Based on recent pronouncements by the U.S. Equal Employment Opportunity Commission (“EEOC”), businesses that conduct criminal background checks do so at their own risk. Companies that either ask job applicants if they have been convicted of a felony or check criminal histories expose themselves to potential discrimination lawsuits. Under the EEOC’s recent Enforcement Guidance (“Guidance”), while conducting criminal background checks is not, by itself, unlawful, the use of criminal histories can be discrimina-tory in its impact on minorities and can result in liability for an employer if the employer cannot show a “business necessity” for rejecting an applicant based upon the applicant’s criminal past.

1. Sensible Solutions March, 2013
Volume 11, No. 1
Schoenberg Finkel Newman & Rosenberg, LLC (312) 648-2300
This Newsletter is deemed to
be advertising material by
EEOC Guidance on
the Illinois Supreme Court Criminal Background Checks
B
Special Interest Articles ased on recent pronouncements by the ex-offenders a chance during job interviews
U.S. Equal Employment Opportunity to explain conviction circumstances as well
EEOC GUIDANCE ON Commission (“EEOC”), businesses that as rehabilitation efforts before making a final
CRIMINAL BACKGROUND CHECKS conduct criminal background checks decision.
By Norman T. Finkel do so at their own risk. Companies that either
ask job applicants if they have been con- Businesses still considering conducting crimi-
WHEN IS A CONTRACT TERMINABLE? victed of a felony or check criminal histories nal background checks should consider
By David S. Makarski expose themselves to potential discrimination using the following guidelines:
lawsuits. Under the EEOC’s recent Enforce-
About Our Law Firm ment Guidance (“Guidance”), while con-  On employment applications,
ducting criminal background checks is not, by eliminate the question: “Have you
Our law firm features seasoned, dedicated
itself, unlawful, the use of criminal histories can ever been convicted of a felony?”
professionals who study our clients' industries
as well as their legal issues. We value our cli- be discriminatory in its impact on minorities
ent relationships, keep our clients fully in- and can result in liability for an employer if the  Review background screening
formed, and respect the preciousness of time employer cannot show a “business necessity” policies and practices, including
and business resources. for rejecting an applicant based upon the those that deny employment
LEGAL PRACTICE AREAS: applicant’s criminal past. based on criminal convictions.
BUSINESS TRANSACTIONS. The Firm targets its The use of criminal conviction records by em-  Assess job candidates with a crimi-
diverse legal services to a wide variety of ployers has generally been considered ap- nal history and consider how long
businesses. Its business practice includes the propriate. In fact, employers in some indus- ago the crime was committed, the
formation, buying, selling and financing of tries (such as daycare centers) are required to severity of the crime and whether
privately held businesses, business contracts,
loan agreements, employment contracts,
exclude applicants based on certain types of the crime would have anything to
retirement plans, private stock offers, share- convictions. However, in more recent years, do with the job in question.
holders agreements, and tax matters. the routine use of conviction records has be-
BUSINESS LITIGATION. The Firm’s litigation at- come more suspect, and companies have  Give the job applicant a chance
torneys prosecute and defend commercial, been put on notice that they could be vul- to explain himself, and take into
business and employment disputes in the nerable to pay damages to individuals whose consideration positive references
federal and state trial and appellate courts,
criminal histories have been used against and rehabilitation efforts.
and in various alternative dispute resolution
venues. REAL ESTATE and REAL ESTATE
them. The EEOC has found that significantly
TAXATION. The Firm represents clients in real more African-Americans and Hispanics, espe-  Record and document the busi-
estate purchase and sale contracts, lease cially men, are incarcerated, so they are dis- ness necessity for employment de-
matters, and other real estate transactions. proportionately affected when companies cisions for individuals with criminal
The Firm handles real estate tax property blanketly do not hire ex-offenders. This “im- backgrounds.
assessment appeals at every level, including pact” on minorities has led to an increasing
the Assessor, the Board of Review, the State of
number of discrimination lawsuits based on an  Train recruiters, job interviewers
Illinois Property Tax Appeal Board, and law-
suits in the Circuit Court. ESTATE PLANNING.
employer’s use of a person’s criminal back- and decision-makers on the Guid-
The Firm counsels its individual clients on mat- ground. ance and on discrimination laws
ters involving tax, estate planning and pro- and how they relate to criminal his-
bate, and the transfer of wealth and business The EEOC’s Guidance does not prohibit an tory discrimination.
interests. TRADE ASSOCIATIONS. The Firm has a employer from asking about criminal con-
special relationship with trade associations victions in employment applications, but  Be aware of state law prohibitions
and independent sales representative firms, a
does recommend that employers refrain regarding arrest and conviction
product of its long-established commitment
to these industries.
from asking such questions. The Guidance records in those states where the
also recommends that when an employer company does business, and de-
Schoenberg, Finkel, Newman does ask about an applicant’s criminal his- termine how they may interact
tory, the employer ask only applicants who with the EEOC’s Guidance.
& Rosenberg, LLC are applying for positions where criminal
222 S. Riverside Plaza history may be relevant and that the ques- When deciding whether or not to conduct a
Suite 2100 tions be limited to those convictions that criminal background check, an employer
have a direct connection to job duties. The should balance the risk of being sued for
Chicago, IL 60606 EEOC advises companies to consider three discrimination with the risk of criminal con-
Phone: (312) 648-2300 things: How long ago the crime was com- duct by a future employee that may impact
mitted, the nature or gravity of the crime its business, as well as the possibility of hav-
Fax: (312) 648-1212
and how the crime might relate to the job ing to defend a negligent hiring suit due to
Website: www.sfnr.com held or being sought. The agency also employee criminal conduct.
strongly recommends that companies give

2. 2 SENSIBLE SOLUTIONS
March, 2013 WHEN IS A CONTRACT TERMINABLE?
Volume 11, No. 1
W
Schoenberg, Finkel, Newman & ith the possible exception of a The contract should also specify a particu-
Rosenberg, LLC provides a broad ar- diamond, nothing lasts forever. lar method by which such notice must be
ray of legal services with respect to This is especially true with con- delivered to the other party, and when
employment law matters, including tracts and contractual relation- such notice will become effective. For ex-
ships, even when the parties do not specify ample, the contract may specify that “Any
drafting, reviewing and negotiating
the length of time for which their contrac- notice given by one party hereunder must
employment contracts, independent be sent to the other by certified mail, return
tual relationship will last. As the Illinois Su-
contractor agreements, employment preme Court has said: receipt requested, and such notice shall be
policies, confidentiality and non- deemed effective upon receipt by the
compete agreements, and handles a “Forever” is a long time and few party to whom it is addressed.” By provid-
wide variety of employment law liti- commercial concerns remain vi- ing a specific method by which the con-
gation matters. able for even a decade. Ad- tract may be terminated, the parties can
vances in technology, changes in avoid any problems or questions if and
consumer taste and competition when one (or both) determines that it wants
The Firm’s practice in the qualified
mean that once profitable busi- to put the contractual relationship to an
retirement plan area includes the end.
nesses perish regularly. Today’s
design, creation, administration, and fashion will tomorrow or the next
termination of retirement plans, in- day inevitably fall the way of the Parties should also be aware, however, that
cluding employee stock ownership buggy whip, the eight-track tape a contract with no definite term can con-
plans. The Firm’s practice also in- and the leisure suit. Men and tain provisions which take it out of the “at-
cludes non-qualified deferred com- women of commerce know this in- will” universe, by setting forth specific trig-
pensation arrangements, including tuitively and achieve the flexibility gers which will allow for termination. This
needed to respond to market generally occurs when a contract specifies
“top-hat” plans, stock options, stock
demands by entering into agree- that it is terminable only for cause or upon
appreciation rights, and advice on the happening of some specified event.
ments terminable at will.
the tax issues pertaining to those ar-
rangements. Jespersen v. Minnesota Mining & Manufac- Such provisions generally have been strictly
turing Co., 283 Ill.2d 290, 295 (1998). So, no construed by courts. For example, a con-
The Firm’s corporate practice en- contract will last forever. But it is important tract of indefinite duration which stated that
compasses the full range of legal that parties know, before they enter into a one of the parties “may” terminate it for
matters involving the formation and contract without a specified, definite term specified reasons was found to be an at-will
(e.g., one year), how and under what cir- contract. Jespersen v. Minnesota Mining &
operation of the various types of
cumstances that contract may be termi- Manufacturing Co., 183 Ill.2d 298 (1998). The
business entities, such as limited liabil- Court found that, by using the word “may,”
nated by either of them.
ity companies, corporations, not-for- the termination provision was “permissive
profit corporations, and partnerships, In Illinois, as in most states, the general rule is and equivocal,” and a clear inference ex-
including: entity selection, business that contracts that do not specify the length isted that the specified grounds for which
formation, financing, contracts and of the parties’ relationship are “at-will” con- the contract “may” be terminated were not
leases, shareholder agreements, se- tracts. In other words, either party may ter- intended by the parties to be the sole or
curities, licensing, trademarks, copy- minate the contract at any time, for any exclusive basis for termination.
rights, taxation, business negotiations, reason (or no reason at all). This is true,
generally, even if the contract states some- To the extent, therefore, that the parties wish
and international transactions. to have an indefinite-term contract that can
thing to the effect that it shall “continue in
force indefinitely.” However, good business only be terminated for cause or when a
practices dictate that, if the parties intend specified event occurs, they should state
for a contract to be terminable “at will,” the that the contract may only be terminated
contract should so specify. For example, for those reasons, and not cloak such a ter-
the contract could state that “This contract mination provision in permissive or ambigu-
will remain in force until terminated by one ous terms.
Schoenberg, Finkel, Newman
of the parties hereto.”
& Rosenberg, LLC Certainty is important, particularly when
222 S. Riverside Plaza To avoid any questions about the parties’ contracts are involved. Though many con-
intent, an “at-will” contract should provide a tracts run for a specified term, not all do.
Suite 2100 specific method for its termination, as well as Therefore, before a party enters into a con-
Chicago, IL 60606 a specified notice period before the termi- tract of indefinite length, it should make sure
nation becomes effective. For example, a that it knows how and when the contract
Phone: (312) 648-2300 may be terminated by either party. If a
contract could state that “This contract may
Fax: (312) 648-1212 be terminated by either party by giving the party is not clear as to the potential triggers
Website: www.sfnr.com other party thirty (30) days’ written notice of for termination of a contract, it should con-
its intent to terminate.” sult its attorney to avoid surprises that might
arise down the road.
This newsletter is not intended to be legal or tax advice and is not a substitute for obtaining legal or tax advice.