditional offer has been made can one ask about criminal history

•          Only convictions related to the job can be considered in the decision to deny employment

Three Employers Face Class Action Lawsuits from the Same Law Firm

 Despite all of the FCRA-related class action suits taking place, it appears large companies are not taking an appropriate course of action to ensure they are in compliance. One has to wonder whether, whether it is simply a lack of attention to detail (That would be a surprise) or simply HR/Legal/Compliance not staying current. The latest three companies in question are Panera, LLC, American Multi-Cinema, Inc. (AMC), and Nine West Holdings. Two of these class action suits involve the same plaintiff, and all three are from the same Florida law firm. In each of these cases, the plaintiff applied for employment online. Each of these companies allegedly failed to provide a valid, compliant consent form before initiating pre-employment background checks.

An employer’s obligation before obtaining background information is as follows (from the co-published FTC/EEOC guide):

·         Tell the applicant or employee you might use the information for decisions about his or her employment. This notice must be in writing and in stand-alone format. The notice can’t be in an employment application. You can include minor additional information in the notice (like a brief description of the nature of consumer reports), but only if it does not confuse or detract from the notice.

·         If you are asking a company to provide an “investigative report” – a report based on personal interviews concerning a person’s character, general reputation, personal characteristics, and lifestyle – you must also tell the applicant or employee of his or her right to a description of the nature and scope of the investigation.

·         Get the applicant’s or employee’s written permission to do the background check. This can be part of the document you use to notify the person that you will get the report. If you want the authorization to allow you to get background reports throughout the person’s employment, make sure you say so clearly and conspicuously.

You can find the FTC/EEOC guidance as a whole here.

Panera allegedly violated the FCRA by not providing a consent form specifically for a consumer report. The plaintiff also alleged that the bakery-café chain included extraneous information that detracted from the notice. American Multi-Cinema, Inc. (AMC) allegedly did not have a stand-alone consent form for online application for employment. And finally, Nine West Holdings allegedly had consent language that was part of a web page that contained a number of links to Nine West information on the website.

The main takeaways from these alleged violations is:

·         Your consent, AKA disclosure and authorization, must be a stand-alone (not part of the application) form.

·         The consent form cannot contain extraneous information

·         The purpose of the consent must be clearly stated (i.e. employment screening)

The lawsuit demonstrates that violations of the FCRA can create large potential liability.  Potential class members, including employees and prospective employees, may be entitled to statutory damages of up to $1,000 for each violation in the case of willful non-compliance. Class action lawsuits also create exposure for large awards of attorney’s fees and the potential exposure to punitive damages.

If you have any doubts about your company’s FCRA compliance, PLEASE act before you wind up on the wrong end of a class-action lawsuit.

Louisville: The Latest City to "Ban the Box"

Add Louisville to the list of cities who have “banned the box”. The Louisville Metro Council passed the new law earlier this month. This means that city employers cannot include a section on the application that asks the applicants to reveal if they have been previously convicted. Louisville joins over 50 cities/counties who have some form of the ban-the-box policy.

These ordinances serve to discourage employers from denying a qualified job-seeker based solely on a prior conviction. This particular law pertains to jobs for the City as well as vendor/contractors who do business with the City. The law pushes back the inquiry into the applicant’s criminal history until later in the hiring process. For more on Louisville’s new ordinance, visit NELP.org.

We are seeing more and more of these policies. Half of the states in the U.S. now have at least one city with a ban-the-box policy. Expect more soon. We will keep you up-to-speed.