A Triple Threat to Your Employment Background Screening Program
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A Triple Threat to Your Employment Background Screening Program

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How is your background screening program holding up against the “Triple Threat” of regulation, legislation, and litigation?...

How is your background screening program holding up against the “Triple Threat” of regulation, legislation, and litigation?

This presentation discusses the triple threat of EEOC and FTC regulation, state and federal legislation, and private party litigation in the context of corporate employment background screening programs.

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    A Triple Threat to Your Employment Background Screening Program A Triple Threat to Your Employment Background Screening Program Presentation Transcript

    • REGULATION, LEGISLATION & LITIGATION A Triple Threat to Your Employment Background Screening Program PRESENTED BY: VINCE PASCARELLA, ESQ., SPHR, FCRAA VICE PRESIDENT (540) 338-7151 www.lowersriskgroup.com
    • Disclaimer This presentation and the information contained herein are intended as general educational information only and are not to be construed as legal advise or legal opinion. (540) 338-7151 www.lowersriskgroup.com
    • About Vince Pascarella • Attorney, SPHR, FCRAA • Employment screening, risk management, loss prevention industry executive since 1998 • Former general counsel (in-house) • 2-term Co-Chair NAPBS Best Practices Committee • JD, University of Colorado Law School • BA, magna cum laude, Long Island University http://www.linkedin.com/in/vincepascarella (540) 338-7151 www.lowersriskgroup.com
    • Presentation Overview • Regulatory Landscape Relating to Employment Screening • Legislative Landscape Relating to Employment Screening • Litigation and Class Action Lawsuits Relating to Employment Screening (540) 338-7151 www.lowersriskgroup.com
    • Regulatory Landscape Overview • Why All the Attention? – Cultural, Economic, and Demographic Workplace Shifts – Maturing Industry, Ubiquitous Use of Employment Screening • Regulatory and Legislative Landscape Relating to Employment Screening (540) 338-7151 www.lowersriskgroup.com
    • Cultural, Economic, andDemographic Workplace Shifts • Globalization • US - manufacturing to service economy • “The Great Recession” • Sustained high unemployment • The long-term unemployed (540) 338-7151 www.lowersriskgroup.com
    • Cultural, Economic, andDemographic Workplace Shifts > 12.7m > 5m > 8% On average, or 42% out of work for 6+ months. unemployment rate unemployed workers since February 2009. Nearly 1 in 3 of those out of work for 39.7 out of work for more weeks, or roughly 9 than 1 year. months. – Source: US DOL BLS (540) 338-7151 www.lowersriskgroup.com
    • Cultural, Economic, andDemographic Workplace Shifts• Increased rates of arrest, conviction, and incarceration• Racial arrest and conviction disparity• Criminal history as barrier to employment (540) 338-7151 www.lowersriskgroup.com
    • Cultural, Economic, andDemographic Workplace Shifts• 1991 - 1.8% had served prison time• 2007 - 3.2%, or 1 in 31• 6.6% of population born in 2001 will serve prison time in their lifetimes• 92 million Americans have criminal record Source: US DOJ BJS (540) 338-7151 www.lowersriskgroup.com
    • Cultural, Economic, andDemographic Workplace Shifts• African Americans and Hispanics arrested 2-3x their proportion in the general population• Likelihood of going to prison in lifetime 28% black males 16% Hispanic males 4% white males Source: US DOJ BJS (540) 338-7151 www.lowersriskgroup.com
    • Maturing Industry, Ubiquitous Useof Employment Screening• 25-35 year old industry Employers Have• Est. $2B industry (KPMG) Embraced Background Checks• Significant consolidation• Increasingly a target for plaintiff’s bar (Part 2)• Significant growth in employment screening• % of employers doing background checks – 1996 – 66% – 2010 – 92% 1996 2010 Source: SHRM (540) 338-7151 www.lowersriskgroup.com
    • Regulatory Landscape Overview• Regulatory Landscape Relating to Employment Screening – Federal FCRA (FTC/CFPB) and state equivalents – Federal Title VII (EEOC) and state equivalents EEOC FCRA State Equivalents (540) 338-7151 www.lowersriskgroup.com
    • Fair Credit Report Act (FCRA)• Employer FCRA and EEO Compliance Certification to CRA• Applicant Disclosure and Authorization Requirements• Adverse Action Requirements• Social Media Background Screening (540) 338-7151 www.lowersriskgroup.com
    • FCRA• Employer FCRA and EEO Compliance Certification to CRA – FCRA 604(b)(1)(A) • Certify FCRA Compliance • Certify EEO Compliance – Typically in CRA Service Agreement FPO (540) 338-7151 www.lowersriskgroup.com
    • FCRA• Applicant Disclosure and Authorization Requirements – FCRA 604(b)(2)(A) • Prior to ordering background check • Disclosure and Authorization • Disclosure stand alone document/screen – can be combined with Authorization, only FPO – Sample from CRA (540) 338-7151 www.lowersriskgroup.com
    • FCRA• Adverse Action Requirements – FCRA 604(b)(3)(A) – FCRA 615(a) – Adverse Action 2-Step – Can be Outsourced to CRA (540) 338-7151 www.lowersriskgroup.com
    • FCRA• FTC Adverse Action Enforcement – Imperial Palace (2004) • $325K – Quality Terminal Services/Rail Terminal Services (2009) • $77K (540) 338-7151 www.lowersriskgroup.com
    • FCRA• Social Media Background Screening – 2011 FTC Investigation/Letter – FCRA applicable if done by 3rd party (e.g., CRA) – And all FCRA requirements would apply, including - • Employer certification of EEO compliance • Employer Authorization/Disclosure prior to background check • Employer Adverse Action • CRA Dispute reinvestigation • CRA maximum possible accuracy (540) 338-7151 www.lowersriskgroup.com
    • FCRA• Social Media Background Screening – Hot Topic in US Congress and State Legislatures (Part 2) (540) 338-7151 www.lowersriskgroup.com
    • Title VII of the Civil Rights Act of 1964• Prohibits employment discrimination based on race, color, religion, sex, national origin• Private employers, and federal, state, and local governments (540) 338-7151 www.lowersriskgroup.com
    • Title VII• EEOC – E-RACE Initiative, Systemic Initiative, and Disparate Impact Discrimination – Use of Credit Reports in Hiring – Guidance on the Consideration or Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (540) 338-7151 www.lowersriskgroup.com
    • EEOC• E-RACE Initiative, Systemic Initiative, and Disparate Impact Discrimination – Eradicating Racism and Colorism in Employment • 2006/2007 – Systemic Initiative • Includes evaluating hiring processes, selection, and testing practices (540) 338-7151 www.lowersriskgroup.com
    • EEOC• Use of Credit Reports in Hiring – Current Guidance in review – Current Guidance presumes disparate impact with use of credit report in hiring – Freeman lawsuit (2009) – Kaplan lawsuit (2010) (540) 338-7151 www.lowersriskgroup.com
    • EEOC• Guidance on the Consideration or Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (“EEOC 2012 Guidance”) (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• April 25, 2012 – New Guidance Issued – Consolidates and “updates” 1987/1990 Guidance – Effective immediately upon issue – Comply now (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• Arrests versus convictions• Disparate treatment• Disparate impact• Effect on conflicting Federal and state law• EEOC’s Best Practices for Employers (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• Arrests versus convictions – Use of arrest is per se disparate impact – Not job related or consistent with business necessity ? Arrest Conviction – Burden shift – Can base decision on underlying conduct • Investigate • Talk to individual (individualized assessment) – Pending cases not distinguished (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• Disparate treatment – Treat criminal history differently based on race or national origin of applicant/employee (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• Disparate impact – Neutral policy with disproportional impact based on race and national origin – National data supports basis for investigation – Guidance presumes disparate impact unless employer can show evidence to contrary (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• Disparate impact – Job related, and – Consistent with business necessity – No less discriminatorily impactful alternative – Green v. Missouri Pacific Railroad, 523F.2d 1290 (8th Cir., 1975) • Nature and gravity of offense • Time since conviction/completion of sentence • Nature of job sought or held (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• Green factors – with new Guidance details – Nature and gravity of offense • Harm caused • Legal elements of crime • Classification (F/M) – Time since conviction/completion of sentence • Recidivism evaluation – Nature of job sought or held • Not just job title • Specific duties, essential functions, environment (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• Job related and consistent with business necessity met by - – Validation, or – Targeted screen with individualized assessment• No bright line rules (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• Validation – Academic studies and expert testimony – Correlating specific past criminal conduct to position- specific subsequent workplace performance or behavior – Uniform Guidelines on Employee Selection Procedures – Safety, security, and risk – Recidivism (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• Targeted screen – Green factors • Nature and gravity of offense • Time since conviction/completion of sentence • Nature of job sought or held (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• Individualized assessment – Case-by-case, applicant-by-applicant analysis – Whether the policy as applied to the individual, is job related and consistent with business necessity (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• Individualized assessment – Not required by Title VII – Recommended by EEOC – Criminal offense must have “demonstrably tight nexus to the position in question” to circumvent individualized assessment (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• Individualized assessment – Facts/circumstances surrounding – Number of convictions – Age at time of offense or release – Rehabilitation – Bonding – Length/consistency of employment before and after – Evidence same type of work post conviction without evidence of criminal behavior (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• No bright line rules – No absolute bar – “Ban the box” – recommended by EEOC States with localities that have banned the box (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• Federal law generally withstands Guidance• State and local law preempted – Compliance problem for employers in state regulated industries • e.g., law enforcement, fire and emergency services, schools, healthcare, eldercare, etc. (540) 338-7151 www.lowersriskgroup.com
    • EEOC 2012 Guidance• EEOC’s Best Practices for Employers – No bright line policies – Narrowly tailored written policy on use of criminal records, including matrices – Document justification for policy and procedures, consultation, and research – Train hiring staff on Title VII discrimination generally, and implementation of policy and procedure with regard to Title VII requirements – Inquire only about past convictions that are job-related and consistent with business necessity – Maintain confidentiality of criminal record information (540) 338-7151 www.lowersriskgroup.com
    • Recent EEOC Title VII Investigations• Pepsi settlement (2012) – $3.13M use of criminal records in hiring• Freeman lawsuit (2009) – Pending in MD – Use of credit reports and criminal records in hiring• Peoplemark lawsuit (2011) – EEOC ordered to pay nearly $800K (540) 338-7151 www.lowersriskgroup.com
    • Legislative Landscape Relating toEmployment Screening State Legislatures US Congress Local Government (540) 338-7151 www.lowersriskgroup.com
    • Legislative Landscape Overview Ban the Box Social Media Background Screening Title VII Discrimination – Use of Credit Reports in Hiring – Use of Criminal Records in Hiring (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Ban the Box – Job application questions about criminal conduct (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Ban the Box – States – Passed • CA, CT, MN, NM • HI, MA – Proposed • MD, NE, NJ, RI (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Ban the Box – Cities & Counties • CA - Alameda County, Berkeley, Oakland, San Francisco • CT - Bridgeport, Hartford, New Haven, Norwich • FL - Jacksonville • IL - Chicago • MA - Boston, Cambridge, Worcester • MD - Baltimore • MI - Detroit, Kalamazoo, Muskegon County • MN - Minneapolis, St. Paul • NC - Cumberland County • NJ - Atlantic City (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Ban the Box – Cities & Counties • NY - New York • OH - Cincinnati, Cleveland • OR - Multnomah County • PA - Philadelphia • RI - Providence • TN - Memphis • TX - Austin, Travis County • WA - Seattle • Washington, DC (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Related to Ban the Box – State and local prohibitions/restrictions on asking about non- convictions and certain types of conviction • e.g., CA Labor Code Section 432.7 and 432.8 (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Social Media Background Screening – Public vs. private – Passwords and pretexting – Violation of Terms of Service, Terms of Use, etc. (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Social Media Background Screening – Legal off duty conduct – Discrimination – Identity and Accuracy (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Social Media Background Screening – 37% of employers use social media to research candidates • 65% - Facebook • 63% - LinkedIn • 16% - Twitter Source: CareerBuilder Survey (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Social Media Background Screening – Why employers use social media in hiring • 65% - whether presents professionally • 51% - whether good fit for the company culture • 45% - research qualifications • 35% - research well-roundedness • 12% - research reasons not to hire Source: CareerBuilder Survey (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Social Media Background Screening – States • Passed – MD • User Name and Password Privacy and Exclusion Act • Signed May 2, 2012; Effective October 1, 2012 • Proposed – CA, DE, IL*, MA, MI, MN, MO, NJ, NY, OH, PA, SC, WA *awaiting Governor’s signature (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Social Media Background Screening – US Congress • Stored Communications Act, and Computer Fraud and Abuse Act – Senators requested US DOJ and EEOC investigation of possible employer violations (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Social Media Background Screening – US Congress • House Bill - – Social Networking Online Protection Act (SNOPA) • Illegal for employer to require applicants or employees to supply passwords to social media accounts (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Social Media Background Screening – US Congress • Senate Bill - – Password Protection Act • Extends protection to smart phones, private e-mail accounts and all information contained on an employee’s personal computer (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Title VII - Use of Credit Reports in Hiring – States • Passed – CA, CT, HI, IL, MD, OR, VT*, WA *effective July 1, 2012 • Proposed – DC, GA, IN, IA, KS, MA, MI, MN, MO, NE, NJ, NY, OH, OK, PA, RI • Failed – CO, FL, WI (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Title VII - Use of Credit Reports in Hiring – US Congress • Equal Employment for All Act – A prospective or current employer may not use a consumer credit report for employment purposes or for making an adverse employment action (540) 338-7151 www.lowersriskgroup.com
    • State Legislatures & US Congress Title VII - Use of Credit Reports in Hiring – US Congress • Equal Employment for All Act – Exceptions: • national security • FDIC clearance • state or local government agency requirement • supervisory, managerial, professional, or executive position at a financial institution • otherwise required by law (540) 338-7151 www.lowersriskgroup.com
    • Litigation and Class Action Lawsuits Title VII Discrimination • Use of Credit Reports in Hiring • Use of Criminal Records in Hiring FCRA Violations • Applicant Disclosure and Authorization Requirements • Adverse Action Requirements Negligent Hiring and Negligent Retention (540) 338-7151 www.lowersriskgroup.com
    • Litigation and Class Action Lawsuits Title VII Discrimination • Use of Credit Reports in Hiring – University of Miami School of Medicine Disparate Impact Class Action (2010) • senior medical collector applicant, offer revocation (540) 338-7151 www.lowersriskgroup.com
    • Litigation and Class Action Lawsuits Title VII Discrimination • Use of Criminal Records in Hiring – Accenture Disparate Impact Class Action (2010) • 10 year old vehicular homicide • Offer revocation, termination as contract worker – US Census Bureau Disparate Impact Class Action (2010) (540) 338-7151 www.lowersriskgroup.com
    • Litigation and Class Action Lawsuits FCRA Violations • Capital One Class Action (2011, MD) – Applicant Disclosure and Authorization Requirements – Adverse Action Requirements • Domino’s Pizza Class Action (2012, MD) – Applicant Disclosure and Authorization Requirements – Adverse Action Requirements • First Student/First Transit Class Action (2009, IL) – Adverse Action Requirements – $5,900,000 Settlement (Pending Approval) (540) 338-7151 www.lowersriskgroup.com
    • Litigation and Class Action Lawsuits FCRA Violations • If “wilful” violation, additional statutory punitive penalty of up to $1000 per violation – Reckless disregard enough to show wilfulness • Safeco v. Burr, 127 S.Ct. 2201 (2007) – More than negligence but less than actual knowledge (540) 338-7151 www.lowersriskgroup.com
    • Litigation and Class Action Lawsuits Negligent Hiring and Negligent Retention • Hiring or retaining an employee where: – knew, or should have known, employee was dangerous, unfit, or not qualified, and – foreseeable that injury or harm could result (540) 338-7151 www.lowersriskgroup.com
    • Litigation and Class Action Lawsuits Negligent Hiring and Negligent Retention • Heyl Logistics, LLC – Truck driver coming off a crystal methamphetamine high and falling asleep at the wheel killed other driver – Transportation broker, employer, and driver found liable – $5,200,000 jury verdict (540) 338-7151 www.lowersriskgroup.com
    • Litigation and Class Action Lawsuits Negligent Hiring and Negligent Retention • The Nurse Connection Inc. (2002) – home health care worker murdered patient – prior burglary conviction – prior for-cause termination – $40,000,000 payout (540) 338-7151 www.lowersriskgroup.com
    • Litigation and Class Action Lawsuits Negligent Hiring and Negligent Retention • Average settlement - $1,000,000 Source: Human Resources Management • Employers lose 79% of negligent hiring cases Source: Fortune (540) 338-7151 www.lowersriskgroup.com
    • About Lowers Risk Group Comprehensive enterprise risk management solutions. • High-risk, highly-regulated environments • Organizations that value risk mitigation –human capital risk management –specialized industry enterprise risk management Protect people, brands, and profits from avoidable loss and harm. www.lowersriskgroup.com (540) 338-7151 www.lowersriskgroup.com
    • About Proforma Screening Solutions Comprehensive employment screening services • Background checks • Drug tests – drive compliance – enhance safety – boost performance www.proformascreening.com (540) 338-7151 www.lowersriskgroup.com
    • Questions or Feedback? Vince Pascarella, Esq. SPHR, FCRAA vpascarella@lowersriskgroup.com 540.338.7151 Ext.1131Mention this presentation for a free copy of our Employment Screening Survival Kit! (540) 338-7151 www.lowersriskgroup.com