Assessment of the Effects of EEOC's 2012 Background Screening Guidance

In December of 2012, the U.S. Commission on Civil Rights held a briefing to assess the effects of the Equal Employment Opportunity Commission’s 2012 Guidance. This briefing was held to discuss the impact that their guidance had on background screening for both black/Hispanic applicants and employers. Record of this briefing was just released as a 346-page report. I have taken the time to summarize the main points discussed in the report.

The briefing consisted of 17 speakers from diverse backgrounds. While some of the speakers were pro-EEOC Guidance, many speakers took issue with the 2012 Guidance in some way or another.

The speakers are as follows: 

• Alfred Blumstein, Professor of Urban Systems, Carnegie Mellon University

• Carol Miaskoff, Acting Associate Legal Counsel, EEOC

• Don Livingston, Parter, Akin, Gump, Strauss, Hauer & Feld

• Garen Dodge, Partner, Jackson Lewis LLP

• Glenn E. Martin, Vice President of Development and Public Affairs and Director of the David Rothenberg Center for Public Policy at the Fortune Society

• Harry Holzer, Professor of Public Policy, Georgetown University

• Jeffrey Sedgwick, Co-Founder, Keswick Advisors

• Jonathan Segal, Partner, Duane Morris LLP, Legislative Director, Society for Human Resource Management

• Julie Payne, Sr. Vice President and General Counsel of G4S Secure Solutions USA

• Lucia Bone, Founder of Sue Weaver C.A.U.S.E. (Consumer Awareness of Unsafe Service Employment)

• Montserrat Miller, Partner, Arnall Golden Gregory; Counsel, National Association of Professional Background Screeners (NAPBS)

• Nick Fishman, Co-Founder, Chief Marketing Officer and Executive Vice President, EmployeeScreenIQ

• Richard Larson, President, Winning Work Teams, Inc.

• Richard Mellor, VP, Loss Prevention, National Retail Federation

• Roberta Meyers, Director of Legal Action Center’s National Helping Individuals with Criminal Records Reenter through Employment Network, Also Known as H.I.R.E

• Todd McCracken, President, National Small Business Association

• William Dombi, VP, National Association for Home Care and Hospice

Objective of EEOC Guidance

The EEOC claimed the 2012 Guidance is in response to a disparate impact background screening has had on racial minorities. In other words, minorities have been experiencing difficulties while seeking employment due to a past criminal conviction. The objective of the EEOC is to give minorities an equal chance to re-integrate into society.

The Guidance:

• Puts employers on notice that categorical exclusions for people with certain arrest and conviction records may violate Title VII

• Emphasizes its earlier recommendation that job applications not ask about criminal records, and if they do ask, that they limit inquiries to conviction records for which exclusion would be job-related with business necessity

• Offers a series of examples of common policies and practices that violate Title VII 

• Informs local and state governments that barring people with certain criminal records from jobs or occupational licenses also could violate Title VII.  

Advocates of the EEOC Guidance made several arguments for its most recent list of best practices:

• There are over 65 million individuals with criminal records in this country

• By age 35, one-third of all young black men have been incarcerated at some point. 

• A person should not be haunted many years later by a mistake they made at a young age.

• Criminal Records have a more negative impact on employment for minorities.

• Recidivism probability declines with time clean after an arrest or conviction.

• Recidivism is less probable if an individual gains employment.

Speaker Glenn E. Martin presented a study that showed that black applicants with a criminal record were twice as likely to be denied a job as white applicants. He also reported that black and Latino applicants with clean backgrounds fared no better than white applicants just released from prison.

Harry Holzer made several compelling points:

“The prevalence of arrests and convictions among less-educated American men substantially reduces employer willingness to hire them later in life and worsens their employment outcomes more generally, in ways that generate clear “disparate impacts” on minority (especially black) men.

The very high costs of previous criminal histories on employment are borne not only by the offenders themselves, but also by their families and children, their communities, and the US economy more broadly; accordingly having some successful policy efforts to improve employment outcomes for this population are in the nation’s interest.

The EEOC Guidance should be viewed as one of several potentially effective legal and policy efforts to reduce the many barriers to employment among men with criminal records and thus to improve their employment outcomes.”

The Other Side of the Argument

Many speakers stressed that employers should not be restricted in their use of background checks due to:

• The reality of recidivism

• The prevalence of violent and/or theft-related offenses among inmates. 

• OSHA rules that require employers to provide a safe workplace. 

• Federal, state and local laws and licensing requirements that restrict individuals with certain convictions from employment in selected occupations. 

• State laws that put employers at risk for hiring mistakes. 

• Employer desire to protect business assets.  

Major Concerns 

Many speakers took issue with at least some part of the 2012 Guidance. The concerns that were echoed by the majority were:

• The Guidance is unclear. It is written in a way that is confusing to small business owners.

• The Guidance is vague about the act of conducting an individualized assessment.

• A conflict may arise when a state law mandates a background check, but taking adverse action based on that background check may result in a class action.

• The EEOC’s strategic enforcement plan to create class claims from individual claims encourages investigators to conduct overbroad inquiries.

• The EEOC’s restriction on the use of criminal background checks will have disastrous effects on public safety.

• The guidance results in more risk to the employer. For instance, an employer may feel pressure to hire an employee with a criminal record against his better judgment, resulting in a negligent hiring law suit. 

The EEOC aims to give minorities a fair chance to obtain a job after a conviction. They argue that the struggle to re-integrate into society has a profound effect on not only the individuals involved, but the economy as a whole. Frankly, nobody wants an individual to be perpetually unemployed because of a single mistake they made. But according to those opposed to the guidance as it stands, here lies the dilemma. 

The opposition claims if an employer takes a chance on an applicant with a prior conviction, employees and clients are potentially put at risk. By treating minorities with prior convictions as a protected class, are we putting co-workers and customers at risk? Who is correct, the EEOC or those who spoke out against the Guidance? 

We do not have the answer, but we do feel a certain responsibility to help companies comply with the EEOC’s 2012 Guidance. Our clients can rest assured that we will provide as much information as possible to help them maintain compliance. Some of the concerns that were voiced by several speakers have not yet been answered, but we will keep an eye on any potential developments/changes the EEOC might make. 

You can find the U.S. Commission on Civil Rights’ entire report here. Comments? Concerns?

Litigation Brought Against Whole Foods for FCRA Violations

                  

On February 7, 2014, litigation was brought against Whole Foods for the use of invalid authorization forms in the background screening process. The lawsuit claims the “defendant obtained consumer reports on the plaintiff and similarly situated persons without having obtained factually valid FCRA authorization forms”. 

The online application process included a form labeled “Consent”. Whole Foods allegedly had a section in this form that states “I hereby release the company, my former employers and all other persons, corporations, partnerships and associations from any and all claims, demands or liabilities arising out of or in any way related to such investigation or disclosure.” The form also included other paragraphs that should not be part of a consent form. 

The plaintiff claims that a valid consent form was used, but not until after Whole Foods had already implemented a background check.

The invalid consent forms were allegedly used on thousands of applicants. Should this class action suit be successful, Whole Foods may be paying upwards of $1000 to each class member for the violation. 

FCRA Violations:

1) A consent form, which informs the consumer that a background check may be obtained as a condition of employment, must be signed by the applicant. The consent form, which consists of the required disclosures and requested authorization, cannot include any extraneous information. Including a section in the form about the releasing of liability for companies receiving or providing information for the background check is definitely not legal.

2) When the plaintiff allegedly received the valid consent form is also an FCRA violation. An applicant must sign a valid consent form BEFORE the background check is run, NOT after. 

$1000 per applicant is not something many companies can afford. Precaution should be taken to insure the consent form utilized does not include anything other than the disclosures and requested authorization. Also, get authorization BEFORE you run the background check on the applicant. As always, you should discuss this topic with your in house counsel.

If you have any comments or questions about FCRA compliance, please let us know.

New California Law in Effect: Senate Bill 530

Attention: California Employers

Hundreds of new laws went into effect in California at the beginning of the year. One in particular, Senate Bill 530, has a profound effect on employers and their hiring practices.

The law states “No employer, whether a public agency or private individual or corporation, shall ask an applicant for employment to disclose, through any written form or verbally, information concerning an arrest or detention that did not result in conviction, or information concerning a referral to, and participation in, any pretrial or post-trial diversion program, or concerning a conviction that has been judicially dismissed or ordered sealed pursuant to law”.

Basically, if it did not result in a conviction, you (employers) cannot ask the applicant about it. This applies to diversion programs as well. A satisfactorily completed deferral program is not classified as a conviction. Upon completion of diversion programs, records are often expunged. If the conviction has been expunged, you cannot ask about it. Seeing a pattern? DO NOT ask or seek out information pertaining to charges that did not result in a conviction or have been sealed by the courts.

It also states that you cannot use another source to get information on dismissed criminal charges. As a consumer reporting agency, we focus on reporting convictions. Prior to this law coming into effect, we already refrained from including anything other than charges that resulted in a conviction. This new law is aimed at employers in California who are inquiring about charges that were dismissed and things of that nature.

The law seeks to protect ex-offenders from being discriminated against in the hiring process. If an employer breaks this law, the applicant can bring action against that person to recover actual damages or $200 (whichever is greater) as well as reasonable attorney’s fees. The intentional violation of this law will allow the applicant to treble actual damages or $500 (whichever is greater) plus reasonable attorney’s fees. This intentional violation is also a misdemeanor punishable by a fine of up to $500.

As an employer, you are not privy to information regarding an applicant’s arrests that did not result in a conviction. The law is meant to give someone with a criminal record a second chance. Breaking this law can result in civil penalties. You, as an employer, are responsible for being aware of this new law. Intentionally ignoring the new law can result in misdemeanor criminal charges.

Here is the entire bill.

E-Verify Update

  While it is not mandatory nationwide at this time, there has been recent legislation making E-Verify a requirement in some states. It is important, as an employer, to be aware of your state’s requirements and which businesses it applies to. Each state has a different policy.

A total of 20 states require the use of E-Verify for at least some public and/or private employers: Alabama, Arizona, Colorado, Florida, Georgia, Idaho, Indiana, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, and West Virginia.

Recent Legislation:

Georgia: The Georgia Illegal Immigration Reform and Enforcement Act of 2011 (HB 87) mandates that private employers with over 10 employees register with and use E-Verify. The mandate’s first effective date was January 1, 2012 for businesses with 500+ employees. On July 1, 2013 the requirements became effective for businesses with 10+ employees. 

North Carolina: The North Carolina General Assembly enacted HB 36 that required businesses in the state with 25 or more employees to use E-Verify on all new hires. North Carolina, much like Georgia, has been using a phased approach. HB 36 became active in October 1, 2012 for employers with 500+ employees. As of July 2013, it now applies to employers with 25+ employees.

Pennsylvania: SB 637, enacted in July 2012, requires all public works state contractors and subcontractors with contracts worth $25,000 or more to enroll and use E-Verify by January 1, 2013.

Tennessee: The Tennessee Lawful Employment Act (HB 1378) requires all employers with more than 5 employees to use E-Verify. A phased in approach was used, starting with private companies with 500+ employees in January of 2012. The Act applies to employers with 6+ employees as of January of 2013. The Act also requires employers to maintain documentation of non-employees paid directly by the employer in exchange for labor or services.

Below is a list of specifics for each state that requires the use of E-Verify for employment eligibility verification.

	State	Citation	Year Enacted	Applies to:	Penalties:
1	Alabama	HB 56 HB 658	2011 2012	All employers (phase in) Contractors and subcontractors; prime contractors not liable for subcontractor complying with E-Verify unless they know of the violation	Cancellation of state government grants or incentives and suspension or revocation of business license up to 60 days, and possible debarment from state contracts. A business license can be permanently revoke on a second offense
2	Arizona	HB 2779 HB 2745	2007 2008	All employers	Temporary AZ business license suspension for 10 days upon first offense; permanent AZ business license suspension upon second offense
3	Colorado	HB 1343 SB 139 SB 193	2006 2008 2008	State agencies, contractors	Contractors may become ineligible to receive state contracts. The Colorado Secretary of State’s Office will post the names of vendors using contractors who knowingly employ illegal aliens to perform work on any public contracts for the state
4	Florida	EO 11-02 EO 11-116	2011 2011	State agencies, contractors, subcontractors	Possible denial of future county projects
5	Georgia	SB 529 HB 2 SB 447 HB 87 HB 742 HB 1027	2006 2009 2010 2011 2012 2012	Public employers, contractors, subcontractors with 500+ employees (phase in)	Failure to comply could result in the suspension or denial of a business license, occupational tax certificate, or other document require to operate a business in the state
6	Idaho	EO 2009-10	2009	State agencies, contractors	Immediate cancellation of the contract, reversion of unspent public funds, and monetary penalties. Every contract by a state agency for a state project or service shall include appropriate civil penalties for violation this executive order
7	Indiana	SB 590	2011	State agencies, contractors	State agencies or political subdivisions may terminate a public contract if the contractor knowingly employs an unauthorized alien
8	Louisiana	HB 342 HB 646 HB 996	2011 2011 2012	State contractors Option for private employers	Failure to complete the affidavit or use E-Verify as required would cause the work to be terminated and bar the contractor from future bidding or contract work for up to three years. HB 646 makes it a state offense to employ unauthorized workers and provides E-Verify as a defense to any charges brought under HB 646
9	Michigan	HB 5365	2012	State agencies, contractors, subcontractors	Employers who do not use E-Verify may have all state contracts terminated and become ineligible for public contracts for three years, and/or may have licenses, permits, or certificates suspended for one year.
10	Mississippi	SB 2988	2008	All employers (phase in)	Employers who do not use E-Verify may have all state contracts terminated and become ineligible for public contracts for three years, and/or may have licenses, permits, or certificates suspended for one year.
11	Missouri	HB 1549 HB 390	2008 2009	Public employers, contractors, subcontractors	A violating company’s business permit and licenses shall be suspended for 14 days. Upon the first violation, the state may terminate contracts and bar the company from doing business with the state for 3 years. Upon second violation, the state may permanently debar the company from doing business with the state.
12	Nebraska	LB 403	2009	Public employers, contractors	Loss of eligibility for state contract work and/or state economic incentives.
13	North Carolina	SB 1523 HB 36	2006 2011	State agencies, universities Localities, all employers (phase in)	Failure to comply with HB 36 can result in civil fines ($10,000+) and notification to U.S. Immigration and Customs Enforcement and local law enforcement agencies.
14	Oklahoma	HB 1804	2007	Public employers, contractors, subcontractors	Ineligibility to receive a state contract(s).
15	Pennsylvania	SB 637	2012	Public contractors, subcontractors	First violations incur a warning letter detailing the violation, posted on the website of the Department of General Services of the Commonwealth. On a second violation, the contractor is debarred from public work for 30 days. Upon subsequent violations, the contractor is debarred from public work for 180-365 days. In the case of willful violation, the contractor is debarred from public work for a period of three years. Contractors will also incur a penalty of $250-$1,000 per violation.
16	South Carolina	HB 4400 SB 20 HB 4813	2008 2011 2012	Public employers, contractors (phase in) Private employers Establishes a 24-hour hotline to report E-Verify violations	Possible civil penalty of up to $1,000 per violation and the revocation of the business license.
17	Tennessee	HB 1378	2011	All employers with 6+ employees (phase in)	Employers can incur a penalty of $500 plus an additional $500 for each employee not verified for a first violation; $1,000 plus and additional $1,000 for each employee not verified for a second violation; and $2,500 plus and additional $2,500 for each employee not verified for subsequent violations.
18	Utah	SB 81 SB 39 SB 251 HB 116	2008 2009 2010 2011	Public employers, contractors, subcontractors Private employers with more than 15 employees	Ineligibility to enter into a state contract(s). A private employer may be held civilly liable under state law in a cause of unlawful hiring of an unauthorized alien.
19	Virginia	HB 737 HB 1859 SB 1049	2010 2011	State agencies Public contractors, subcontractors with more than 50 employees	Any employer, including contractors, found to be in violation shall be debarred from entering into a contract with any agency of the Commonwealth for up to one year. The employer shall be released from debarment upon registration and participation in E-Verify. A contractor who fails to enroll and participate in E-Verify may be denied prequalification for contracts.
20	West Virginia	SB 659	2012	Public Employers, contractors	Loss of eligibility for state contract work and/or state economic incentives.

Background Screening Compliance Update

Ban-the-Box Compliance Update

As a provider of employment screening, we feel an obligation to communicate the manner in which our services can and cannot be used. We stress compliance with FCRA requirements, adhering to EEOC guidelines, and state regulations for the well-being of your firm. Due to an increase in the number of cities and counties passing “ban-the-box” regulations, we are providing you an updated list. This will serve as an additional guide as to the role of background screening in your hiring process. Data here is from the National Employment Law Project (NELP.org). The table below details the differences in the “ban-the-box” regulations for each city. 

The differences are as follows:

• which employers the law applies to (public or private sector)

• which positions the law applies to (specific positions or all)

• when a background check can be issued (at what point in the hiring process)

• whether or not EEOC criteria is included in law

• the right of an applicant to appeal background screening results

• Whether or not a copy of the background check report is to be provided

*Policies apply to contractors doing business with the Human Services Department

You will notice that some of these cities/counties incorporate the EEOC guidelines in their ban-the-box policies. For those of you who are not familiar with these guidelines, I have included them below.

The Equal Employment Opportunity Commission’s Policy on Pre-Employment Background Checks:

“There is no Federal law that clearly prohibits an employer from asking about arrest and conviction records. However, using such records as an absolute measure to prevent an individual from being hired could limit the employment opportunities of some protected groups and thus cannot be used in this way.

Since an arrest alone does not necessarily mean that an applicant has committed a crime the employer should not assume that the applicant committed the offense. Instead, the employer should allow him or her the opportunity to explain the circumstances of the arrest(s) and should make a reasonable effort to determine whether the explanation is reliable.

Even if the employer believes that the applicant did engage in the conduct for which he or she was arrested that information should prevent him or her from employment only to the extent that it is evident that the applicant cannot be trusted to perform the duties of the position when:

• considering the nature of the job

• the nature and seriousness of the offense

• the length of time since it occurred.

This is also true for a conviction.

Several state laws limit the use of arrest and conviction records by prospective employers. These range from laws and rules prohibiting the employer from asking the applicant any questions about arrest records to those restricting the employer's use of conviction data in making an employment decision.

For more information, see,

 e.g., http://www.usis.com/commercialservices/transportation/FaqStateImpact.htm.

In some states, while there is no restriction placed on the employer, there are protections provided to the applicant with regard to what information they are required to report.

The Fair Credit Reporting Act (FCRA) imposes a number of requirements on employers who wish to investigate applicants for employment through the use of consumer credit report or criminal records check. This law requires the employer to advise the applicant in writing that a background check will be conducted, obtain the applicant's written authorization to obtain the records, and notify the applicant that a poor credit history or conviction will not automatically result in disqualification from employment.

Certain other disclosures are required upon the employee's request and prior to taking any adverse action based on the reports obtained.”

This information is from The Equal Employment Opportunity Commission

For more clarification from the EEOC about their policies, check out this article.

The importance of compliance cannot be overstated. I hope this serves as a compliance guide for you and your company. I will continue to provide updated information on the ever-changing laws in the employment screening industry. If you have any questions or comments, please feel free to provide your input. I will get back to you as soon as I can.

A Snag in EEOC's Plans to Regulate Background Checks

The U.S. Equal Employment Opportunity Commission  is a bipartisan Commission that enforces employment discrimination laws. One of their most recent oversight efforts has been to engage in lawsuits aimed at businesses who use background checks to rule out applicants with criminal records. The EEOC claims that certain policies and procedures followed by companies are an act of discrimination against certain minorities. Lawsuits against Dollar General and a U.S. unit of BMW are pending;  however, on August 9th, a lawsuit filed in 2009 by the EEOC against Freeman Companies was resolved last week.

Freeman Companies, an event-marketing company, may have set precedent for several other similar cases when a Federal District Judge dismissed the case brought by the EEOC.  The Judge's opinion letter stated there was a lack of facts and error-ridden statistics. There was no evidence to prove that Freeman Companies, a company that employs 30,000+ people of varying races and backgrounds, was discriminating against African Americans or Hispanic applicants. While this is but a single ruling, this case will certainly have long reaching effects on the efforts of the EEOC’s plan to enforce their opinion on how background checks are used by companies.

Companies should be allowed to protect their primary assets.... their employees and their customers. The refusal to hire an applicant with a relevant, past conviction is not the same as racial discrimination. Safeguarding a company and its employees from violence, fraud, harassment, etc. is a perfectly reasonable course of action. The recent rulings may play a huge factor in the EEOC’s attempts to regulate the use of background checks. This is a victory of sorts for companies that want to maintain a safe workplace and protect their bottom line.

How do you feel about the ruling? 

How do you think it will affect the EEOC’s attempts to enforce their opinion on how background checks should be used by companies? 

Texas House Bill 1188 Limits Liability

Texas House Bill 1188

This bill limits the liability of employers, general contractors, premise owners and third parties for hiring employees with criminal convictions. It was introduced in February of this year, and it will take effect on September 1, 2013.
HB 1188 states that no legal action can be taken against an employer who negligently hires an employee with a criminal record. Now before you consider calling off background checks to cut your costs, be aware that there are many exceptions to this bill.

Exceptions-

An employer may be sued for negligently hiring an employee:

I. who has committed a criminal offense while performing duties similar to those expected to be performed in the course of employment

II. who has committed an criminal offense under conditions similar to those expected to be encountered in the course of employment

III. who has committed murder, capital murder, indecency with a child, aggravated kidnapping, aggravated sexual assault, and/or aggravated robbery

Even with this law in place, you may still find yourself answering for the actions of your employees. Continuing to screen your applicants will protect your company and its reputation, as well as save you from a legal nightmare. The cost of a law suit is much more than the cost of a criminal background check, so don’t put your company at risk.

Click here for House Bill 1188 in its entirety.