Background Screening Best Practices & EEOC Guidance: A Compliance Tool for Employers
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1 Background Screening Best Practices & EEOC Guidance: A Compliance ADP Background, Drug Testing and Medical Screening Services Background Screening Best Practices & EEOC Guidance: A Compliance 1
2 Background Screening Best Practices & EEOC Guidance: A Compliance Tool for Employers Background screening has become an essential tool for employers. Today there are a variety of reasons employers should conduct background checks: reduce negligent hiring risks; assure a safe and violence-free work environment; monitor and protect financial assets from employee fraud and embezzlement; protect the company brand and reputation. Background screening has clearly become more critical than ever for employers regardless of what industries they serve. Employers must properly balance the need for background checks while also conducting them in compliance with the regulatory laws. In addition to this balancing act, employers background screening practices and policies are becoming increasingly frequent targets for lawsuits stemming from a variety of different angles - Fair Credit Reporting Act (FCRA) class-action lawsuits, EEOC disparate treatment claims, and even negligent hiring lawsuits. In just a decade the background screening landscape has drastically changed for employers. These mounting shifts continue to place unique challenges in front of employers to successfully navigate regulations while locating and screening qualified talent. Since the updated EEOC Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions was issued in 2012, there has been considerable controversy and confusion among employers over the EEOC s efforts to enforce its position that an employer s criminal background screening programs, if not designed and used properly, can result in disparate discriminatory practices by employers. Furthermore, despite recent lawsuit defeats, the EEOC has made no indication that it plans to limit or discontinue pursuing lawsuits against employers regarding background screening discrimination. The introduction of the EEOC s updated Guidance and its continued pursuit of enforcement have brought a new wave of additional compliance worries for employers to address. This guide serves as an educational tool to highlight and bring employers attention to resources that outline best practice recommendations that employers should consider when developing background screening programs. These valuable and practical resource tools provide employers the needed insight into how to better align their screening programs with requirements of the FCRA regulations and EEOC Guidance. 2 Background Screening Best Practices & EEOC Guidance: A Compliance
3 Background Screening Best Practices Resource: Fair Credit Reporting Act In March 2014, the Federal Trade Commission (FTC), the agency responsible for enforcement of the Fair Credit Reporting Act (FCRA) and the Equal Employment Opportunity Commission (EEOC), the agency responsible for enforcement of federal anti-discrimination laws jointly issued two guidance documents on employment background checks. The two guides Background Checks: What Employers Need to Know and the Background Checks: What Job Applicants and Employees Should Know provide basic steps for employers should follow to ensure compliance under the FCRA as well as EEOC Guidance. The FTC/EEOC guidance highlights how to use background checks to make an employment decision while complying with federal laws that protect applicants and employees from discrimination. The guidance also reminds employers to comply with local laws where applicable. Lastly, the guidance educates both new job applicants and current employees on what they should know about background checks and their rights. The following are summary highlights of the best practice guidance that employers should be aware of when using background check information to make employment decisions. Each respective government agency has provided its own unique guidance feedback. Before You Get Background Information EEOC: Ensure you are treating everyone equally. It is illegal to make hiring decisions about person s race, national origin, color, sex, religion, disability, genetic information or age (over 40). Avoid asking for medical information. If an employer has obtained medical information, avoid using it when making a hiring decision. Only in rare cases should employers use such information. FTC: If you utilize a background screening company (also known as a consumer reporting agency or CRA ) there are additional procedures the FCRA requires beforehand: Notify applicants or employees in writing you intend to use their background information for decisions about thier employment or promotion. The notice must be in in a stand-alone format and not a part of the employment application. There should be no additional information or language in the notice that distract from its primary purpose (ex. disclaimers, release of liability). If you are asking a company to provide an investigative report you must also tell the applicant or employee of thier 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. Make sure the authorization is clear and conspicuous as to what type of information the background report will seek to contain. Background Screening Best Practices & EEOC Guidance: A Compliance 3
4 Certify to the company from which you are getting the report that you: notified the applicant and got their permission to get a background report; complied with all of the FCRA requirements; and won t discriminate against the applicant or employee, or otherwise misuse the information in violation of federal or state equal opportunity laws or regulations. Using Background Information EEOC: Any background information you receive from any source must not be used to discriminate in violation of federal law. Apply the same standards to everyone, regardless of their race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older). Avoid basing employment decisions on background problems that may be more common among people of a certain race, color, national origin, sex, or religion; among people who have a disability; or among people age 40 or older. Be prepared to make exceptions for problems revealed during a background check that were caused by a Estimated cost for replacing disability. a mid-level employee FTC: is 200% of their annual salary. Prior to taking adverse action (not hiring an applicant or firing an employee) you must give the applicant or employee: a notice that includes Inc. 500, a 2014 copy of the consumer report you relied on to make your decision; and a copy of A Summary of Your Rights Under the Fair Credit Reporting Act, which you should have received from the company that sold you the report. an opportunity to review the report and explain any negative information. After you take an adverse employment action, you must tell the applicant or employee (orally, in writing, or electronically): that they were rejected because of information in the report; the name, address, and phone number of the company that sold the report; that the company selling the report didn t make the hiring decision, and can t give specific reasons for it; and that they have a right to dispute the accuracy or completeness of the report, and to get an additional free report from the reporting company within 60 days. 4 Background Screening Best Practices & EEOC Guidance: A Compliance
5 Guidance Purpose and Highlights: The purpose of the EEOC s Guidance is that it focuses on employment discrimination based on race and national origin, and provides information about criminal records, employer practices, and Title VII. The main focus of the EEOC Guidance and the key take-away concept for employers is that widespread exclusionary screening practices that, even when applied uniformly, may result in the unlawful process of disparate impact discrimination. The Guidance is divided into several sections covering the following aspects: The differences between arrest and conviction records Disparate treatment and disparate impact analysis under Title VII Hiring by employers in regulated industries in relation to Title VII Best practices for employers Since the release of the updated EEOC Guidance in 2012 there has been notable legal activity by the EEOC in an attempt to enforce the Guidance. And despite recent EEOC case losses it does not appear to have slowed the EEOC s continued pursuit of discrimination lawsuits against employers. This has led to considerable controversy and confusion by many employers as to how to apply the Guidance recommendations to their screening policies. However, regardless of the speculation surrounding EEOC Guidance litigation activity there should be no mistake that the EEOC Guidance is here to stay and employers must begin to align their screening and hiring practices with the Guidance in order to mitigate the risk of being the next EEOC target. Recommended Compliance Resource Tools The EEOC Guidance has left employers concerned about the risks their background screening policies and practices may bring to their organizations. Such concerns are also accompanied by confusion and uncertainty on just how exactly employers are to comply with the EEOC Guidance. Fortunately there are a variety of compliance resource tools that employers may utilize to assist their HR managers and legal counsel in developing a more compliant background screening program aligned with EEOC Guidance and Best Practice Standards. In turn a compliant screening program also helps to mitigate risks of liability in negligent hiring claims as well as FCRA violations. Background Screening Best Practices: EEOC Guidance On April 25, 2012, the U.S. Equal Employment Opportunity Commission (EEOC) issued its updated Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964: Click here The EEOC also created a Q & A on the Guidance to assist employers: Click here Background Screening Best Practices & EEOC Guidance: A Compliance 5
6 EEOC Employer Best Practices The first recommended resource is Employer Best Practices found within Section VII of EEOC Enforcement Guidance itself. Here employers can learn more about EEOC recommended best practices examples to consider and incorporate into their background screening practices and policies. These best practices examples within the Guidance cover a variety of topics such as: General information pertaining to policy development Training of recruiters, hiring managers and decision makers Specific criminal record inquiry and use Individual assessments Confidentiality Best Practice Standards The second recommended resource is the Best Practices Standards: The Proper Use of Criminal Records in Hiring 1. The Standards were developed specifically by a variety of workers rights and civil rights organizations along with the collaboration of consultants from the background screening industry. Per the contributors of the Standards, these Best Practice Standards, developed by a group of civil rights organizations in consultation with background checking companies, represent high standards that employers and Consumer Reporting Agencies (CRAs) can reasonably be expected to follow. According to the report, The Best Practice Standards presented here set out concrete, practical procedures that will help employers make hiring decisions that: Comply with the EEOC Guidance and limit liability under Title VII of the Civil Rights Act and state and local anti-discrimination laws Comply with the Fair Credit Reporting Act (FCRA) Minimize the risk of liability from hiring an unfit employee. 6 Background Screening Best Practices & EEOC Guidance: A Compliance
7 The Best Practice Standards consist of 15 recommended practices. A summary of the recommendations are outlined in the following grid: Click here to view complete version of Best Practices Standards: The Proper Use of Criminal Records in Hiring. The Best Practice Standards are the result of the collaborative work of both background screening industry experts and the following national groups: National H.I.R.E. Network 1 Lawyers Committee for Civil Rights Under Law 2 National Workrights Institute 3 Background Screening Best Practices & EEOC Guidance: A Compliance 7
8 The ADP Compliance Difference The following chart identifies several of the recommended best practice standards and FCRA requirements referenced in this guide. The chart compares the recommended best practices and federal requirements with ADP s built-in compliance features and services which can help employers meet these recommendations and requirements. Best Practices & FCRA Requirement Check List When Considering Background Checks for Employment Purposes 8 Background Screening Best Practices & EEOC Guidance: A Compliance
9 Establishing a Background Screening Program: Form a criminal background screening program group to review, revise or develop background screening policies and practices. Include all stakeholders. Seek screening program assessment from outside legal counsel. Ensure this audit is privileged. Synchronize the screening program with all areas of the organization - ATS, recruiters, hiring managers, legal. Consider an individual assessment & a relevancebased approach when developing screening policies and practices. Establish a FCRA policy. Establish periodic reviews of the policy and update accordingly. FCRA-Before Obtaining a Background Report: Ensure you are treating everyone equally. Ensure hiring decisions are not based on person s race, national origin, color, sex, religion, disability, genetic information or age. Avoid asking for medical information. Notify applicants or employees in writing you intend to use their background information for decisions about his or her employment or promotion. If you use a background screening company, know your obligations under the Fair Credit Reporting Act (FCRA). Review background check disclosures notice to ensure they are standalone and contain no extraneous language. Get the applicant s or employee s written permission to do the background check. Certify to the consumer reporting agency you are getting reports from that you ve notified the applicant and got their permission to get a background report; complied with all of the FCRA requirements; and won t discriminate against the applicant or employee. Background Screening Best Practices & EEOC Guidance: A Compliance FCRA-After Obtaining a Background Report: Avoid basing employment decisions on background problems that may be more common among people of a certain race, color, national origin, sex, or religion; among people who have a disability; or among people age 40 or older. Prior to taking adverse action, ensure you have provided the applicant or employee appropriate notices, and a copy of the report. Allow the consumer the opportunity to dispute and correct any inaccurate information in the report. After you take an adverse employment action, tell the applicant or employee (orally, in writing, or electronically) the reasons for the adverse decision, name of the CRA who compiled the report, that the CRA did not make the adverse decision and their rights to dispute the report. EEOC Employer Best Practices: Eliminate policies or practices that exclude people from employment based on any criminal record. Train managers, hiring officials, and decision makers about Title VII and its prohibition on employment discrimination. Train managers, hiring officials, and decision makers on how to implement the policies and procedures consistent with Title VII. Develop a narrowly tailored written policy and procedure document for screening applicants and employees for criminal conduct. When asking questions about criminal records, limit inquiries to records for which exclusion would be job related for the position in question and consistent with business necessity. Keep information about applicants and employees criminal records confidential. Only use it for the purpose for which it was intended. 9
10 ADP Background Screening Services understands the compliance demands on employers. When seeking a background screening partner, employers need guidance and expertise to navigate a regulatory landscape full of pitfalls. Employers need more than an order taker background screening vendor. Employers should seek a knowledgeable and reputable partner for compliant background screening services a partner who has taken the necessary steps to build compliance elements into its services with an employer s compliance requirements in mind. Employers should expect a background screener with whom they can collaborate to better understand the compliance requirements that are encircling their organizations. Employers should expect a screening partner to provide them practical compliance guidance and best practice recommendations when developing and implementing a compliant background screening program. ADP Background Screening Services aims to provide clients with useful and practical compliance updates impacting their background screening programs. In order to accomplish this, ADP strategically and systematically builds many of the compliance aspects discussed here into its products, services and processes to help ease the employer s screening compliance requirements. This built-in compliance concept is a cornerstone of ADP Screening and Selection Services and is essential in helping to ensure that an employer s screens matter. References 1. National H.I.R.E. Network 2. Lawyers Committee for Civil Rights Under Law 3. National Workrights Institute This document is not a substitute for legal counsel and does not provide legal advice. Nor will following the practices described here guarantee that an employer will avoid investigations or avoid liability for its decisions to forego background checks or to use the procedures recommended in this document in conducting background checks. 10 Background Screening Best Practices & EEOC Guidance: A Compliance
11 About ADP Background, Drug Testing and Medical Screening Services ADP Background Drug Testing and Medical Screening Services has the tools and expertise to quickly and accurately scrutinize the backgrounds of your candidates, conduct drug screening, administer I-9/E-Verify services, and help you comply with state and federal regulations. Our flexible products adapt to your business needs and are backed by world-class customer service, industry expertise, and timely information. Accelerate your hiring process and make more informed compliance and employment related decisions by leveraging ADP s solution. For more information, please visit or call About ADP Employers around the world rely on ADP (NASDAQ: ADP) for cloud-based solutions and services to help manage their most important asset their people. From human resources and payroll to talent management to benefits administration, ADP brings unmatched depth and expertise in helping clients build a better workforce. A pioneer in Human Capital Management (HCM) and business process outsourcing, ADP serves more than 610,000 clients in 100 countries. ADP.com. ADP and the ADP logo are registered trademarks of ADP, LLC. ADP RPO is a service mark of ADP, LLC. ADP A more human resource. is a service mark of ADP, LLC. All other marks are the property of their respective owners. Copyright 2015 ADP, LLC. ALL RIGHTS RESERVED. Background Screening Best Practices & EEOC Guidance: A Compliance 11
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