Background Checks Under Fire: Policy Considerations to Avoid Discrimination Claims

Background Checks Under Fire:Employer Policy Considerations to Avoid Discrimination Claims
Mike Coffey, SPHR
PresidentImperative Information Group

Why Employers RunBackground Checks

Jeffrey Hefling

Michael Gilbert

Stephen Robertson

2009 National Retail Security Survey

The federal Fair Credit Reporting Act governs background checks.

Disclosure must be made and written authorization received.

Disclosure must be made and written authorization received.
$5.9 Million

The employer must provide information prior to making an adverse decision.

The employer must provide additional notice after taking the adverse decision.

The FCRA limits what can be reported in background checks.

Sample State Consumer Reporting Laws
Texas’ only restriction (limiting all information to seven years) was invalidated by the Fair and Accurate Credit Transactions Act (FACTA), though it is still widely quoted by attorneys and screening firms unfamiliar with the interplay of the state and federal laws.

The authorization and consent must contain a “box” for the consumer to check to receive a copy of the report.
Employers may not inquire about sealed records and applicants may state that they have no conviction

SampleState Consumer Reporting Laws
Employers may not consider non-conviction criminal information.
Convictions can only be reported for seven years (including murder, rape, arson, etc.)
Special protections for marijuana convictions and sex offenders.
Special notices to applicants when obtaining consent to procure background check.

Employers may not inquire about criminal records on the initial written application.
Time limits effective 2012:
Felonies: 10 years
Misdemeanors: 5 years
Murders, manslaughter and certain sexual offenses: no limit

Many states have passed or are considering laws to limit employers’ use of credit reports.

National Labor Relations Act
The National Labor Relations Act makes it illegal to refuse to hire a job applicant because he/she is a union member, or even a union organizer.

National Labor Relations Act
The NLRB found that an employee’s negative comments on Facebook about a supervisor constituted “protected activity.”

Title VII of the Civil Rights Act of 1964

Prohibits both intentional discrimination (“disparate treatment”) and seemingly neutral policies without business necessity that have adverse impacts on protected classes (“disparate impact” - see Griggs v. Duke Power)
Policies must have a manifest relationship to employment role with no viable alternatives to qualify as a business necessity
Heavily impacts employment qualifications, tests, and background checks

Criminal Records Brightline Rule:
Have you ever been arrested?
No
Yes (please deposit your application in the trashcan on your way out)

When reviewing criminal records, an employer must consider:
The relevance of the offense to the position, including severity and time passed since the offense
The reasonable likelihood that the person committed the offense
Disposition (final judicial outcome),though an indicator of relevance, is not the only issue!
See EEOC Policy Statement on the Issue of Conviction Records under Title VII of the Civil Rights Act of 1964 and Policy Guidance on the Consideration of Arrest Records in Employment Decisions under Title VII of the Civil Rights Act of 1964

Protected Classes under Federal Law
Age
Race
Sex
National origin
Religion
Marital status
Disability

EEOC Activity
99,922 charges filed in 2010 (20% increase since 2005)
E-RACE (Eradicating Racism and Colorism from Employment) initiative looks for systemic discrimination (disparate impact claims)
Expects 110K charges in 2011

EEOC Activity
2011 stated goals:
improve enforcement initiatives,
reduce the backlog,
target systemic litigation, and
reinvigorate Federal Sector enforcement.
July 26, 2011- hearings on the use of criminal records in employment (“a new protected class”)

EEOC v. Freeman Companies

EEOC v. Kaplan Higher Education Corp.

EEOC v. PeopleMark
$751,942

State EEO Laws
Many states have their own equal employment opportunity or human rights laws.
Washington state will not allow employers to consider any criminal records older than ten years.
6 states have “job-relatedness” requirements for the consideration of criminal records.
Texas has no such limitations.

Ban The Box Initiatives

Ban The Box Initiatives
Massachusetts: Employers may not inquire about criminal records on the initial written application.
Minnesota, Connecticut & New Mexico: Public employers may not inquire about criminal records on the initial written application.
Hawaii: Employer may inquire only after an offer of employment is made
More than 2 dozen cities have passed similar ordinances including Philadelphia (04/2011), Baltimore, Memphis, and San Francisco

Policy Considerations
Smart employers will have polices in place before background results are requested.
Always consult with your background screening partner and legal counsel before creating new policies in this area.

Policy Considerations: When to Run Background Checks?
Pre-offer
Upon contingent offer
Annually
Prior to promotion/job change
Return from extended leave
During investigations/ progressive discipline
“Rumor mill” allegations

Policy Considerations: Criminal Records
The criminal history question posed to applicants (when compliant with state law) is an employer’s least expensive integrity test:
“Please list all misdemeanor and felony criminal matters, other than minor traffic safety violations for which no arrest was made, in which you were convicted, served probation, participated in deferred adjudication or other program to avoid a conviction, or made restitution or participated in pre-trial diversion or other program to avoid prosecution.”

What is your policy about incomplete or inaccurate responses to questions on the employment application?
Are applicants who fail to answer or lie on the application eligible for hire? If not, are they eligible for future consideration?
What about pending cases? Warrants for arrest?

What kinds of criminal record sources are relevant:
County criminal records
State criminal record repositories
Multi-jurisdictional databases
Federal criminal records
International records

What jurisdictions will be searched:
County of residence
Those disclosed by the applicant (address history, previous employment locations, education locations, etc.)
Those identified in identity research
How far back? (7 years, 10 years, more?)

What names will be searched:
Current/former names disclosed by applicant.
Those identified in identity research.
What about “nicknames” (“Bob” for “Robert”)
How far back on previous names? (7 years, 10 years, all?)

What are the position-specific business risks:
Asset/information theft
Risks from unsafe/negligent conduct
Vulnerable coworkers, customers, others
Company reputation/branding risks

How might past behavior predict on-the-job behavior?
=

Position-specific (or job class-specific) criminal offense guidelines (in line with state laws):
Eligible for hire (Y)
Management review of offense, time that has passed, and applicant’s whole picture (C)
Not eligible for hire (N)

Policy Considerations: Verifications
Verification of qualifications and employment:
What to verify: all claimed by applicant or only those specifically required by the job description, regardless of applicant claims?
Ask about gaps in employment
At what point do discrepancies become falsehoods?

Policy Considerations: Credit
The use of credit is being scrutinized closely:
What job-related insight into the applicant’s ability to perform the job duties do you hope to obtain from the credit report?
What will be your objective criteria for evaluating applicants’ credit reports (employment-related reports don’t show a credit score)?
Are you willing to be the EEOC’s next test case?

Policy Considerations: Social Media
How will you avoid obtaining protected class information?
See my full social media presentation at slideshare.net/mrcoffey

Policy Considerations: Adverse Action
Document:
FCRA pre-adverse action communication on “management review” or “not eligible” scores before making a final decision.
Subsequent communications with applicant.
Reasons behind each “management review” decision.
Reason for any variations to guidelines.
FCRA post-adverse action communication.

Policy Considerations: Contingent & Contract Workforce
How do you ensure the same “standard of care” when dealing with contingent and contract workers?
Stephen Robertson

Questions?
Mike Coffey, SPHR
PresidentImperative Information Group
coffey@imperativeinfo.com

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Background Checks Under Fire: Policy Considerations to Avoid Discrimination Claims

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Background Checks Under Fire: Policy Considerations to Avoid Discrimination Claims Presentation Transcript