THE LAW OF BACKGROUND CHECKS: WHAT CLIENTS MAY/MAY NOT "CHECK"

Transcription

1 THE LAW OF BACKGROUND CHECKS: WHAT CLIENTS MAY/MAY NOT "CHECK" First Run Broadcast: January 13, :00 p.m. ET/12:00 p.m. CT/11:00 a.m. MT/10:00 a.m. PT (60 minutes) Background checks are an exercise in risk management in hiring. Companies want to get their hiring decisions right, aligning skills and experience with a job profile, reducing the likelihood a hire won t work out or, worse yet, cause the company liability. Thus, companies want as much information as possible on job candidates. But background checks themselves are fraught with potential liability. There are many categories of questions that employers may not ask job applicants; and if they do ask those questions, employers open themselves to financial liability. Indeed, there is a trend toward in legislation and common law to further limit background checks. This program will provide you with a real-world guide to what s allowed and not allowed in background checks, and best practices for using that information and avoiding liability. Review of laws impacting background checks, including the Fair Credit Reporting Act Review of recent case law developments involving background checks What an employ may/may not ask criminal arrest history, marital status, age, credit history, and other bases Social media background checks Potential liability (and measure of damages) for improper/discriminatory use of background checks Trend toward Ban the Box legislation Counseling clients about best practices in conducting/using background checks Speaker: Felicia Davis is an attorney in the Los Angeles office of Paul Hastings, LLP where she represents employers in all aspects of labor and employment law, including discrimination, retaliation, harassment, religious accommodation and wage and hour issues, in both singleplaintiff and class-action matters. She has also represented clients in disability access litigation under Title III. She has served as lead attorney on single and multi-plaintiff matters, successfully defending lawsuits alleging discrimination, retaliation, and wrongful discharge as well as collective bargaining agreement violations. She is a member of the ABA Labor and Employment Law Committee on Technology in the Practice and Workplace (Planning Committee). Ms. Davis received her B.A., cum laude, from Claremont McKenna College and her J.D. from the University of California at Los Angeles.

2 VT Bar Association Continuing Legal Education Registration Form Please complete all of the requested information, print this application, and fax with credit info or mail it with payment to: Vermont Bar Association, PO Box 100, Montpelier, VT Fax: (802) PLEASE USE ONE REGISTRATION FORM PER PERSON. First Name Middle Initial Last Name Firm/Organization Address City State ZIP Code Phone # Fax # Address The Law of Background Checks: What Clients May/May Not Check Teleseminar January 13, :00PM 2:00PM 1.0 MCLE GENERAL CREDITS VBA Members $75 Non-VBA Members $115 NO REFUNDS AFTER January 6, 2017 PAYMENT METHOD: Check enclosed (made payable to Vermont Bar Association) Amount: Credit Card (American Express, Discover, Visa or Mastercard) Credit Card # Exp. Date Cardholder:

3 Vermont Bar Association CERTIFICATE OF ATTENDANCE Please note: This form is for your records in the event you are audited Sponsor: Vermont Bar Association Date: January 13, 2017 Seminar Title: Location: Credits: Program Minutes: The Law of Background Checks: What Clients May/May Not Check Teleseminar - LIVE 1.0 MCLE General Credit 60 General Luncheon addresses, business meetings, receptions are not to be included in the computation of credit. This form denotes full attendance. If you arrive late or leave prior to the program ending time, it is your responsibility to adjust CLE hours accordingly.

4 EMPLOYEE BACKGROUND CHECKS The Top Trends To Avoid Litigation And Protect Your Business Presented by Felicia A. Davis, Esq. Paul Hastings LLP (o) (213)

5 AGENDA 2 Why you should care about employee background checks Basic obligations under the Fair Credit Reporting Act and state and local laws Review of litigation trends involving background checks Using criminal conviction information in hiring Ban the Box legislation Photo via Cartoon Resource / Shutterstock

6 WHY YOU SHOULD CARE ABOUT EMPLOYEE BACKGROUND CHECKS 3 A host of discrimination lawsuits focused on employer use of criminal history information disclosed pre-employment or discovered during a background check Sharp uptick in class action lawsuits under the Fair Credit Reporting Act ( FCRA ) The FCRA (and state law counterparts) impose STRICT technical requirements on employers to provide candidates written notice, authorization and other required forms Employers who violate the FCRA face STIFF consequences because recovery under the FCRA can include: Actual damages proved Statutory damages without having to prove actual damage of up to $1,000 per candidate/violation Punitive damages Costs of litigation plus attorney fees State and local laws are constantly changing and are not consistent 3

7 EVER-GROWING LIST OF EMPLOYERS TARGETED WITH FCRA CLASS ACTION LAWSUITS 4 A few examples of employers who have been targeted: 4

8 EVER-GROWING LIST OF EMPLOYERS TARGETED WITH FCRA CLASS ACTION LAWSUITS 5 A few examples of FCRA class action settlements: Publix Stores: $6.8 million Swift Transportation Corporation: $4.4 million Dollar General: $4 million K-Mart: $3 million Food Lion: $3 million Domino s Pizza: $2.5 million Home Depot: $1.8 million 5

9 FAIR CREDIT REPORTING ACT & RELATED COMPLIANCE REQUIREMENTS 6 6

10 LEGAL BACKGROUND 7 Federal law: Fair Credit Reporting Act ( FCRA ) Employers: Strict notice/disclosure and authorization requirements Consumer reporting agencies (aka CRAs ): Strict limitations on what CRAs can provide in their reports State and local law: Various states and cities have requirements different from, and in addition to, those under the FCRA These state laws, too, must be followed... 7

11 BASIC FCRA REQUIREMENTS 8 Notice/Disclosure Obligation: An employer must provide notice to the applicant or employee that the employer will be obtaining a consumer report and/or investigative consumer report about the applicant or employee. Authorization Obligation: An employer must obtain written authorization from an applicant or employee before the employer requests a consumer report or an investigative consumer report. Pre-Adverse/Adverse Action Notice Requirement: Employers who intend to take an adverse action based in whole, or in part, on the background check report first must provide a copy of the report and applicable summary of rights, and must allow the applicant an opportunity to dispute the accuracy or completeness of the information in the report; employers also must provide adverse action notice to the candidate after the adverse action is taken. 8

12 NOTICE / DISCLOSURE REQUIREMENT 9 FCRA: Clear and conspicuous disclosure In writing In a document that consists solely of the disclosure That a consumer report may be obtained for employment purposes States / Cities: Other notice / disclosure requirements Summaries of rights Combine or Separate?

13 AUTHORIZATION REQUIREMENT 10 FCRA: Consumer must authorize report in writing Authorization may be on disclosure Vet e-signature requirements States / Cities: Additional requirements Some states require option for employee to receive copy of report

14 PRE-ADVERSE ACTION REQUIREMENT 11 FCRA: Before taking any adverse action based in whole or in part on the report Provide consumer: Copy of the report Summary of rights under FCRA

15 PRE-ADVERSE ACTION NOTICE SAMPLE LANGUAGE 12 In connection with your application you authorized a background check A copy of your report and summary of your rights is enclosed We have not made a final decision regarding your employment The attached report, however, contains information that may disqualify you for employment in the position to which you have applied If you believe the report is inaccurate or incomplete, please contact the CRA within five business days If you have other information to share, please contact the company

16 PRE-ADVERSE ACTION REQUIREMENT 13 States / Cities: Additional pre-adverse action requirements Some require the employer to specifically identify the problematic information in the report Some require more time for the applicant to respond Some require communication of specific rights to the applicant

17 POST-ADVERSE ACTION REQUIREMENT 14 FCRA: After adverse action, applicant must receive: Notice of the adverse action The name, address and telephone number of the CRA A statement that the CRA did not make the adverse action decision and is unable to provide the specific reasons why the adverse action was taken Notice of the applicant s right to obtain a free copy of the report from the CRA within 60 days Notice of the applicant s right to dispute the accuracy or completeness of any information in the report States / Cities: Additional requirements

18 POST-ADVERSE ACTION NOTICE SAMPLE LANGUAGE 15 This letter is to notify you that we have decided to rescind our conditional offer of employment to you based in whole or in part on information contained in the pre-employment investigation performed on your background. The pre-employment background investigation report was prepared by [name and full address of background check vendor]. Their telephone number is, their fax number is, and their address is. [The background check vendor] did not make this employment decision and will be unable to explain why the decision was made. You have the right to dispute the accuracy or completeness of any information contained in your report by contacting [background check vendor]. You also have the right to obtain a free copy of your file from [background check vendor], if you request a report within sixty (60) days of this letter. We have already provided you with a copy of your consumer report and/or investigative consumer report and a summary of your rights under applicable laws. If you have any further questions, please feel free to contact me. 15

19 FCRA LITIGATION POST-SPOKEO 16 Spokeo, Inc. v. Robins, 136 S. Ct (2016) Consumer must prove concrete injury that is actual and imminent, not conjectural or hypothetical Several lawsuits dismissed Still important to be vigilant

20 DISPARATE IMPACT IN BACKGROUND CHECKS 17

21 EEOC BACKGROUND CHECK GUIDANCE 18 An employer s neutral policy (e.g., excluding applicants from employment based on certain criminal conduct) may disproportionately impact some individuals protected under Title VII, and may violate the law if not job related and consistent with business necessity (disparate impact liability). National data supports a finding that criminal record exclusions have a disparate impact based on race and national origin. The national data provides a basis for the Commission to investigate Title VII disparate impact charges challenging criminal record exclusions.

22 EEOC BACKGROUND CHECK GUIDANCE (CON T.) 19 Two circumstances in which the Commission believes employers will consistently meet the job related and consistent with business necessity defense are as follows: The employer validates the criminal conduct exclusion for the position in question in light of the Uniform Guidelines on Employee Selection Procedures (if there is data or analysis about criminal conduct as related to subsequent work performance or behaviors); or The employer develops a targeted screen considering at least the nature of the crime, the time elapsed, and the nature of the job.... provides an opportunity for an individualized assessment for those people identified by the screen, to determine if the policy as applied is job related and consistent with business necessity.

23 EEOC S EMPLOYER BEST PRACTICES 20 Eliminate policies or practices that exclude people from employment based on any criminal record. Train managers, hiring officials, and decisionmakers about Title VII and its prohibition on employment discrimination. Develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct. Identify essential job requirements and the actual circumstances under which the jobs are performed. Determine the specific offenses that may demonstrate unfitness for performing such jobs. Determine the duration of exclusions for criminal conduct based on all available evidence. Include an individualized assessment. Record the justification for the policy and procedures.

24 HOW TO ASSESS CRIMINAL HISTORY/BACKGROUND CHECK INFO 21 Key takeaways: Focus on job-relatedness Do an individualized assessment no automatic disqualification based on Yes response to criminal history question or results of background check Let s walk through these three bullets above in more detail. 21

25 IS THE CRIMINAL HISTORY INFORMATION JOB- RELATED? 22 Factors to consider: The nature and gravity of the criminal offense; The time that has passed since the offense and/or completion of the sentence; and The nature of the job duties of the position sought Questions to consider: How is the criminal conviction history relevant to concerns about risks in a particular position? How is the individual s specific criminal conviction history relevant to the successful performance of the particular job at issue? 22

26 IS THE CRIMINAL HISTORY INFORMATION JOB- RELATED? (CONT D) 23 The nature and gravity of the criminal offense Elements of the offense (e.g., deception, physical force) Harm caused (trivial vs. significant) Type of offense (1 st degree felony vs. misdemeanor) 23

27 IS THE CRIMINAL HISTORY INFORMATION JOB- RELATED? (CONT D) 24 The time that has passed since the offense and/or completion of the sentence Stale vs. recent Avoid blanket rules 24

28 IS THE CRIMINAL HISTORY INFORMATION JOB- RELATED? (CONT D) 25 The nature of the job duties of the position sought Job s duties and essential functions (e.g., operating heavy machinery, data entry, security, access to financial data) Circumstances under which the job is performed (e.g., the level of supervision, oversight, and interaction with co-workers or vulnerable individuals) Environment in which the job s duties are performed (e.g., in a car, in a warehouse, in a preschool) 25

29 CONDUCTING THE INDIVIDUALIZED ASSESSMENT 26 Give the candidate notice and fair opportunity to provide additional information that may be relevant to determining whether the candidate should be rejected in whole or in part based on his/her criminal history Must occur before any decision is made to revoke an offer At least 5 business days for candidate to respond Be mindful of state law limitations on what you can and cannot ask the candidate to discuss Be careful to treat similarly-situated individuals similarly but avoid blanket rules 26

30 CONDUCTING THE INDIVIDUALIZED ASSESSMENT (CONT D) 27 Consider any additional relevant information provided by the candidate, such as the circumstances surrounding the offense evidence that the individual has successfully performed the same type of work post-conviction at another employer length and consistency of employment history before and after the offense rehabilitation efforts, such as education and training Make a final determination based on careful consideration of all the relevant and job-related facts and circumstances presented 27

31 BAN-THE-BOX LEGISLATION 28 Prohibits asking about criminal conviction history before conditional offer Does not prevent background check but prevents early knockout At least 24 states and 150 states and counties have some form Endorsed by EEOC Many national employers removing from application

32 ALSO TO NOTE Credit checks are another hot legislative area Pre-offer questions regarding previous salary

33 CONCLUSION 30 Recap of Key Points Questions 30

34 LAWYER BIO 31 Felicia A. Davis Associate, Employment Law Department Los Angeles T (213) F (213) feliciadavis@paulhastings.com Felicia Davis is an associate in the Employment Law practice of Paul Hastings in the Los Angeles office. Ms. Davis represents employers in all aspects of labor and employment law, including discrimination, retaliation, harassment, religious accommodation, background check and wage and hour issues, in both singleplaintiff and class-action matters. She has also represented clients in disability access litigation under Title III, labor grievances and collective bargaining. Ms. Davis has served as lead attorney on single and multi-plaintiff matters, successfully defending lawsuits alleging discrimination, retaliation, and wrongful discharge as well as collective bargaining agreement violations. Ms. Davis is a member of the ABA Labor and Employment Law Committee on Technology in the Practice and Workplace (Planning Committee Co-Chair). She also serves as Co-Chair for the Western Center on Law & Poverty s Advisory Board.