NYC Passes Bill Banning Credit Checks in Hiring Process

Pending Mayor DeBlasio signing the bill (Int.0261-2014) into law, New York City will join a growing a list of U.S. localities eliminating credit checks from the background screening process. The New York City Council passed the bill last Thursday April 16, 2015 by a vote of 47-3. Ten states (CA, MD, CT, HI, IL, WA, OR, VT, CO, NV) and two cities (Chicago, IL and Madison, WI) set precedent for NYC’s latest legislature.

One’s credit history, according to the bill, consists of:

• Prior bankruptcies, judgments, or liens

• Number or credit accounts

• Late or missed payments

• Charged-off debts

• Items in collection

• Credit limit

• Prior credit report inquiries

• Items in collections

This bill, an amendment to the NYC Human Rights Law, would make it an unlawful discriminatory practice for an employer to use an individual’s consumer credit history in making employment decisions. Due to the sensitive nature of various employment positions that require additional layers of security, the bill would provide exceptions to several positions.

Exemptions from the credit check ban include:

• An employer, or agent thereof, that is required by state or federal law or regulations or by a self-regulatory organization as defined in section 3(a)(26) of the securitiesexchange act of 1934

• Police officers or any position with a law enforcement or investigative function

• A position in which an employee is required to be bonded under City, state, or federal law

• A position that requires security clearance under federal or state law

• A non-clerical position having regular access to trade secrets, intelligence information, or national security information

• A position having signatory authority over third party funds or assets valued at $10,000 or more

• A position that involves fiduciary responsibility to the employer with the authority to enter financial agreements valued at $10,000 or more on behalf of the employer

• A position with regular duties that allow the employee to modify digital security systems established to prevent the unauthorized use of the employer’s or client’s networks or databases

New York City employers will need to pay close attention as this unfolds. Should this bill become law, modification of employers’ background screening policies will be necessary.

Re-screening Your Employees

You have just extended a conditional offer to a job candidate to fill that vacant position at your company. The conditional offer is contingent upon the results of his/her background check. You follow FCRA guidelines through the entire hiring/screening process. The background check is completed, and you see that the candidate has no criminal record. Your job is done now, right? The new hire has been deemed safe and his qualifications acceptable. So you won’t ever need to screen him/her again, right? WRONG.

There are many reasons to re-screen your employees:

•          Employees in safety-sensitive positions
•          Employee have contact with customers
•          Employees work with children/elderly
•          A change in employee responsibilities
•          A promotion gives an employee access to assets or sensitive employee info

Safety-Sensitive Positions

Re-screening is important in some of the high risk positions, such as transportation or any job requiring the operation of heavy machinery. In the transportation industry, keeping track of one’s driving record is essential. You don’t want a reckless or drunk driver operating a vehicle for your company. The operating of any heavy machinery can be dangerous. For the safety of themselves, fellow employees, and others, we recommend routine drug screening, another party of the screening process.

Contact with Customers

When your employees work directly with customers, you have an obligation to regularly screen your employees. This is especially important when they work inside customers’ homes. While a red flag may not have been spotted in the pre-employment background check, criminal activity may occur during the employment of an individual. A current look at an employee’s criminal history can help ensure the safety of your customers.

Work with Children/Elderly

Children and the elderly are particularly vulnerable. As an organization that deals with either demographic, it is your duty to make sure you are not putting them at risk. You have a duty to your customers to ensure that they are not exposed to someone who is a sex offender or has a history of violence. An up-to-date look at the criminal history of those who work with them is one way of protecting this defenseless group.

Change in Employee Responsibilities

Whether a lateral or vertical move is made by an employee, there will be changes in responsibilities. And since your background check should be based upon the responsibilities of the job, you may need to run a different or more thorough search on the employee.

Access to Assets or Sensitive Employee Info

A promotion typically means more access to capital, other assets, or sensitive employee information. Because of this, employers may want to initiate a more involved background check. For example, work with the company’s finances may warrant a credit check. When the employee was hired, his background check may have consisted of only a national criminal search. This search casts a wide net, but is not as reliable as screening at the local level. Therefore, it would be prudent to order a county criminal search for a more up-to-date look at the employee’s criminal history.

A recent survey determined that only about 30% of employers have an active program for re-screening their employees. That is an alarming number. If you want to protect your company, your employees, and your customer base, it is imperative that you consider re-screening your workforce.

If you are not sure where to begin with your company’s re-screening policy, start by identifying the jobs that require re-screening. You can do this by considering the following questions:

•          What are the responsibilities of the position?
•          How much access will the employee have to assets and/or customers?
•          Is the position high-risk?

Once you have identified the situations that require re-screening, craft a written policy to handle decisions, such as grounds for termination based on the background check, and any possible disagreements that may follow.

Improving Your Employment Screening Program in 2015 (Part 3)

Customer Service

We have all had experiences with bad customer service at one time or another. When dealing with customer service is a headache more often than not, it’s time to review your provider. Awful customer service is a deal breaker. Whether or not the product or service offered is great becomes irrelevant when communicating with the customer support staff is a hassle. If you’re on the fence about changing providers, here are a few questions to ask yourself:

How accessible is the Customer Service Team?

Navigating through the maze of an overly complicated automated phone system is unacceptable. When you’re constantly put on hold for an extended period of time, your provider is not holding up their end of the bargain. Employment screening is in many cases very time sensitive. When a position needs to be filled quickly, you do not have the luxury of dealing with an unresponsive vendor. Make sure you can quickly reach someone when you need help. Don’t settle for less.

How knowledgeable/helpful is the support staff?

The customer support team should be well-trained and fully equipped to handle any questions and/or concerns. Whether you have questions about FCRA compliance or need help navigating the system, the support staff should be able to help you. If they cannot answer a question, they should be able to quickly direct you to someone who can. Don’t stand for being bounced around and constantly put on hold.

How long does it take to resolve a problem?

Your issues should not take more than one phone call on average to resolve. If you have to keep calling to obtain a solution, your provider is letting you down. So this year, hold your provider to the service excellence that they promised.

Are you dealing with any of the problems mentioned above? If so, take action this year!

Improving Your Employment Screening Program in 2015 (Part 2)

Choosing the Right Screening Package

Employment screening can be a little overwhelming. A lot of people that are initiating a background screening program for the first time ask, “What kind of records should I look for?” The answer to that question depends on a number of factors:

1. Which industry is your company a part of?

Your industry plays an important part in what searches need to be run. For example, if you are in the transportation industry, there will obviously be an emphasis on driving records. For a job in the healthcare industry, on the other hand, a background check may include checking & monitoring health care sanctions, education verification, and license & certification verification.

2. Are there any particular searches that are required by law in your state or industry?

Most states require criminal background checks if the job involves working with children, elderly, or disabled. Certain positions, for example, may require a thorough background check for security clearance. While certain searches are required, we recommend protecting your company by doing more than the bare minimum required by the state.

3. What are the responsibilities of the position you are attempting to fill?

The EEOC recommends that criminal conduct exclusions be related to tasks required by the particular job the individual has applied for. If a job requires the employee to work with children, you would not hire someone who has recently been found guilty of indecent exposure. As this particular charge interferes with business necessity, denial of employment would be the only course of action.

4. How much access will the applicant have to assets and/or customers?

The more access the employee has to your company’s assets and customers, the more thorough your background check should be. Neglecting to run a complete background check is high risk and can have catastrophic results. For example, a position may require the managing, monitoring, and/or using assets for the company’s best interest. It would be prudent for the employer to conduct a comprehensive background check to look for red flags such as theft, embezzlement, fraud, forgery, etc.

Figuring out the screening criteria for each position can seem like a daunting task. Start by asking yourself these questions. Still overwhelmed? Reach out to your vendor. This is where their experience should come in handy.

Remember to use the same employment screening criteria for each individual applying for any given position. Facing a lawsuit for discrimination can be detrimental to your organization, but is also completely avoidable. For more information about legal compliance, refer back to Part 1 (Compliance) of our 3-part blog on "Improving Your Employment Screening Program in 2015".

Improving Your Employment Screening Program in 2015

As we kick off 2015, we thought it would be fitting to provide you with some insight on refining your employment screening program. Understanding the basics of employment screening is important, whether you are initiating an employment screening program for the first time or seeking improvements for an existing program. Is improving your program on the agenda for 2015? This 3-part blog will look at three areas in your background screening program worth reviewing: Legal Compliance, Choosing the Right Screening Package, and Customer Service. 

Part 1: Compliance

In Regards to the EEOC:

The first step to promoting compliance is creating a written policy for employment screening at your company. Creating a clearly defined policy and strictly adhering to those guidelines is a great way to protect your company. One recommendation is to clearly state exactly what background information will be utilized for each job position.

You want a non-discriminatory background screening process that does not change from person to person. However, it should be modified for each available job position. EEOC guidance suggests companies determine whether a criminal conduct exclusion is job related and consistent with business necessity. And remember, valid exclusions include relevant convictions, NOT arrests.

The EEOC, which acts in interest of Title VII of the Civil Rights Act, states that employers need to show that their policy operates to effectively link specific conduct, and its dangers, with the risks inherent in the duties of a particular position. This is one of the three factors that the EEOC suggests employers take into account when considering denial of employment. The other two factors are the nature of the crime and the time elapsed. For more information, please read the EEOC’s guidance in full.

In Regards to the FCRA:

The Fair Credit Reporting Act regulates the collection, dissemination, and use of consumer information. Employers are required to follow the regulations set forth by the FCRA when using consumer reporting agencies (like S2Verify) to obtain consumer reports for “employment purposes”. 

The numerous FCRA class action lawsuits from 2014 just go to show that employers are still getting this wrong. O’Reilly Auto Parts, Swift Transportation, Whole Foods, Canon Solutions America, Dollar General, and Publix are just a few companies that were recently involved in costly class action lawsuits. Failure to comply with the FCRA can cost companies millions of dollars. 

Below are rules you must follow to maintain FCRA compliance:    

                                           

Before obtaining background information:

1.       Disclosure and Authorization

a.       Disclosure and authorization forms were the reason many employers (O’Reilly Auto Parts, Publix, Whole Foods) faced class action lawsuits in 2014.

b.      Must be signed BEFORE the background check

c.       Disclosure and authorization forms should be standalone documents and cannot contain extraneous information such as release language

If you plan to deny employment based on the background report:

1.       A Pre-Adverse Action Notice must be sent to the applicant. It must include:

a.       Name, address, and phone number of CRA

b.      The fact that the CRA did not make the adverse decision and cannot give reasons for the decision

c.       His/her right to a free copy of the consumer report

d.      His/her right to contact the CRA to dispute the accuracy of the report

e.      Summary of Rights including any State specific requirements

2.       After allowing the applicant five days to dispute any information found in the report, an Adverse Action Notice is to be sent to the applicant. It must include:

a.       Notification to him/her of final decision to deny employment based on consumer report.

b.      All notification provisions used in Pre-Adverse Action letter.

In Regards to Local Laws:

While it is important to abide by the FCRA and EEOC’s standards, that alone is not enough for legal compliance. You must also stay up-to-date on local laws. In 2014, new local “Ban the Box” laws popped up in counties, cities, and states all over the country. These “Ban the Box” laws, as they are called, not only restrict the use of criminal history inquiry on the application, but potentially tell you at what point in the hiring process a background check may be run. 

A good resource to keep up with your particular city/state and any laws that may apply to your business is NELP.org. For the sake of caution, our best practice recommendation, in most cases, is to hold off on the background check until after a conditional offer is made.

NELP.org - http://www.nelp.org/page/content/banthebox/

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.