Legal Risks involved in
Background Checks &
Other
Pre-Hire Inquiries
Presented By: Joseph M. Gagliardo, Managing Partner
J...
Today’s Program
• Practical considerations arising out of
these LEGAL TRENDS related to
Background Investigations.
• Do th...
What do others do?
• Recent statistics show that 92% of all
employers conduct SOME form of a
background investigation for ...
Why Reconsider Now?
• Costs involved in testing;
• Legal risks of improper inquiries;
• Even lawful inquiries can have Dis...
Initial Considerations:
Q: Is there a JOB RELATED reason
to obtain this information?
Q: Do I have a BUSINESS NEED to
obtai...
If “YES” then ask:
Q: Am I confident that the individuals on
my team who gather this information are
properly trained to o...
An OPTION to consider…
Q: Should/can we conduct Background
Checks for some but not all jobs?
A: YES!
Be consistent; treat ...
What questions can I ask?
The Illinois Human Rights Act has long
prohibited employers and staffing/recruiting firms
from m...
Outside the IHRA Prohibition
The IHRA does not prevent or limit
employers or staffing firms from obtaining
or relying on i...
Employment Applications
Drafting Tips based on the CURRENT laws:
1. Delete inquiries about ARREST RECORD alone.
2. Notify ...
Change is Coming…
Governor Quinn has stated that he WILL
SIGN into law:
The Illinois “Job Opportunities for Qualified
Appl...
“Ban the Box”
The law will bar employers and employment agencies from soliciting
criminal history information from an appl...
EEOC REGULATIONS
• The EEOC has taken the position that
employers violate Title VII when they have a
“blanket” prohibition...
THE EXCEPTIONS
SOME EXCEPTIONS APPLY:
• Jobs that involve dealings with
vulnerable citizens: children & elderly.
• Nurses ...
“INDIVIDUALIZED ASSESSMENT”
• The “GREEN FACTORS” include consideration of
the following factors:
(1) the nature or gravit...
RELEVANT FACTS ABOUT
NATURE OF CONVICTION
• Amount of on-site supervision;
• Amount of Contact with the public or
other em...
Retain the Info Gathered
1. Criminal history information relied on for
hiring decisions is part of an employee’s
“personne...
“Best Practices”
• ASG Staffing and Azimuth maintain a published policy
and training program to educate their recruiters o...
The Decision maker:
Consider a Designated Decision maker
who will review all recommendations about
the disqualification of...
MYTH #1 – not so fast…
• Employers cannot insulate themselves
from liability by suggesting that their
staffing firm engage...
MYTH #2:
Employers CANNOT insulate themselves from
the legal risks related to background
investigations by using a Third P...
THE FAIR CREDIT REPORTING ACT
If an employer uses a third party vendor to conduct a
background check on an applicant or em...
WHAT’S THE PENALTY?
• Employers have a variety of other obligations under
the FCRA before and after taking any adverse
emp...
FCRA Settlements
• Pitt v. K-Mart Corp., Case No. 11-CV-00697
(E.D. Va. May 2013): $3 million to resolve a
class action se...
Scary Stuff!
 Singleton v. Domino’s Pizza, LLC, Case No. 11-CV-01823 (D. Md. Oct 2,
2013): $2.5 million to resolve a clas...
Ouch.. that stings!
 Roe v. Intellicorp Records, Inc., Case No. 12-CV-288 (N.D. Ohio Nov.
2013): $18.6 million to resolve...
The Good Guys
• Before using a 3d party vendor, be sure that
they are reputable and use the proper FCRA
forms.
• Legal rev...
RECENT CREDIT CHECK LAWS
• Credit checks for hiring and employment considerations have
come under attack in recent years, ...
Prohibited Inquiries about
Credit History
• Under Illinois law, for example, an employer covered
under the Act is prohibit...
Exceptions to the Law
Employees in the following positions are NOT covered by this law:
(1) the duties include custody of ...
What would you do?
The owner of the business tells you she doesn’t
care about the law….she will NEVER accept a
temporary w...
As if that were not enough…
ADDITIONAL LEGAL AND
PRACTICAL CONSIDERATIONS
DURING THE HIRING &
SELECTION PROCESS
32
On Line Applications
• ADA reasonable accommodations (disabled
employees must be offered effective way to
participate in t...
Recruiting with Social Media
The #1 most frequently used recruiting tool for
seeking candidates is LinkedIn. Consider:
• A...
Privacy Rights
The “Illinois Privacy in the Workplace Act” makes it
unlawful to refuse to hire, discharge or otherwise
dis...
Workers’ Compensation History
This same Illinois privacy law makes it unlawful for
employers to inquire in any manner of a...
Limited access to Sites
Consider a Designated Social Media
“SCREENER” for recruiting purposes.
The screener should not par...
Expansion of Privacy Law:
PASSWORD PROTECTION
• Since 2012 Illinois employers have been limited in
their ability to obtain...
OTHER TRACKING RISKS
• Do you keep track of size, weight, strength,
appearance factors when applicants are being
considere...
COMPASSIONATE USE OF MEDICAL
CANNABIS PILOT PROGRAM ACT
• In January 2014, Illinois became the 20th state
to legalize medi...
EMPLOYER RIGHTS
• An employer may discipline registered qualifying
patients who demonstrate “specific articulable
symptoms...
EMPLOYER RIGHTS CONT’D
• Employers may continue to enforce their “ZERO
TOLERANCE” policies against use, possession or
impa...
WORKPLACE BULLYING
For NOW:
• Unless the conduct is based on a legally “protected
category” not a violation of the anti-di...
CONSIDER AN HR AUDIT
AN HR AUDIT can include (among other things):
– Review of application forms
– Compliance with posting...
QUESTIONS?
Thank you for your participation today.
45
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EEOC FCRA When Working With Temp or Contract Employees

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Great information from our June 12th 2014 Seminar from Jill P. O' Brian, Partner Laner Muchin

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EEOC FCRA When Working With Temp or Contract Employees

  1. 1. Legal Risks involved in Background Checks & Other Pre-Hire Inquiries Presented By: Joseph M. Gagliardo, Managing Partner Jill P. O’Brien, Partner Laner Muchin 515 North State Street, Suite 2800 Chicago, IL 60654 (312) 467-9800 jgagliardo@lanermuchin.com jobrien@lanermuchin.com www.lanermuchin.com
  2. 2. Today’s Program • Practical considerations arising out of these LEGAL TRENDS related to Background Investigations. • Do these Laws even apply to my organization? • Should I conduct Background Checks in the First Place? 1
  3. 3. What do others do? • Recent statistics show that 92% of all employers conduct SOME form of a background investigation for all newly hired employees. • Many of our clients are RECONSIDERING their Practices. • Every employer is encouraged to consider the Pros/Cons involved? 2
  4. 4. Why Reconsider Now? • Costs involved in testing; • Legal risks of improper inquiries; • Even lawful inquiries can have Disparate Impact on protected classes; • Delay in putting new employees to work; • Privacy concerns with retention and/or misuse of the information obtained. 3
  5. 5. Initial Considerations: Q: Is there a JOB RELATED reason to obtain this information? Q: Do I have a BUSINESS NEED to obtain the information? 4
  6. 6. If “YES” then ask: Q: Am I confident that the individuals on my team who gather this information are properly trained to obtain and use it? Q: Do I have the proper tools in place to track criminal history or other vulnerable information that I obtain? 5
  7. 7. An OPTION to consider… Q: Should/can we conduct Background Checks for some but not all jobs? A: YES! Be consistent; treat SIMILARLY SITUATED EMPLOYEES similarly 6
  8. 8. What questions can I ask? The Illinois Human Rights Act has long prohibited employers and staffing/recruiting firms from making an INQUIRY or EMPLOYMENT DECISION based on: – The FACT of an ARREST RECORD; or – a CRIMINAL HISTORY RECORD ordered EXPUNGED, SEALED OR IMPOUNDED 7
  9. 9. Outside the IHRA Prohibition The IHRA does not prevent or limit employers or staffing firms from obtaining or relying on information which indicates that the person ACTUALLY ENGAGED IN THE CONDUCT for which the applicant was arrested. Ex: admissions, witness statements, videos, photos, etc. 8
  10. 10. Employment Applications Drafting Tips based on the CURRENT laws: 1. Delete inquiries about ARREST RECORD alone. 2. Notify the candidate that he/she should NOT disclose information about a conviction that has been EXPUNGED or SEALED. 3. INCLUDE a DISCLAIMER MESSAGE: “A record of a conviction alone will not automatically disqualify any candidate from employment; we other job related circumstances surrounding the conviction.” 4. Be wary of “canned” applications from the internet. 9
  11. 11. Change is Coming… Governor Quinn has stated that he WILL SIGN into law: The Illinois “Job Opportunities for Qualified Applicants Act” applicable to employers AND employment agencies with 15 or more employees. 10
  12. 12. “Ban the Box” The law will bar employers and employment agencies from soliciting criminal history information from an applicant until (with few exceptions): (a) AFTER the employer has made a determination that the applicant is qualified for the position and notified the applicant he/she was selected for a job interview, or (b) If there is no interview, AFTER the employer has made a conditional offer of employment to the applicant. Anticipated effective date: January 1, 2015 11
  13. 13. EEOC REGULATIONS • The EEOC has taken the position that employers violate Title VII when they have a “blanket” prohibition of hiring applicants with criminal histories (few exceptions by industry). • To comply: employers must conduct an individualized case-by-case assessment to determine if the conviction is JOB RELATED AND CONSISTENT WITH BUSINESS NEED. 12
  14. 14. THE EXCEPTIONS SOME EXCEPTIONS APPLY: • Jobs that involve dealings with vulnerable citizens: children & elderly. • Nurses & caregivers can be held to higher standard. • Teachers and others who work in schools, etc. 13
  15. 15. “INDIVIDUALIZED ASSESSMENT” • The “GREEN FACTORS” include consideration of the following factors: (1) the nature or gravity of the offense or conduct; (2) the time elapsed since the conviction and/or completion of the sentence; and, (3) the nature of the job sought or held. 14
  16. 16. RELEVANT FACTS ABOUT NATURE OF CONVICTION • Amount of on-site supervision; • Amount of Contact with the public or other employees; • Access to property or cash (if conviction involves theft or destruction of property); • Prior employment history of candidate in similar position (without incident); 15
  17. 17. Retain the Info Gathered 1. Criminal history information relied on for hiring decisions is part of an employee’s “personnel file” under IL law. 2. Limited access to others/confidentiality of the information obtained. 3. How long will you retain the info AFTER the decision was made that the record of conviction was NOT job related? 16
  18. 18. “Best Practices” • ASG Staffing and Azimuth maintain a published policy and training program to educate their recruiters on what information can be gathered about a candidate’s criminal history record. • ASG Staffing and Azimuth use a template document prepared to properly document the relevant factors considered when evaluating criminal history records of all candidates. (This establishes that an individualized assessment has occurred). 17
  19. 19. The Decision maker: Consider a Designated Decision maker who will review all recommendations about the disqualification of a candidate based on a criminal history record. What evidence will you rely on if there is a challenge to one of your hiring decisions? 18
  20. 20. MYTH #1 – not so fast… • Employers cannot insulate themselves from liability by suggesting that their staffing firm engage in the unlawful recruiting practices (on their behalf). • Several laws prohibit employment agencies from even “accepting a job order” which contains prohibited non-job related considerations. 19
  21. 21. MYTH #2: Employers CANNOT insulate themselves from the legal risks related to background investigations by using a Third Party Vendor to conduct the background evaluations. In fact, there are enhanced legal responsibilities attach when 3d party vendors are used for this purpose. 20
  22. 22. THE FAIR CREDIT REPORTING ACT If an employer uses a third party vendor to conduct a background check on an applicant or employee, the employee is required to: • Disclose to the applicant that a consumer report/ background check will be performed; • Obtain the individual’s authorization to proceed with the check; and • Provide notice to the individual if it will take adverse action based on information discovered in the report. 21
  23. 23. WHAT’S THE PENALTY? • Employers have a variety of other obligations under the FCRA before and after taking any adverse employment action due to the background check results (such as rejecting a job application or revoking an offer of employment). • Because the FCRA provides for statutory damages up to $1,000 PER VIOLATION, the potential for punitive damages, and the recovery of attorneys’ fees, plaintiffs’ attorneys have recently filed a wave of class action lawsuits alleging FCRA violations. 22
  24. 24. FCRA Settlements • Pitt v. K-Mart Corp., Case No. 11-CV-00697 (E.D. Va. May 2013): $3 million to resolve a class action settlement – Plaintiffs alleged that K-Mart willfully failed to comply with the FCRA’s disclosure and authorization requirements prior to obtaining consumer reports and prior to taking adverse actions against the class. 24
  25. 25. Scary Stuff!  Singleton v. Domino’s Pizza, LLC, Case No. 11-CV-01823 (D. Md. Oct 2, 2013): $2.5 million to resolve a class action – Plaintiffs alleged that the consent form Domino’s used for procuring a consumer report violated the FCRA and that Domino’s took adverse actions against applicants without providing the required notices prior to the adverse action being taken.  Bell v. U.S. Xpress, Inc., 11-CV-00181 (E.D. Tenn. April 2013): $2.75 million to resolve a class action – Plaintiffs alleged that Xpress violated the FCRA because it: (a) did not ask candidates if they could obtain a consumer report as part of the application process, (b) based their decisions not to hire employees (in part) based on erroneous information in the report, and (c) they neglected to send the FCRA notices until after the decision were made. 25
  26. 26. Ouch.. that stings!  Roe v. Intellicorp Records, Inc., Case No. 12-CV-288 (N.D. Ohio Nov. 2013): $18.6 million to resolve a class action – Plaintiffs accused two CRAs of providing inaccurate criminal background reports to employers that caused the applicants to suffer adverse actions, and of not notifying them at the time defendants provided the consumer reports to prospective employers.  Johnson v. Midwest Logistics Systems, Ltd., Case No. 11-CV- 01061 (S.D. Ohio May 2013): $452,380.00 to resolve a class action – Plaintiffs alleged they were hired by defendant, pending a successful criminal background check, but did not receive a stand-alone consent form, as required by the FCRA, that the consumer report was inaccurate, and they were denied the position without proper notices. 26
  27. 27. The Good Guys • Before using a 3d party vendor, be sure that they are reputable and use the proper FCRA forms. • Legal review of FCRA forms used by 3d party vendors is highly recommended. • Review written agreements with vendors to be sure they assume appropriate responsibility for compliance with FCRA paperwork obligations. 27
  28. 28. RECENT CREDIT CHECK LAWS • Credit checks for hiring and employment considerations have come under attack in recent years, especially by the EEOC. • Under the Employee Credit Privacy Act, Illinois employers cannot use an individual’s credit history to make hiring, firing, promotion or recruiting decisions. Further, employers are forbidden from inquiring on an applicant’s or employee’s credit history and obtaining a copy of their credit report. • Industries such as banking, insurance, law enforcement, debt collectors and state and local agencies that require credit reports are exempt, and there are other exceptions as well. 28
  29. 29. Prohibited Inquiries about Credit History • Under Illinois law, for example, an employer covered under the Act is prohibited from the following acts: – (1) failing or refusing to hire or recruit, discharging, or otherwise discriminating against an individual with respect to employment, compensation, or a term, condition, or privilege of employment because of the individual’s credit history or credit report; – (2) inquiring about an applicant’s or employee’s credit history; – (3) ordering or obtaining an applicant’s or employee’s credit report from a consumer reporting agency. 29
  30. 30. Exceptions to the Law Employees in the following positions are NOT covered by this law: (1) the duties include custody of or unsupervised access to cash or assets valued at $2,500 or more; (2) the duties include signatory power over business assets of $100 or more per transaction; (3) the position is a managerial position which involves setting the direction or control of the business; or (4) the position involves access to personal or confidential information, financial information, trade secrets, or State or national security information. TIP: Document basis of request for credit history info when applicable. 30
  31. 31. What would you do? The owner of the business tells you she doesn’t care about the law….she will NEVER accept a temporary worker or interview any candidate that has been convicted of a FELONY of any kind in the PAST 7 YEARS. Q: Does it matter if a felony or misdemeanor is involved? Is a 7-year prohibition reasonable? 31
  32. 32. As if that were not enough… ADDITIONAL LEGAL AND PRACTICAL CONSIDERATIONS DURING THE HIRING & SELECTION PROCESS 32
  33. 33. On Line Applications • ADA reasonable accommodations (disabled employees must be offered effective way to participate in the application process.) • Ensure that every candidate is required to complete an application that is IDENTICAL in form? • Be sure that form states that “falsification or misrepresentation thru omission is grounds for termination (no matter when discovered)” 33
  34. 34. Recruiting with Social Media The #1 most frequently used recruiting tool for seeking candidates is LinkedIn. Consider: • Are minorities sufficiently represented on LinkedIn? • Are applicants age 40 and over sufficiently represented on LinkedIn? • Are the unemployed sufficiently represented? • Does the site reveal a person’s age (graduation year) or race (photos)? 34
  35. 35. Privacy Rights The “Illinois Privacy in the Workplace Act” makes it unlawful to refuse to hire, discharge or otherwise disadvantage an individual because the individual uses lawful products off the premises of the employer during non-working hours. What would you do? Your Facebook friend posts some Memorial Day vacation pictures labeled “What happens in Vegas…stays in Vegas”. You recognize one of your direct reports smoking cigarettes and drinking alcohol with a bedazzled lamp shade on his head. 35
  36. 36. Workers’ Compensation History This same Illinois privacy law makes it unlawful for employers to inquire in any manner of any prospective employee (or the prior employers of the candidate) whether the person has ever filed for benefits under the workers’ compensation laws. What would you do? You discover a picture on line which proves that your employee is not complying with the restrictions imposed by the doctors while on worker’s compensation leave of absence. 36
  37. 37. Limited access to Sites Consider a Designated Social Media “SCREENER” for recruiting purposes. The screener should not participate in other aspects of the hiring/decision making process. 37
  38. 38. Expansion of Privacy Law: PASSWORD PROTECTION • Since 2012 Illinois employers have been limited in their ability to obtain an applicant’s or employee’s restricted social media accounts. • Summary: Illinois law forbids employers from requesting or requiring log-in credentials for an applicant’s or employee’s social networking sites. • The law also prohibits “shoulder surfing” or in other words, demanding that an employee or applicant show the employer their social media profile or account without revealing any log-in credentials. 38
  39. 39. OTHER TRACKING RISKS • Do you keep track of size, weight, strength, appearance factors when applicants are being considered for employment or promotions? • For example: A manufacturing company prefers workers who can lift 50 pounds or more. How do you track “good lifters?” • What would your records look like if there was a challenge? 39
  40. 40. COMPASSIONATE USE OF MEDICAL CANNABIS PILOT PROGRAM ACT • In January 2014, Illinois became the 20th state to legalize medical marijuana. • The Act prohibits an employer from “penalizing” an individual (including refusing to hire) based solely for his status as a “registered qualifying patient” under the Act. Q: Have you revised YOUR drug testing policy to conform to this new law? 40
  41. 41. EMPLOYER RIGHTS • An employer may discipline registered qualifying patients who demonstrate “specific articulable symptoms” of impairment from marijuana use while at work, as long as the employees are afforded a REASONABLE OPPORTUNITY to contest the determination. • An employer may also discipline registered qualifying patients based on a GOOD FAITH BELIEF that they used or possessed marijuana while on the employer’s premises or during work hours. 41
  42. 42. EMPLOYER RIGHTS CONT’D • Employers may continue to enforce their “ZERO TOLERANCE” policies against use, possession or impairment of medical marijuana. • Employers must apply policy consistently for medical marijuana and other drugs (including lawful drugs taken contrary to prescription). • Employers do NOT need to permit an employee to work impaired even if the employee is a licensed patient who may lawfully possess or use marijuana for a qualified medical condition. 42
  43. 43. WORKPLACE BULLYING For NOW: • Unless the conduct is based on a legally “protected category” not a violation of the anti-discrimination laws. • Employees assume it is based on protected category when they are treated mean or unfairly (perception is reality) • Consider: Expanding harassment policy to include this type of bullying. Also include a prohibition against “cyber bullying” even if off duty (private employers). 43
  44. 44. CONSIDER AN HR AUDIT AN HR AUDIT can include (among other things): – Review of application forms – Compliance with posting requirements – Review of FMLA compliance obligations (spot checking) – I-9 compliance checks – Wage/Hour compliance – exemptions; lunch breaks, rounding practices reviewed – Leave policies drafted and implemented to avoid or minimize disparate impact concerns. – Closure memos to all complaints of harassment or discrimination or even bullying, etc. 44
  45. 45. QUESTIONS? Thank you for your participation today. 45

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