Emergency Terminations, the FCRA and the EEOC

Transcription

1 Emergency Terminations, the FCRA and the EEOC What to do when your screening of a current employee uncovers significant risk If you run enough criminal background reports on current employees, you will eventually receive a report showing a criminal history that either didn t exist or didn t appear when you first checked the employee one that must be addressed immediately because the criminal history shows an immediate and severe risk. Your gut reaction may be to terminate the employee immediately, but if you want to stay legal and compliant, there are certain steps you have to take. So, before you take action, take a deep breath. Then. Emergency Terminations, the FCRA and the EEOC GIS HireRight info@geninfo.com www@geninfo.com page 1

2 Step : Remember the laws you must obey While you can take prompt action, the law requires you to do take some steps that might not otherwise occur to you. First, remember that the Fair Credit Reporting Act (FCRA) and many state laws require you to give an employee a copy of the report and a special notice (typically called pre-adverse action and adverse action letters) before you take action. 1 Not only do you have to provide these notices, the Federal Trade Commission (FTC) has given guidance which courts have followed that you must then wait a reasonable amount of time before taking action. 2 This waiting period recognizes that consumer reporting agencies can make mistakes and gives the employee a reasonable period of time in which to dispute a report that is inaccurate, incomplete, or out-of-date. So what s considered reasonable? Based on prior FTC guidance, 3 the consumer reporting industry generally recommends five business days, but the FTC acknowledges that the minimum length of this period will vary depending on the particular circumstances involved. 4 So while the 5- day recommendation is routine when the notice is delivered by mail, it isn t set in stone, especially when the notice is delivered by any means other than mail. Once the notice issue has been satisfied, you have to remember that federal Equal Employment Opportunity (EEO) guidance strongly recommends that you not take any action until you give the employee an opportunity to present evidence that shows that the employee does not pose (or no longer poses) the risk that worries you. Based on the evidence presented, you must then make a business judgment about whether it makes a difference for you from a risk perspective. This is particularly true in New York where it is illegal to discriminate on the basis of criminal history without balancing eight factors one of which is any evidence of rehabilitation or good conduct that the employee presents. 5 Weighing the evidence could make a serious difference. For example, if a DUI conviction is normally a deal-breaker for you, you might be persuaded by someone who has a DUI conviction, but who admits to having a drinking problem, who successfully served out their probation, who enrolled in Alcoholics Anonymous, and who volunteers to gets their sponsor to vouch for them. Step : Revisit whether immediate action is really required Even if you know that you want to terminate the employee, you have to recognize that there is some unavoidable risk in taking immediate action and you should check your initial reaction that immediate action is required. There are two aspects to this. First, you need to determine whether the risk is one that really relates to the position that the employee currently occupies. For example, if your hiring criteria for your finance department say that you can t hire anyone who has written bad checks, you might look into whether the specific position in question poses the risk that caused you to adopt that rule. Can this person write or steal checks, decide who to pay, or transfer funds? If there is no real risk, then you should step back and decide whether your hiring criteria really apply to the position. Second, you need to determine whether the possible risk event could occur before the waiting period expires. In the finance department example, does this person have access to accounts, where giving them a pre-adverse action notice might cause them to clear out the company s bank account or delete the company s financial records? If there is no real risk within the normal waiting period, you should wait it out. Emergency Terminations, the FCRA and the EEOC GIS HireRight info@geninfo.com www@geninfo.com page 2

3 Step : Accelerate the timeline by meeting the employee If you decide that the risk is real and the event could occur within the next five business days, then you will want to adopt a procedure that makes it more likely that a court will find that you complied with FCRA laws and EEO guidance. The best way to do this is a personal meeting with the employee. Prepare your representative for the meeting At this point, you will need to prepare a senior manager to meet with the employee. You should review the procedure with your manager, equip your manager with three notices, and empower the manager to make the necessary decisions during the meeting. These three notices should include: A pre-adverse action notice that includes (1) a copy of the background report, (2) a copy of the FTC s summary of rights and any other notices that your consumer reporting agency (CRA) normally sends along with pre-adverse-action notices, and (3) the form that your CRA provides to people who want to dispute reports about them. An unsigned termination notice telling the employee that the company is taking adverse action based on the report by terminating the employee s employment. The manager may sign this notice during the meeting depending on what happens in it. An unsigned suspension notice telling the employee that the company is taking adverse action by suspending the employee pending further actions. The letter has two check boxes on it: one for suspension pending the employee s dispute of the report and one for suspension pending the company s consideration of the employee s explanation of the report. The manager may sign this notice during the meeting depending on what happens in it. If so, the manager will also need to check one or both of the check boxes. The letter should say that company intends to reinstate the employee if the matter is resolved to the company s satisfaction. Each of the two unsigned adverse action notices should comply with the FCRA s requirements for an adverse action notice. 6 They should include: notice of the action being taken, the name, address, and telephone number of the CRA, a statement that the CRA did not make the decision to take the adverse action and is unable to provide specific reasons for the action, notice of the employee s right to obtain a free copy of the report from the CRA within 60 days, and notice of the employee s right to dispute the accuracy or completeness of any information in the report. Meet with the employee to decide the outcome Your senior manager should meet with the employee as soon as possible, preferably in person. In the meeting, your manager should take the following steps in this order: 1. Explain that the company has received a negative background report about the employee that indicates the possibility of a severe risk in the employee continuing to perform in the employee s position. 2. Give the employee the pre-adverse-action notice (which includes a copy of the report, the summary of rights, and the dispute form). 3. Ask the employee to read the report, right then and there. Wait for the employee to do it. 4. When the employee finishes reading the report, ask the employee if there is anything on the report that is inaccurate, incomplete, or out-of-date. 5. If the employee says that there is, have the employee fill out the dispute form during the meeting and take the employee to a fax machine to send the form to your CRA. 6. Additionally, ask the employee if there is anything on the report that the employee would like to explain. 7. If so, seriously consider the employee s explanation, using good business judgment. If the explanation lessens the seriousness of the report to the point that you are willing to forgo action, consider whether you need any confirmatory evidence for your files (such as certificates showing participation in a rehabilitation program, or letters from character references). 8. If the employee neither disputes nor explains the report, then you can probably terminate the employee s employment immediately without violating the FCRA. Assuming that termination is the approach you want to take, your manager would sign the termination letter during the meeting, hand it to the employee, and then do whatever normally occurs for terminations in your company. 9. If the employee disputes the report, then the most that you should do on that day is suspend the employee pending the outcome of the dispute. In this case, your manager should check the dispute box on the suspension letter, sign the letter, hand it to the employee, and then do whatever normally occurs for suspensions in your company. You should then call Emergency Terminations, the FCRA and the EEOC GIS HireRight info@geninfo.com www@geninfo.com page 3

4 your CRA and ask that they expedite the dispute. If your CRA resolves the dispute in the employee s favor by eliminating the items that worried you, you should immediately reinstate the employee. If your CRA does not resolve the dispute in the consumer s favor, you should then send a new adverse-action notice terminating the employee s employment. 10. If the employee explains the report, your manager must make decisions on the spot. The manager must decide whether he or she believes the explanation and whether the explanation (if true) shows that the individual does not now pose the risk that the criminal history shows. The possible answers here are no, yes, and maybe. If the answer is clearly no, then the manager should explain that he or she has considered the explanation carefully, found that it does not address the company s concerns, and proceed as described in item (8) above, if the employee has not also disputed the report or in item (9) above (if the employee has also disputed the report). If the answer is clearly yes, then the manager should tell the employee what kind of documentation the manager will need to back up that decision and ask the employee to provide that documentation. Examples could include character reference letters or certificates of completion of a drug rehabilitation course. The manager should then check the explanation box on the suspension letter, sign it, hand it to the employee, and do whatever normally occurs for suspensions in your company. If the employee has also disputed the report, the manager should check that box as well. When the employee provides the documentation, you should reinstate the employee. If the manager is unsure, then he or she will need to discuss it with other managers and maybe other departments. In this case, the manager should explain that he or she is not prepared to make a decision on the explanation during the meeting because it will require additional consideration. The manager should tell the employee what kind of documentation will be needed to back up a positive decision and ask the employee to provide that documentation. The manager should then check the explanation box on the suspension letter, sign it, hand it to the employee, and do whatever normally occurs for suspensions in your company. If the employee has also disputed the report, the manager should check that box as well. If, after conferring, the manager decides that the explanation is adequate, then you should reinstate the employee when he or she provides the documentation. If, after conferring, the manager decides that the explanation is not adequate and if the employee did not dispute the report or the CRA resolved it against the consumer you should send a new adverseaction notice terminating the employee s employment. If the manager decides that the explanation is not adequate but the employee successfully disputed the report, reinstate the employee. Step : Consider the legal arguments In each of these cases, your first legal argument will be that you provided all the required notices and gave the employee a reasonable period, under the circumstances, in which to dispute or explain the report by meeting with the employee. In each of these cases, you also have an argument about damages, although it varies on the case. If the employee did not dispute or explain the report, then your argument is that the employee should have mitigated his or her damages by taking the opportunity to dispute or explain the report. If the employee did dispute or explain the report, then your argument is that your violation of the law, if there even was one, could not have caused any damages to the employee because the employee actually took advantage of the right that the law provides. These arguments don t necessarily get the case dismissed, but they are strong ones at trial, which means that they are strong ones in settlement talks. Any employment decision based on information from a CRA needs to be treated carefully. With this process you can feel safe in knowing that you have taken all possible steps to avoid a legal issue based on an emergency termination. Emergency Terminations, the FCRA and the EEOC GIS HireRight info@geninfo.com www@geninfo.com page 4

5 Sources: U.S.C. 681b(b)(3)(A). 2. Federal Trade Commission, 40 Years of Experience with the Fair Credit Reporting Act: An FTC Staff Report with Summary of Interpretations (July 2011) (available at ( FTC Report ) at Federal Trade Commission, informal staff opinion letter to Eric J. Weisberg (June 27, 1997) (available at 4. FTC Report at New York Corrections Law U.S.C. 1681m(a). Emergency Terminations, the FCRA and the EEOC GIS HireRight info@geninfo.com www@geninfo.com page 5