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Temporary List B Expiration Flexibility Ends May 1, 2022

After over two years, the Department of Human Services (DHS) announced an end to the temporary ID document flexibility for Form I-9. The temporary policy has been in effect since May 1, 2020, when COVID-19 began to impact document renewals. The interim rule allows employers to collect expired List B documents for identification. List B documents include driver’s license, government-issued ID card, military card, and more.

“…identity documents found in List B set to expire on or after March 1, 2020, and not otherwise extended by the issuing authority, may be treated the same as if the employee presented a valid receipt for an acceptable document for Form I-9 purposes.”

Employers have until May 1 to implement procedures to change back to the permanent DHS policy. At that time, employers will no longer be allowed to accept expired List B documents. But that’s not all the policy change requires. Employers must collect updated documentation from anyone that gave an expired List B document between March 1, 2020, and April 30, 2022.

To update the record, for employees that are still employed, employers must:

  • Have the employee provide an unexpired document that establishes identity. Acceptable documentation includes the renewed List B document, a different List B document, or a document from List A.
  • Enter the document title, issuing authority, number, and expiration date in the “Additional Information” field in Section 2.
  • Initial and date the record change.

No action is required for employees that are no longer employed. If the List B document was automatically extended by the issuing authority so that it was unexpired when presented, no further action is required.

Currently, this is the only temporary I-9 policy that DHS is ending. This week, the DHS again extended other temporary guidelines resulting from COVID-19 until October 31, 2022. Employers may want to monitor I-9 Central for updates to necessary Form I-9 requirements.

A Case of Potential Violations of City & State Requirements in NYC

New York City has some of the country’s most complex laws for employers to follow. A case filed in the Southern District of New York alleges potential violations of city and state requirements.

The federal Fair Credit Reporting Act (FCRA) may be the most well-known law impacting how employers use background checks. But those that hire in the Big Apple might have to follow more than just the FCRA and may need to pay attention to city employment laws like the New York City Fair Chance Act (FCA), part of the New York City Human Rights Law (NYCHRL). There are also New York state-specific laws, including the New York State Fair Credit Reporting Act.

Allegations against Hersha Hospitality Management and Others

Like FedEx, another employer in New York City is accused of violating the NYC FCA and other allegations. In December 2021, Steven Anthony Sanchez applied for a bellperson job at the Moxy NYC Downtown hotel, a hotel owned and operated by Hersha Hospitality Management, LP, one of the Defendants named in the complaint. He was hired, but he found another person assigned to his duties shortly after beginning the role.

The general manager explained to Sanchez, “Sorry, we found out that you have a criminal background, so we’re going to let you go.” Sanchez also received an “Adverse Action Notice” around the same time.

The hotel sent Sanchez a copy of his background check showing a conviction history, and he doesn’t dispute that he received it. However, the complaint alleges that the Defendants never provided a detailed explanation of why his conviction disqualified him. Further, Sanchez claims that the Defendants never provided a copy of Article 23-A of the New York Correction Law, detailing the circumstances under which an employer may reject an applicant based on conviction history.

Based on the complaint, Sanchez claims the Defendants violated the New York City Fair Chance Act in three ways:

  • Defendants completed a background check on Sanchez before extending a conditional offer of employment.
  • Defendants took adverse action without a written copy of Article 23-A analysis (required by N.Y.C. Admin Code § 8-107(11-a)(b)(ii)).
  • Defendants took adverse action without allowing a reasonable amount of time, of not less than least three days, to respond to the Article 23-A analysis (required by N.Y.C. Admin Code § 8-107(11-a)(b)(ii)).

In addition, Sanchez alleges the employer violated the state-level New York Fair Credit Reporting Act (“NY FCRA”). He claims the Defendants completed consumer reports without providing copies of Article 23-A of the New York Correction Law.

Class Action Proposed

Sanchez’s complaint proposes two classes for the case:

1. The NYCHRL class

“All individuals with criminal records who, during the applicable limitations period, applied for employment at any New York City hotel [owned by Defendants] and were either denied employment or terminated after Defendants conducted a background check… without first receiving (a) a conditional offer of employment and/or (b) Defendant’s Article 23-A analysis and a reasonable opportunity to respond to it.”

2. The NY FCRA class

“All individuals with criminal records who, during the applicable limitations period, applied for employment at any New York City hotel [owned by Defendants] and (a) were denied employment or terminated by Defendants, (b) had consumer reports requested about them by Defendants, and were not provided with a copy of Article 23-A of the Correction Law.”

This case is currently pending. Employers that hire in New York City or state may want to monitor the case with their legal team to understand how it may impact their practices.

Higher Court Reviews Employment Discrimination Case

We previously covered the appellate court decision in Cree, Inc. v. LIRC. After our last post, the case continued to move through the legal process. The Supreme Court of Wisconsin has now weighed in on the case.

An Overview of the Cree Case

In July 2015, Cree, Inc. offered job applicant Derrick Palmer an Applications Specialist job subject to a standard background check. The background check revealed the candidate’s convictions stemming from a 2012 domestic violence incident. The candidate pled no contest to several serious crimes, including:

  • Two counts of felony strangulation and suffocation
  • Four counts of misdemeanor battery
  • One count of fourth-degree sexual assault
  • One count of criminal damage to property

Cree referred the matter to its general counsel. They reviewed Palmer’s conviction record using a matrix that categorized each candidate’s convictions as a “fail.” Cree then rescinded its offer of employment.

Evaluating What Relates to the Job

According to the Supreme Court holding, Wisconsin law generally prohibits an employer from discriminating against prospective employees based on one’s conviction record. However, there is an exception to the general rule.

“It is not employment discrimination because of conviction record . . . [if] the individual has been convicted of any felony, misdemeanor, or other offense the circumstances of which substantially relate to the circumstances of the particular job.”

This is known as the “substantial relationship test.” However, the employer bears the burden to take advantage of the exception in these cases. They must show that the conviction substantially relates to the circumstances of the job.

Conflicting Decisions Across Courts

Palmer filed a complaint with the Wisconsin Department of Workforce Development’s Equal Rights Division (ERD). It alleged that Cree discriminated against him based on his record, violating the Wisconsin Fair Employment Act. The ERD found probable cause to hold a hearing on the merits before an administrative law judge.

Administrative Law Judge Decision

The judge determined that Palmer’s convictions substantially related to the Applications Specialist position. Under Wisconsin law (Wis. Stat. § 111.335(3)(a)1.,8), Cree did not discriminate against Palmer when it rescinded its job offer.

Labor and Industry Review Commission Decision

Palmer appealed the ALJ’s findings to the Labor and Industry Review Commission (LIRC). LIRC reversed. They held that,

“Where assault or battery convictions stem from personal relationships and the crimes are committed at home, it cannot necessarily be assumed that the individual is likely to engage in the same conduct with co-workers or customers at the work place.”

Based on the domestic nature of Palmer’s crimes, LIRC concluded that they did not substantially relate to the Applications Specialist job.

Circuit Court & Court of Appeals Decisions

The circuit court reversed the LIRC’s decision. The court of appeals then reversed again. The appellate court upheld the LIRC’s decision that Cree failed to meet its burden. They held that the employer didn’t show a substantial relationship between Palmer’s convictions and the job.

The Case Moves to the Supreme Court

The Wisconsin Supreme Court reviewed the LIRC’s decision. In doing so, the Supreme Court noted that “the plain language of the substantial relationship test requires that the employer show that the facts, events, and conditions surrounding the convicted offense materially relate to the facts, events, and conditions surrounding the job.”

The WI Supreme Court held, “To summarize, we apply the substantial relationship test to a domestic violence conviction the same way we would to any other conviction.”

“[W]e must look beyond any immaterial identity between circumstances——such as the domestic context of the offense or an intimate relationship with the victim——and instead examine the circumstances material to fostering criminal activity. The material circumstances are those that exist in the workplace that present opportunities for recidivism given the character traits revealed by the circumstances of a domestic violence conviction.”

The court held, “Based on the evidence Cree submitted, the circumstances of Palmer’s convictions substantially relate to the Applications Specialist position…”

“The candidate’s willingness to use violence to exert power and control over others substantially relates to the independent and interpersonal nature of a pre and post sales job like the Applications Specialist position.”

Further, “the absence of regular supervision creates opportunities for violent encounters.”

The court also noted, “several other factors also weigh in favor of finding a substantial relationship.”

  • “…the seriousness of Palmer’s convictions would force Cree to assume the risk of Palmer repeating his conduct and threatening the safety of employees, customers, and the public.”
  • “…the recentness of Palmer’s convictions—a scant two years—eliminates any favorable inference of a long-dormant conviction record.
  • “…Palmer’s emerging pattern of domestic violence convictions further highlight his recidivism risk.”

Employers may want to review the court’s decision with their legal counsel and assess how this might impact their hiring decisions.

Lowe’s Accused of FCRA Violations

Home improvement store Lowe’s is accused of violating the FCRA. The claims are part of a putative class action suit filed in the Western District of North Carolina.

According to the complaint, Lowe’s offered Anthony Hale a sales position contingent on a background check in March 2020. After the offer, Hale stopped applying for jobs and even turned down a job at another home improvement store. But in April, Hale received a text message from a Lowe’s employee that his background check didn’t pass. Hale responded to the message requesting a copy of his report. He alleges that he never received a copy of the report or the FCRA summary of rights.  The complaint alleges that:

Simply put, Defendant violated [the Fair Credit Reporting Act (“FCRA”)] because, before taking adverse action against the Plaintiff, it did not provide him either with a copy of his consumer report or with the summary of rights required under [the FCRA].

As we have previously discussed, the FCRA has specific requirements for employers who are thinking about taking adverse action against a candidate based, in whole or in part, on information from a background report.  This includes, but is not limited to, providing the candidate with a copy of both the background report and written summary of rights under the FCRA before taking adverse action against the candidate.

Complaint Proposes a Class

Hale’s complaint aims to highlight more than just his experience. The complaint outlines a proposed class of others impacted by Lowe’s background check procedures. The proposed class includes all consumers in the United States who over the last five years:

  • Were subject to a background check provided to Lowe’s;
  • Based, in whole or in part, on information contained in the reports, were entered into Lowe’s computer system with a code indicating they were “ineligible” for hire or continued employment; and
  • Didn’t receive a copy of their report or FCRA summary of rights from Lowe’s at least five business days before they were entered in Lowe’s computer system with a code indicating they were ineligible for hire or continued employment.

Multiple Lawsuits May Show Willfulness

The complaint claims that Defendant’s alleged violations of the FCRA were willful.

The foregoing violations were willful. Defendant acted in deliberate or reckless disregard of its obligations and the rights of Plaintiff and other Pre-Adverse Action Class Members under [the FCRA].

The complaint states that Lowe’s previously settled a nationwide class claim for alleged violations of the FCRA and should be on “heightened notice of [the FCRA’s] requirements as a result of the… litigation”.

This is the second time Defendant has been sued for nearly identical violations of the FCRA, making its FCRA violations alleged herein particularly egregious and willful.

Hale’s complaint states that this, among other things, is proof the company’s alleged violations of the FCRA were “willful.”

This case was only filed in February 2022 and is still in its early stages.  At this point in the litigation, the allegations against Lowe’s remain only allegations. Verified Credentials will continue to monitor the case status and release updates.

California Case Offers Insight on Potential Cost of Violating State Reporting Law

It may be apparent to employers that any violation of employment law can result in consequences. Often, the law spells out potential penalties. That’s the case with the California Investigative Consumer Reporting Agencies Act (ICRAA).

An Overview of ICRAA Damages

California employers, and employers hiring people who live or work in the state, may want to work with trusted legal counsel to determine if their background screening programs need to comply with both California and federal law. What’s at risk? Employers that violate California’s ICRAA may be required to provide monetary damages.

According to state law, the cost to employers that fail to meet California’s requirements may include:

  • Actual damages sustained by the candidate due to the employer’s violation or, except in the case of class actions, $10,000, whichever is greater.
  • The costs paid by the candidate to enforce the employer’s liability. This includes the costs of the legal action and reasonable attorney’s fees as determined by the Court.
  • Punitive damages determined by the Court if the employer’s actions are found grossly negligent or willful.

How the Court May Interpret the Law

A recent order by the US District Court in the Southern District of California in the case of Garcia v. Quest Group Consulting, LLC looks at how the courts may calculate statutory damages under ICRAA.

According to the Court’s order, Garcia initially filed a claim in California state court alleging, among other things, violations of ICRAA. The court order states that Garcia’s complaint alleges that the Defendants employed Garcia as an hourly temp worker in California. Garcia further alleged that Defendants procured an investigative consumer report on her after requiring her to sign a deficient disclosure document, violating ICRAA. She seeks only the ICRAA statutory damages.

The Defendants removed the case from state court to federal court, arguing that the statutory damages Garcia is seeking exceed the required $75,000 threshold for hearing the case in federal court based on diversity jurisdiction.  Garcia filed a motion with the US District Court to remand the case back to state court.

The Defendants claimed that Garcia is seeking ICRAA damages of $120,000, plus attorney fees, because Garcia alleges the Defendants violated several sections of ICRAA.

Garcia claimed that her statutory damages should be lower, below the required threshold for hearing the case in federal court. She argued that she is only entitled to one statutory penalty because the Defendants only performed one background check. Garcia claimed that the law applies the penalty per defendant, not per violation.

The US District Court ruled in favor of Garcia and remanded the case back to state court. The ruling held that “…the ICRAA penalty applies per ‘investigative consumer report’” and not for individual alleged violations.

This case gives employers a peek at how courts may calculate ICRAA statutory damages in the future. Employers should talk with their legal team to understand how this could impact them.

Colorado Introduces Bill to Automatically Seal Some Records

You may be familiar with sealed criminal records. Generally, sealed records are not accessible with a public record search.

Pending legislation in Colorado may create an express path to sealing records. On February 1, 2022, Colorado SB22-099 was introduced in the Colorado legislature. If passed, the bill would create a way to seal some criminal and civil records automatically.

According to the legislative summary, among other things, “The bill extends… automatic sealing to all of the offenses, including civil infractions, that allow the defendant to petition the court for sealing criminal justice records that are not subject to the victims’ rights act.”

Let’s get to know more about what is happening with this pending legislation.

What Would and Would Not Be Automatically Sealable

The bill expands the list of automatically sealable conviction records to include, with some exceptions:

  • Conviction records that are eligible for sealing under state law
  • Civil infractions, if four years have passed since final disposition
  • Petty offenses or misdemeanor convictions, if seven years have passed since final disposition
  • Eligible felonies, if ten years have passed since final disposition or the release of a defendant from supervision, whichever is later.

The bill excludes convictions for crimes listed under the Colorado Victims’ Rights Act. This exception prevents certain serious crimes from becoming eligible for the automatic sealing process, such as murder, assault, kidnapping, aggravated robbery, child abuse, and more.

Proposed Path to Sealing a Record

The state would manage the process of automatically sealing eligible conviction records. According to SB22-099, the path to automatically seal a conviction record would include:

1. The state court administrator generates a quarterly report of conviction records eligible for automatic sealing.

2. The list is forwarded to the Colorado Bureau of Investigation (“Bureau”). The Bureau is required to compare the list with criminal history reports. The Bureau will then remove any convictions from the list which cannot be compared to criminal history reports due to insufficient identification validation.  Additionally, the Bureau is required to remove convictions from the list if the defendant has any intervening convictions during the “waiting period” from the final disposition of the conviction record until the record is eligible to be automatically sealed for each level of offense.

3. Validated and eligible conviction records move onto each district attorney, who may object to sealing the conviction record if the defendant has a pending criminal charge or intervening conviction.

4. The state court administrator then would remove conviction records objected to by the district attorney and compile a revised list of conviction records eligible for automatic sealing. The final list would then be sent to the chief judge for each judicial district.

5. The courts of each judicial district then would enter sealing orders for the listed conviction records within 14 days of receiving the final list.

Other Implications of Bill

Among other implications, the bill would amend the Colorado Consumer Reporting Act. If passed, among additional proposed amendments:

  • “A user of any consumer report or investigative consumer report shall disclose or provide a copy of the report, including the name and contact information of the consumer reporting agency, to the consumer to whom it relates if adverse action has been taken or is being contemplated based, in whole or in part, on the report.”
  • “Consumer reporting agencies are prohibited from reporting records of charges or indictments pending trial, sealed records, expunged records, and records that did not result in conviction.”

Please see the bill for full details of proposed exceptions and procedures of automatically sealing records.

If passed, the Colorado law could impact what criminal records will be reportable in Colorado. Verified Credentials will continue to watch legislative proceedings regarding Colorado SB22-099. Keep an eye out for updates in the coming months.

Lawsuit for Employment Discrimination Allegations Moves Forward

A proposed class-action lawsuit filed against Whole Foods Market Group, Inc., Amazon.com, Inc., and Cornucopia Logistics, LLC (“Defendants”) is one of the latest lawsuits alleging that employers violated applicable laws during the hiring process. We have previously discussed other recent lawsuits filed against employers, including an additional case against Amazon for allegations of background check disclosure violations.

Former Job Candidate Turned Plaintiff

Let’s look at what led up to this lawsuit against the Defendants.

According to a recent court order in response to Defendant’s Motion to Dismiss the amended complaint, plaintiff Henry Franklin served nearly 25 years in prison for a second-degree murder conviction. The State released him on parole in 2018. In April 2019, Franklin applied for a delivery worker job with Cornucopia Logistics, a vendor that has a contract with Amazon to provide delivery workers for its subsidiary, Whole Foods.

The court order notes that Franklin contends that the job application, which Cornucopia posted on a recruiting website, stated that applicants must consent to a background check as part of the job application process. Amazon and Whole Foods claim Franklin answered “no” when asked whether he had any prior convictions as part of his application. Further, the court order also notes:

“Shortly after Franklin completed the online application, he alleges that he received a letter from Amazon informing him that Amazon had performed a background check and would make a final decision on his application in ten days…Franklin alleges that he received another letter from Amazon two weeks later, informing him that his application had been denied “in whole or in part” due to information contained in the Background Report.”

According to the court order, Franklin filed a first amended complaint in September 2020 alleging that all the Defendants unlawfully discriminated against him based on his criminal history ad that they used discriminatory screening policies and practices in violation of:

  • New York State Human Rights Law (NSHRL)
  • New York City Human Rights Law (NYCHRL)
  • New York State Fair Credit Reporting Act (NYFCRA)

Employers Seek Motion to Dismiss

The defendants moved to dismiss the lawsuit based on Failure to State a Claim.

The Court disagreed and denied the Defendant’s Motion to Dismiss. The Court held that Franklin stated a claim of employment discrimination under the NYSHRL. According to the Court’s order, “Section 296(15) of NYSHRL makes it unlawful to deny employment to an individual ‘by reason of his having been convicted of one or more criminal offenses . . .’ when such denial is in violation of the provisions of [Article 23-A] of the N.Y. Correction Law” unless one of two exceptions applies:

1. There is a “direct relationship” between the criminal offense and the employment sought.

2. Hiring someone with a criminal background poses an “unreasonable risk” to the public.

The court notes that NYSHRL does not prohibit the consideration of an applicant’s criminal history in deciding whether to hire a person but can only consider the applicant’s criminal history if the employer can show that one (or both) of the exceptions apply. According to the Court, Franklin’s complaint sufficiently alleged why neither exception applies in this case.

“As the position at issue involved driving to deliver groceries, and, as Franklin asserts, he was never convicted of a vehicular offense, the Court finds that Franklin has adequately alleged that there is no direct relationship between his conviction and his fitness or ability to deliver Whole Foods groceries.”

Additionally, the Court found that Franklin adequately pled that the “unreasonable risk” to persons or property exception does not apply. According to the Court order, “The Court is sympathetic to Defendants’ likely position that they do not want a convicted murderer delivering groceries to their customers’ homes. But considering the allegations in the complaint in the light most favorable to Franklin, he has adequately alleged that he is rehabilitated and no longer poses a threat to the public.”

Nearly 25 years have passed between his conviction and the job application. Franklin contended that because the State of New York paroled him, the State had determined that he did not pose a risk to anyone’s property, safety, or welfare. Franklin also contended that he is older now, and individuals who know him can attest to his rehabilitation. “Taken together, those allegations support the conclusion that Franklin has adequately pled that the public risk exception does not apply to him.”

The Court held that because Franklin has adequately alleged that neither of the NYSHRL exceptions applies, he has adequately alleged facts that can infer a minimal inference of discriminatory motivation. Further, the Court states that because Franklin has stated a claim under the NYSHRL, he has necessarily stated a claim under NYCHRL.

The Court also addressed the Defendants’ argument that the Defendants had a legitimate, nondiscriminatory reason for not hiring him because Franklin lied on his application. The Court held that alleged legitimate reasons for an adverse employment action cannot be considered on a motion to dismiss – but can only be considered on a motion for summary judgment or trial.

The Case Moves Forward

At this stage in litigation, the case is allowed to proceed. Even though the Court denied the motion to dismiss, it did not rule on the merits of the Plaintiff’s arguments. Instead, the Court held that the Plaintiff sufficiently stated a claim for the case to continue. The case is being referred to a mediation program as the next stage in litigation.

We will continue to monitor the status of this case. Employers should consult their legal team for details on how this case may impact them.

 

 

Get to Know Massachusetts’ CORI

CORI, or Criminal Offender Record Information, is a specific term defined by Massachusetts law. Those that conduct background checks in Massachusetts might already know about CORI. For those that don’t, CORI isn’t the name of the person in charge of records in the state. CORI, with some exceptions, is generally defined as records and data in any form compiled by a Massachusetts criminal justice agency that concerns an identifiable individual and relates to the nature or disposition of:

  • Criminal charges
  • Arrests
  • Pre-trial & other judicial proceedings
  • Previous hearings conducted, according to state law, where the defendant was detained before trial or released with certain conditions
  • Sentencing, incarceration, rehabilitation, and release

The Massachusetts Department of Criminal Justice Information Services (DCJIS) maintains an online database of certain CORI information, known as iCORI.  Generally, employers that obtain such information from the DCJIS have certain obligations. However, even employers who don’t get criminal record information from iCORI may have specific responsibilities.

Are you running criminal history checks in Massachusetts? According to Massachusetts regulations, a person or entity that conducts five or more criminal background investigations annually must maintain a written CORI policy. That obligation applies, whether you get information from DCJIS or another source. Policies must include all provisions from the DCJIS Model CORI Policy. Verified Credentials maintains the DCJIS Model CORI policy in the Resource Library. There, clients can find other sample documents to reference too. These are helpful resources for employers as they create their policies.

Massachusetts Adverse Action Requirements

Massachusetts regulations also state that employers that choose to take adverse action against an employment applicant, volunteer applicant, employee, or volunteer based on CORI or any other criminal history information must do the following (before taking adverse action):

  • Comply with applicable federal and state laws and regulations.
  • Notify the candidate in person or by telephone, fax, or correspondence (either electronic or “hard copy”) of the potential adverse action.
  • Give the candidate a copy of their CORI or other criminal history information.
  • Identify the source of the CORI or criminal history information.
  • Provide the candidate with a copy of their CORI Policy.
  • Identify the information within the candidate’s CORI or criminal history information used as the basis for the potential adverse action decision.
  • Give the candidate an opportunity to dispute the accuracy of the CORI or other criminal history information.
  • If CORI is considered a part of a potential adverse action, provide a copy of the DCJIS CORI correction process located in the Resource Library.
  • Document all steps taken to comply with Massachusetts regulations.

Employers may wish to review the Massachusetts laws and regulations with their legal teams to determine how they may apply to them.

A Deeper Look at Investigative Consumer Reports

Employers hoping to learn detailed information about their candidates may want to read on. You may know the Fair Credit Reporting Act (FCRA) definition of a “Consumer Report.” But are you familiar with the FCRA’s definition of “Investigative Consumer Reports” and the specific requirements that go along with them?

The FCRA defines an Investigative Consumer Report as:

a Consumer Report (or any part within a Consumer Report), with some exceptions, in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer, or any others who may be acquainted with the consumer or who may have knowledge about such items.

Want to dig deeper about what is (and what is not) an Investigative Consumer Report? Looking at regulatory interpretations of the FCRA can help.

In 2011, the Federal Trade Commission (FTC) released a report containing a summary of FCRA interpretations. The summary, “40 Years of Experience with the Fair Credit Reporting Act” (the “40 Years Report”), can be a practical tool to help provide guidance and other interpretations of the FCRA. While the summary can be helpful, the FTC does caution that “The Staff Summary does not have the force or effect of regulations or statutory provisions” and that “These summary statements of the law… should not be used as a substitute for the statutory text.”

“Personal Interviews” Inform Investigative Consumer Reports

So, what does the FTC’s summary say about Investigative Consumer Reports?  The FTC’s interpretation of the definition of an Investigative Consumer Report notes that “An ‘Investigative Consumer Report’ is a type of ‘Consumer Report’ that includes information obtained through personal interviews with the consumer’s neighbors, friends, associates, or others. If communication does not fall within the definition of ‘Consumer Report,’ however, it will not be an ‘Investigative Consumer Report.’”

What’s critical to the definition of an Investigative Consumer Report is that information must be obtained through a “personal interview.”

According to the FTC, “’Personal interviews’ include interviews with a neighbor, friend, or associate of the consumer conducted by mail, telephone or electronic means, as well as in person.” This information all has something in common – it’s an interview with a third person. The term may lead employers to believe that any interview fits this category. The FTC notes that if the report contains only information obtained from the candidate, it would not be considered an Investigative Consumer Report. The information was not collected through personal interviews with third persons.

Employers may wonder if the definition includes checking a candidate’s references or job history. The FTC provides guidance on this, too.  According to the FTC’s interpretation, a discussion between a Consumer Reporting Agency and a candidate’s previous employer to verify facts reported on an employment application (such as periods of employment, job titles, and salary information) is not an interview and is not an Investigative Consumer Report. The FTC does clarify that obtaining information from a former employer beyond “fact-checking” could constitute an interview and be considered an Investigative Consumer Report. This could include, but is not limited to, asking a candidate’s former employer about:

  • Discipline actions against the candidate
  • Termination reasons
  • Evaluations of the candidate’s job performance

Keep in mind that a report that contains both information obtained from personal interviews and information not obtained through other, non-interview background checks could still be considered an Investigative Consumer Report. The FTC notes:

“A report that is obtained by personal interviews with the consumer’s neighbors, friends, associates or others does not lose its status as an ‘investigative consumer report’ if it also contains non-investigative information (such as a credit report), because the definition includes reports, a ‘portion’ of which are investigative reports.”

Unique Disclosure Requirements for Investigative Consumer Reports

Employers that obtain Investigative Consumer Reports must provide their candidates with a specific disclosure to get the report. The disclosure must:

  • Clearly and accurately disclose to the employee or applicant in writing that it may obtain an Investigative Consumer Report, including information from the referenced personal interviews as to their character, general reputation, personal characteristics, and mode of living.
  • Be provided to the candidate within three days of requesting the report.
  • Include a statement that the candidate has the right to request additional disclosures and a written summary of rights, as provided by the FCRA.

It may be tempting for employers to combine all disclosures into one. You may want to think again if this is something you are considering. Verified Credentials recently discussed litigation involving one employer that took this route.

The FTC detailed additional interpretations of the FCRA in the 40 Years Report. Check out the resource for disclosure and delivery requirements.

We offer sample disclosures, including a sample investigative consumer report disclosure, to clients in their account’s Resource Library to reference as they create their disclosure documents. Employers should work with their legal counsel to determine if their disclosures meet their specific requirements.

Federal “Fair Chance Act” Now in Effect

“Ban the Box” style laws are a trend that has grown exponentially over the last decade. In fact, we have covered several laws in multiple jurisdictions, including laws in Louisiana, Philadelphia, Illinois, and more.

The federal government’s own Ban the Box law, the federal “Fair Chance Act,” has recently come into effect. Initially signed into law on December 20, 2019, as part of the National Defense Authorization Act for Fiscal Year 2020, the Fair Chance Act became effective on December 20, 2021.

With some exceptions, the Fair Chance Act prohibits federal executive agencies from inquiring about an applicant’s criminal history record information before making a conditional offer (i.e., an employment offer conditioned on the results of a criminal history inquiry). The Fair Chance Act states that:

[A]n employee of an agency may not request, in oral or written form (including through the Declaration for Federal Employment (Office of Personnel Management Optional Form 306 or any similar successor form, the USAJOBS internet website, or any other electronic means) that an applicant for an appointment to a position in the civil service disclose criminal history record information regarding the applicant before the appointing authority extends a conditional offer to the applicant.

In addition to executive agencies, this prohibition applies to all legislative and judicial agencies.

The Fair Chance Act restrictions on criminal history record information inquiries also extend to federal contractors, with some exceptions. According to the law:

[A]s a condition of receiving a Federal contract and receiving payments under such contract … the contractor may not verbally, or through written form, request the disclosure of criminal history record information regarding an applicant for a position related to work under such contract before the contractor extends a conditional offer to the applicant.

To read the full text of the Fair Chance Act, click here (the link will take you to the National Defense Authorization Act for Fiscal Year 2020. The Fair Chance Act starts at Section 1121 on Page 408).

While the applicability of the Fair Chance Act is limited to certain federal agencies and entities that have contracts with the federal government, you may still want to review the law with your legal counsel to determine any impacts it may have on you.

Clarity on FCRA Disclosure and Certification Requirements May Be Coming

Employers often struggle with the many disclosure and certification requirements of the Fair Credit Reporting Act (FCRA). A recently introduced bill in the US House of Representatives aims to provide new clarity on these requirements. On November 23, 2021, US Representatives Madeline Dean and Trey Hollingsworth introduced HR 6067, the Clarity in Consumer Disclosures Act of 2021. According to a press release by Representative Dean,

“[t]his legislation will direct the Consumer Financial Protection Bureau (CFPB) to create clear, plain-language model forms for consumer reports so that employers can fulfill the requirements of FCRA.”

Model Documents and Language to Help Employers

If passed, the CFPB must, within one year of enactment of the law, develop and issue:

  • Model language for the certifications a user of background reports must provide to their background report provider before obtaining a background report for employment purposes.
  • Model disclosure and authorization forms that comply with the FCRA’s background report disclosure and authorization requirements.
  • A model consent form and language that can be used in any form for a consumer to provide the required consent if a background report contains certain medical information if that report is to be used for employment purposes or in connection with a credit transaction.
  • A model form and language that can be included in any forms that can be used to provide a consumer with the required disclosures and notifications before obtaining an “investigative consumer report,” as the FCRA defines that term.
  • Model language for the required certifications a user must provide to their background report provider before obtaining an “investigative consumer report”.
  • Model language of certification regarding the permissible purpose for a user to obtain a background report, as required by 15 USC § 1681b(f)(2) and 15 USC § 1681e(a).

Formatting and Components of Model Forms and Model Language

To the extent possible, the CFPB must attempt to create a single, integrated model form that complies with all of the above requirements. Any model forms or language developed by the CFPB must be in plain language understandable by an average reader, cannot contain citations to law, and must be easily adapted based on specific consumer reports.

Additionally, the CFPB must consider state laws when developing the model forms. Among other things, it must:

  • Review state laws regulating background reports.
  • Develop the model FCRA forms to satisfy any state law requirements substantially similar to FCRA requirements.

The bill includes a safe harbor provision, providing added protections to employers that use background reports for employment purposes. Employers that use a model form developed by the CFPB intended to meet a specific FCRA requirement and that accurately reflects the practices of that employer are considered to be compliant with that requirement.

Verified Credentials will continue to monitor the progress of this bill and release updates as it moves forward.

New York City Moves to Restrict Use of Certain Automated Hiring Technologies

Technology could help simplify the hiring process, including adopting new technologies to manage your candidate pool, run video interviews, and conduct background checks. Employers may use automation to process candidates and hire faster. A New York City law will soon place restrictions on the use of certain automation tools during the hiring process.

Restrictions on Certain HR Technology Tools

The New York City council enacted the new law on December 11, 2021. The law goes into effect on January 23, 2022. Once effective, employers and employment agencies (“employers”) cannot use “automated employment decision tools” unless they meet certain conditions. An automated employment decision tool includes any computational process, with some exceptions, that issues simplified output, including a score, classification, or recommendation to assist or replace discretionary decision making for employment decisions through:

  • Machine learning
  • Statistical modeling
  • Data analytics
  • Artificial intelligence

The city seeks to remove situations where these technologies may create bias in hiring.

Criteria for Using Automated Employment Decision Tools

Automated tools that assist employers with decision-making during the hiring process won’t be banned entirely in New York City. The city will allow employers to use automated employment decision tools after they meet certain requirements. This includes:

1. Conducting a bias audit of the automated employment decision tool. This must be an impartial evaluation by an independent auditor. The bias audit must be done within the year before using the tool.

2. Bias audit results must be available to the public. A summary of the results of the most recent bias audit and the distribution date of the tool to which the audit applies, must be publicly available on the employer’s website before using the tool.

Notice Required for NYC Candidates

In New York City, employers that use an automated employment decision tool to screen a candidate or employee must provide certain notices to employees or candidates that reside in the city, including:

  • The employer’s plan to use an automated employment decision tool during the candidate assessment. This notice must be made no less than ten (10) business days before use of the tool and must allow the candidate to request an alternative selection process or accommodation.
  • The job qualifications and characteristics the tool will use in the assessment of the candidate or employee. This notice must be made no less than ten (10) business days before using the tool.
  • If not disclosed on the employer’s website, the candidate’s right to submit a written request for the type of data collected for the tool, data source, and employer’s data retention policy. The employer must provide the information within 30 days of the candidate’s written request unless disclosing this information would violate local, state, or federal law or interfere with a law enforcement investigation.

Employers that violate the restrictions could face civil penalties. The first violation and any additional violations made on that same day will result in a $500 civil penalty. Later violations require a fine of $500-$1,500 for each subsequent offense. The law notes that each day an employer uses an automated employment decision tool is a separate violation. Failing to provide any notice to a candidate or employee is also a separate violation. Additionally, New York City’s corporation counsel, or other persons designated by the corporation counsel, may initiate court proceedings to correct violations, including mandating compliance with the law or other appropriate relief.

If you hire candidates that reside in New York City, you may want to become familiar with this law before the effective date. Employers should review the law with their legal counsel to understand the impact on the hiring process.

Background Check Bill Introduced to Protect Florida Renters

Certain industries require mandatory background checks of employees according to law. Florida is looking to add to that list apartment employees. A new bill, if passed, looks to improve safety and security for tenants. On November 12, 2021, Florida Senator Linda Stewart introduced SB 898 in the Florida Senate. Known as “Miya’s Law,” the bill was introduced in response to the tragic case of Miya Marcano.

“Miya’s death is an awful tragedy – one that has put a spotlight on problems with apartment safety and security,” said Senator Stewart. “We’ve heard too many horror stories of some landlords disregarding the security of their tenants by issuing master keys to maintenance workers without running any background checks. Everyone deserves to feel safe in their homes and we are hopeful that ‘Miya’s Law’ will help make that a reality.”

Bill Defines Employment Requirements

As introduced, SB 898 mandates that landlords require each employee of their apartment establishments to undergo a background check as a condition of employment. Those background checks must:

  • Be performed by a Professional Background Screening Association (PBSA) accredited consumer reporting agency, like Verified Credentials;
  • Include a criminal history check;
  • Search sex offender registries from all 50 states and Washington, D.C.

According to the bill, landlords may disqualify a person from employment if the person has been convicted or found guilty of, or entered a guilty or nolo contendere plea to, the following offenses:

  • Criminal offenses involving disregard for the safety of others that are felonies or misdemeanors of the first degree in Florida or would be considered felonies or misdemeanors of the first degree in Florida if the offenses were committed in another state.
  • Criminal offenses committed in any jurisdiction which involve violence including, but not limited to, murder, sexual battery, robbery, carjacking, home-invasion robbery, and stalking.

Additional Landlord Obligations

In addition to background check requirements, “Miya’s Law” would introduce new safety requirements for landlords. These additional requirements address when and how apartment employees can access tenant units.

Florida state law currently requires apartment employees to provide notice 12 hours before entering a tenant’s home for property repair. If passed, the new law would increase the notice time to 24 hours.

For added tenant safety, the bill includes additional requirements around unit keys. If passed, Landlords will be required to maintain a log accounting for the issuance and return of all keys for each dwelling unit. They must also establish policies and procedures for issuing and returning dwelling unit keys and regulating the storage of and access to unissued keys.

SB 898 is in the early stages of the legislative process and is not yet law. However, the bill has received support from Florida lawmakers and the Florida rental housing industry. Representative Robin Bartleman has filed HB577 in the Florida House, a companion bill to Senator Stewart’s bill in the Senate. The Florida Apartment Association stated, “FAA looks forward to remaining engaged in this effort during the 2022 legislative session and thanks to Senator Stewart and her legislative staff for their hard work on this legislation.”

Employers in Florida may want to follow this bill as it proceeds through the legislative process. Verified Credentials will provide updates as they become available.

U.S. Department of Human Services Seeking Comment on Form I-9 Document Examination Alternatives

Throughout the COVID-19 pandemic, organizations have adjusted how they operate. In March 2020, the Department of Homeland Security (DHS) announced temporary compliance flexibility for certain I-9 requirements. What was first a short-term action has become a longer-term change. The U.S. Immigration and Customs Enforcement (ICE) recently announced that I-9 compliance flexibility will continue into the new year with an extension of the policy until April 30, 2022.

Additionally, DHS announced that it is seeking public input regarding I-9 document examination practices. DHS is exploring alternative options to physical document examination and stated it is interested in obtaining public input about experiences with remote document examination that can be used to inform and improve DHS policies and processes. DHS provided a non-exhaustive list of questions to help individuals as they create comments regarding remote document examination, including:

1. Comments about pandemic-related I-9 compliance flexibility experience, such as:

  • Did your organization use the compliance flexibilities for remote document examination for I-9? Why or why not?
  • How did remote review perform with your technical resources (video and image quality, document retention, etc.)?
  • What was your experience collecting digital images or documents from employees?
  • What was your experience with employees completing and submitting Section 1 of Form I-9 remotely?

2. Comments about potential remote document examination in the future, such as:

  • What are the benefits of a permanent remote document examination option?
  • What types of employers or employees would have interest in a remote option?
  • Should the list of acceptable documents change? What are the costs and benefits of this?

Employers and others can submit comments at regulations.gov. All comments are public and posted on the site. The commenting period runs through December 27, 2021, with late-filed comments considered to the extent practicable.

Lawsuit Filed for Alleged Background Check Disclosure Violations

Amazon is busy this time of year. But a recent court filing may leave it busier than usual. A prior Amazon employee claims the retailer violated a handful of background check disclosure-related laws. Narek Melikyan filed a class-action lawsuit, on behalf of himself and others similarly situated, against Amazon.com, Inc., Amazon.com Services, LLC, Amazon Logistics, Inc., and other unnamed defendants in September 2021 alleging, among other things, that the defendants violated the:

  • Federal Fair Credit Reporting Act (FCRA)
  • California Investigative Consumer Reporting Agencies Act (ICRAA)
  • California Consumer Credit Reporting Agencies Act (CCRA)

The initial complaint states that Melikyan was hired as an Amazon Flex delivery driver in October 2019. Melikyan received a copy of his background report in August 2020 from the defendants’ third-party background report provider. He claims ”[D]efendants had procured and/or caused to be procured a background report regarding him without a required disclosure or… based on a non-compliant disclosure form”.

The complaint alleges, among other things, that defendants violated:

1. The FCRA’s consumer report disclosure requirement. Defendants allegedly didn’t give Melikyan and the other plaintiffs “a clear and conspicuous written disclosure…in a document that consists solely of the disclosure” before completing the checks.

2. The FCRA’s investigative consumer report disclosure requirement. Defendants allegedly didn’t provide written disclosures advising “that an investigative consumer report, including information as to their character, general reputation, personal characteristics, and mode of living, may be made.” The complaint alleges that the defendants did not provide plaintiffs with written disclosures within three days of requesting investigative consumer reports regarding them, advising them of their rights to request additional disclosures and a written summary of rights under the FCRA.

3. The ICRAA’s disclosure requirement. Defendants allegedly didn’t give Melikyan and the other plaintiffs “a clear and conspicuous disclosure in writing that consisted solely of the disclosure which adequately notified the consumer of the nature and scope of the investigation, and fail[ed] to obtain written authorization each time an investigative consumer report [was] sought and procured with a permissible purpose as required by law.” The complaint further alleges that defendants “procured investigative consumer reports or caused investigative consumer reports to be procured for Plaintiff and ICRAA Class Members without complying with the requirements set forth in 1786.16(a)(2) of the ICRAA.”

4. The CCRA’s disclosure requirement. Defendants allegedly obtained “consumer credit reports,” as that term is defined by California law, without providing written notice that:

  • Identifies the specific basis under California law for the use of the report
  • Informs the person of the source of the report, and
  • Contains a box that the person can check off to receive a copy of the credit report.

Initially filed in Los Angeles Superior Court, the case was removed to the U.S. District Court for the Central District of California in November 2021. The case remains pending, and all claims remain allegations at this time. Verified Credentials will continue to monitor this case and attempt to provide updates as they become available.

State Regulator Announces Increased California Fair Chance Act Enforcement

“Fair Chance” -type laws are becoming more common across the country. These types of laws often restrict the types of criminal information employers can consider during the hiring process, or when certain criminal information can be considered. With the increasing adoption of “Fair Chance”-style laws, it’s sometimes unclear how, or if, agencies will enforce these types of laws. But one agency in California is stepping up their enforcement.

Proactive Measures to Enforce California’s Fair Chance Act

On October 20, 2021, the California Department of Fair Employment and Housing (DFEH) announced a new effort to identify and correct violations of the California Fair Chance Act (FCA).

The DFEH plans to use technology to conduct mass searches of online job advertisements for statements that violated the FCA. The department states that, “Blanket statements in job advertisements indicating that an employer will not consider anyone with a criminal history, such as “No Felons” or “Must Have Clean Record,” violate the Fair Chance Act’s requirement that employers consider an applicant’s criminal history on an individual basis, as well as any mitigating information provided by the applicant.”

In one day alone, they found over 500 problematic job postings. Those included “unlawful statements that the employer will not consider any job applicant with a criminal record.”  The DFEH is documenting the violations. Employers involved with the listings will also receive notice to remove unlawful statements.

DFEH’s steps show that state regulators are willing to enforce these types of laws.

But the state isn’t just about punishing violators. In an effort to help educate employers on the FCA, they created a Fair Chance Toolkit for guidance.

Understanding the Law in California to Avoid Violations

Without a clear understanding of the employment laws, you could be putting yourself at risk of a potential violation. For employers that hire in California, that means staying compliant with the FCA (Cal. Gov. Code § 12952). This law generally makes it an unlawful employment practice for companies that employ five or more people, with some exceptions, to:

  • Ask questions about or consider an applicant’s conviction history before a conditional offer. This also entails including questions on an employment application that seek the disclosure of an applicant’s conviction history.
  • Consider, distribute, or disseminate any of the following while conducting a conviction history background check in connection with an application for employment:
    • Arrests not followed by conviction, except when allowed by state law
    • Referral to or participation in a pretrial or posttrial diversion program
    • Convictions that have been sealed, dismissed, expunged or statutorily eradicated
    • Any conviction for which the convicted person has received a full pardon or has been issued a certificate of rehabilitation

In addition to these restrictions, certain employers in California have more to consider if they intend to deny an applicant employment based solely, or in part based on the applicant’s conviction history. This includes:

1. Conducting an individualized assessment of whether the conviction history has a direct and adverse relationship with the specific duties of the job that justifies denying employment to the applicant. The assessment must consider:

  • The nature and gravity of the offense or conduct
  • The time that has passed since the offense or conduct and completion of the sentence
  • The nature of the job

2. Employers that make a preliminary decision to take adverse action after the assessment must send the applicant a notice of the preliminary decision in writing. The notice must contain:

  • What conviction(s) are the basis for the preliminary decision
  • A copy of the conviction history report
  • An explanation of the applicant’s right to respond before the employer’s preliminary decision becomes final. This explanation must detail the deadline for the applicant to respond and inform the applicant that the response can include submission of evidence challenging the accuracy of the conviction history, evidence of rehabilitation or mitigating circumstances, or both

3. Employers must allow the applicant at least five days to respond before making their final decision. If during this initial waiting period the applicant notifies the employer, in writing, that they are disputing the accuracy of the conviction history, and that the applicant is trying to obtain evidence supporting their dispute, the employer must give the applicant five additional days to respond to the notice. The employer must consider information provided by the applicant before making a final decision.

4. If, after considering evidence from the applicant, the employer makes a final decision to deny an applicant based solely or in part on their conviction history, the employer must notify the applicant in writing:

    • Their final denial, which may include justification of their decision
    • Any existing procedure the employer has for the applicant to challenge the decision or request reconsideration
    • The right to file a complaint to DFEH

Employers may want to review their current job postings with their legal team to make sure they remain in compliance with the changing laws.

A Potential Case of Negligence in Florida Emphasizes Screening for Risky Hires

It’s a nightmare scenario when there is a threat to an individual. Or worse, if someone takes another’s life. While tragedies related to an employee are rare, they’re situations for which HR teams may choose to prepare. Many employers even pinpoint safety as a top reason for doing background checks.

A recent complaint filed in Florida relates to a terrible situation like this. An employee of a housing complex allegedly killed a woman, who was a fellow employee and tenant. And while the details are startling, this pending case is a reminder to employers. Companies run a risk of negligence if they don’t hire and employ responsibly. They should act with the safety of their staff, customers, and the public in mind.

Alleged Events that Ended in Tragedy

The estate of the alleged victim, Miya Marcano, filed a lawsuit in Orange County, Florida on October 18, 2021 against Arden Villas Apartments, LLC (“Arden Villas Apartment”) and the D.P Preiss Company, Inc. (“Preiss”), among others. The complaint states that Marcano was hired by Preiss in June, 2021 to work in the front office of the Arden Villas Apartments, where she was also a tenant.

According to the complaint, during her employment, Marcano met Armando Caballero, who also was employed by Arden Villas Apartments and/or their agents or employees, including Preiss. At some point, she voiced her discomfort with Caballero to her parents and colleagues. But, according to the complaint, it was common for management at the complex to ignore complaints from staff and tenants.

In September 2021, Caballero allegedly kidnapped Marcano from her own apartment. The complaint states that Caballero used a key fob, or other access control device, given to him by the defendants to get into Marcano’s residence. She was later found dead.

The complaint states that “At no time was [Marcano] made aware by the management of Arden Villas that Caballero had a criminal background, a history of harassing women, nor was she aware that Caballero would have unsupervised and/or free access to her apartment.”

Accusations of Negligence

Among other claims, the complaints alleges that the defendants should have been aware of the risk Caballero posed. Defendants knew, or should have known, “that he should have not been hired, not been retained, and/or not been given a key fob (or other access device) that provided unfettered access to apartments…”

Additionally, the complaint alleges that because some employees had access control devices that allowed them to enter apartments, “Defendant had a duty to ensure that all persons that sought to work for defendant and/or at Arden Villas, were properly vetted, and that only appropriate persons were hired”.

Filing documents allege that Arden Villas and others breached their duty to exercise reasonable care and safety for the protection of residents, including Marcano. They also claim that the defendants acted in a negligent manner in various respects, including, but not limited to:

  • Failing to adequately vet prospective employees, including Caballero
  • Failing to contact the prior employers of prospective employees, including Caballero
  • Failing to conduct criminal background searches of prospective employees, including Caballero
  • Failing to implement or execute an adequate screening process for potential employees, thereby allowing persons, that otherwise would be deemed dangerous, to work at Arden Villas

This case is pending and the allegations remain only allegations at this stage in litigation. However, this case highlights the potential risks to employers, their staff and customers, and more. Hiring candidates without proper vetting can result in a dangerous situation. Employers may want to work with their legal counsel to determine if their current background checks thoroughly protect their organization.

Hiring in New Jersey? Have Your Summary of Rights Ready

Last year we talked about New Jersey’s state-specific background check disclosure requirements. But this isn’t the only thing employers should know about New Jersey-specific requirements. Like Washington state, New Jersey also has a state-specific Summary of Rights.

According to New Jersey law, if using a background report for employment purposes, before taking adverse action based in whole or in part on information in the report, employers must provide a copy of the report to the candidate. In addition, the employer must also provide the candidate with “a description in writing of the rights of the consumer under [the New Jersey Fair Credit Reporting Act (NJFCRA.)] and the federal ‘Fair Credit Reporting Act’…”

Consumer Rights & Protections in New Jersey

What are the rights of consumers under the NJFCRA?  The NJFCRA is similar to the federal Fair Credit Reporting Act and contains a number of consumer rights, including, but not limited to:

  • Required consent – The candidate must provide written authorization to obtain a background report about them for employment purposes.
  • Required disclosure – Before procuring a background report for employment purposes, employers must provide a clear and conspicuous written disclosure to the candidate. The document must solely disclose that the employer may obtain a background report for employment purposes.
  • Specific disclosuresSpecific disclosures are required if obtaining information in the background report through personal interviews with neighbors, friends, associates, or acquaintances of the candidate or others with knowledge of the candidate. (An “investigative consumer report,” as defined by New Jersey law).
  • Pre-adverse action requirements – If using the background check for employment purposes, employers must provide specific notices to candidates before taking adverse action.
  • Right to information – Candidates have the right to request and receive all information in their file from a consumer reporting agency.
  • Dispute process – Candidates have the right to dispute information contained in their file directly with a consumer reporting agency.
  • Information removal – Consumer reporting agencies are required to delete or modify inaccurate, incomplete, or unverifiable information.
  • Remedies – Candidates have the right to seek damages from violators of the NJFCRA.

Employers should work with their legal counsel to determine if their New Jersey Summary of Rights complies with the New Jersey Fair Credit Reporting Act. Verified Credentials’ clients can access sample documents in the Resource Library, including a sample New Jersey Summary of Rights,  to help as they create their candidate-facing documents.

New Guidance on Cannabis Drug Tests in New York State

Legal recreational marijuana use continues to shake up drug testing policies in the workplace. The state of New York recently joined the growing list of states that have legalized the recreational use of marijuana with the passage of the Marijuana Regulation and Taxation Act (MRTA).  The act, among other things, included amendments to the New York Labor Law.

Changes to the New York Labor Law

The amendments to the New York Labor Law Section 201-D now makes it unlawful, unless otherwise provided by law, for an employer to refuse to hire, employ or license, discharge from employment, or otherwise discriminate against an individual in compensation, promotion or terms, conditions or privileges of employment because of:

  • An individual’s legal use of consumable products or legal recreational activities, including cannabis in accordance with state law, outside of the employee’s work hours, off the employer’s property, and without the use of the employer’s equipment or property.

There are some exceptions.  According to New York Labor Law Section 201-D(4-a), an employer can take action specifically related to the use of cannabis if:

  • The employer’s actions were required by state or federal statute, regulation, ordinance, or other state or federal governmental mandate.
  • The employer would be in violation of federal law.
  • The employer would lose a federal contract or federal funding.
  • The employee displays specific articulable symptoms of impairment while working that decrease the employee’s performance of their tasks or duties or interfere with the employer’s obligation to provide for a safe and healthy workplace as required by state or federal occupational safety and health law.

Additionally, the law states that employers are not in violation of the law if the employer takes action based on the belief that:

  • The employer’s actions were required by statute, regulation, ordinance, or other government mandate.
  • The employer’s actions were permissible pursuant to an established substance abuse or alcohol program or workplace policy, professional contract, or collective bargaining agreement.
  • The individual’s actions were deemed by an employer or previous employer to be illegal or to constitute habitually poor performance, incompetency, or misconduct.

New Guidance on Cannabis Testing

In October 2021, the New York Department of Labor (NY DOL) issued guidance to “address some of the most common situations or questions in the workplace related to adult-use cannabis and the Marijuana Regulation and Taxation Act.”

The NY DOL guidance includes valuable information for employers regarding the amendments to New York Labor Law Section 201-D.  This includes guidance on drug testing employees.  According to the NY DOL guidance, an employer cannot test for cannabis, unless they are covered by one of the limited exceptions from New York Labor Law Section 201-D(4-a), listed above, or other applicable laws.  The guidance goes on to clarify that employers can drug test employees for cannabis if federal or state law requires drug testing or makes it a mandatory requirement.  However, “an employer cannot test an employee for cannabis merely because it is allowed or not prohibited under federal law.”

The guidance clarifies that both the MRTA and New York Labor Law Section 201-D apply to all public (state and local government only, the federal government, as an employer is exempted) and private employers in New York state, regardless of size, industry or occupation. They apply to all employees employed within the State of New York.  They do not apply to employees that work remotely in a different state, individuals that are not employees (e.g., students who are not employees, independent contractors, and volunteers), and employees under the age of 21, as cannabis use by individuals under the age of 21 is prohibited by New York state law.

You may want to review Section 201-D of New York Labor Law and the NY DOL guidance with your legal counsel to determine if you need to make adjustments to your drug testing policy. If you would like to add a drug testing package without cannabis, we can help. Please contact Verified Credentials support for assistance at 800.938.6090 or fill out this form.

Rideshare Companies in the Hot Seat for Screening Practices

Transportation service giants Uber and Lyft have faced a fair share of attention related to their drivers. Buckley v. Uber claim both rideshare companies failed to comply with federal background check laws.  A driver that worked with both companies recently filed a complaint in the Eastern District of New York on August 27, 2021.

The complaint alleges Uber and Lyft, along with their screening provider, Checkr, failed to comply with certain requirements of the Fair Credit Reporting Act (FCRA). More specifically, it alleges that Uber and Lyft failed to follow the FCRA’s “pre-adverse action” requirements.

What Are the Pre-Adverse Action Requirements?

If using a background report for employment purposes, before taking any adverse action based in whole or in part on information in the background report, employers are required to provide the candidate with:

1. A notice that includes a copy of the background report

2. A copy of the FCRA Summary of Rights

Providing these documents gives the candidate a chance to review what was found in their background report. Then, if they believe there was an error in the background report, the candidate has the ability to dispute the information.

Accusations Against the Rideshare Companies

According to the complaint, driver Donald Buckley had been an Uber driver beginning in 2018.  In April of 2021, a background report was ordered by Uber regarding Buckley. Later that month, Buckley “received notice from Uber that there was an issue with his background check. [Buckley] was unable to continue working for Uber with an incomplete background check…”

Regarding his employment with Lyft, the complaint states that Buckley was a Lyft driver beginning in 2019.  In June2021,  Buckley “received an email communication from Lyft stating that they were unable to complete his annual background check and that additional information was needed. Plaintiff was unable to continue working for Lyft with an incomplete background check.”

The complaint alleges that Uber and Lyft, prior to taking adverse action against him, failed to provide Buckley with either:

  • A copy of his background report
  • A written description of his rights under the FCRA

The complaint also contains various additional allegations against Uber and Lyft’s background screening provider, Checkr.

Buckley is seeking damages from all three of the defendants. Of course, the allegations against Uber, Lyft, and Checkr remain allegations at this stage in litigation.  Verified Credentials will attempt to provide updates on this case as they become available.

Planning a Roadmap to Adverse Action

The case against Uber and Lyft is a good reminder to employers about their obligations under the FCRA. Employers that use background reports for employment purposes may want to develop a clear plan if they are thinking of taking adverse action based in whole or in part on information from a background report. Learn more about Verified Credentials’ tool to help employers fulfil FCRA pre-adverse action and adverse action requirements. Work with your legal team to create a plan for your situation.

 

 

 

An Update on an FCRA Disclosure Case

The Fair Credit Reporting Act’s (FCRA) disclosure requirements haven’t always been clear to employers. A recent update to a long-running case, Walker v. Fred Meyer, Inc., adds additional clarification. to what employers may need to do to comply.

Historical Areas of Confusion

Among other things, the FCRA requires employers to notify candidates of the potential use of a background check for employment purposes. The FCRA requires an employer to:

  • Before a background report is procured, provide the applicant/employee with a clear and conspicuous written disclosure, in a document consisting solely of the disclosure, that the employer may obtain a background report on the applicant/employee for employment purposes

On the surface this disclosure requirement may seem straightforward. But employers have been accused of FCRA violations because they misinterpreted what this means. And regulators haven’t offered much guidance.

Luckily, courts have helped establish some points employers may want to consider. Let’s review a recent development in Walker, a case that has previously provided one court’s interpretation of FCRA disclosure requirements.

Walker v. Fred Meyer, Inc.

As previously discussed, the Ninth Circuit Court of Appeals reviewed defendant Fred Meyer’s disclosure document. The Ninth Circuit held, among other things, that some portions of Fred Meyer’s disclosure violated the FCRA’s “standalone disclosure requirement,” while other sections did not.  The Ninth Circuit then sent the case back to the District Court to determine if the remaining sections that did not violate the standalone disclosure requirement were “clear and conspicuous.”

The Latest – Partial Summary Judgement Granted

With the case returned to the lower court, Fred Meyer filed a motion for partial summary judgement seeking a declaration that:

1. Their disclosure was “clear and conspicuous”

2. The company didn’t act “willfully” with its violation of the standalone disclosure requirement

On August 13, 2021, a United States Magistrate Judge issued her findings and recommendation granting Fred Meyer’s motion for partial summary judgement. It was adopted by the District Court on September 24, 2021. Fred Meyer’s motion was granted.

In determining whether Fred Meyer’s disclosure was clear and conspicuous, the District Court relied on another recent Ninth Circuit disclosure case, Gilberg v. California Check Cashing Stores, LLC., stating, “The phrase ‘clear and conspicuous’ is not defined in the FCRA, but the Ninth Circuit has held [in Gilberg] that a disclosure is ‘clear’ when it is ‘reasonably understandable,’ and a disclosure is ‘conspicuous’ when it is ‘noticeable to the consumer.’”

The court found Fred Meyer’s disclosure language clear stating, “…as a whole does not suffer from grammatical errors or the kind of vague language the court found problematic in Gilberg.  Nor does the disclosure include any information regarding state laws that would ‘confuse a reasonable reader,’ like those in Gilberg.”

The court also determined that the disclosure is conspicuous stating, “First, the disclosure paragraphs are confined to a single page surrounded by ample whitespace and are preceded by a clear title [and]… The disclosure uses legible, clear font…Thus, there is no question that Fred Meyer’s disclosure is conspicuous as a matter of law.”

The Ninth Circuit found earlier that portions of Fred Meyer’s disclosure violated the standalone document requirement. In its recommendation to grant partial summary judgement for Fred Meyer, the District Court held that Fred Meyer’s violation was not a willful violation of the FCRA.

According to the court, “an FCRA violation is “willful” if it is made either knowingly or with “reckless disregard” for the requirements…” of the FCRA.  “An employer acts in ‘reckless disregard’ when “the action is not only a violation under a reasonable reading of the statute’s terms, but shows that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless.”

Using this standard, the court determined that “…Fred Meyer’s disclosure was not based on an ‘objectively unreasonable’ interpretation of FCRA’s standalone requirement at the time Walker applied for a position.”  Even though Fred Meyer’s disclosure now violates the FCRA’s standalone disclosure requirement, it was not unreasonable for Fred Meyer to have provided Walker with the disclosure at the time it was provided.

The back-and-forth of these cases can be complex. But it offers valuable insights into the interpretation of FCRA requirements. Employers may want to review these decisions with their legal advisor to learn how they could impact them.

Rhode Island Works to Boost Pay Equality

The topic of salary equality has been prevalent in recent years. As part of this trend, Rhode Island recently passed amendments to its pay equity law.  This law applies to employers that employ any one person in the state of Rhode Island. The amended law aims to “…comprehensively address wage discrimination, based on religion, race, color, sex, sexual orientation, gender identity or expression, disability, age or country of origin by expanding employee protections and the scope of the remedies available to employees who have experienced wage discrimination.”

The governor signed the amended law on July 6, 2021. But employers will have plenty of time to review their policies and procedures. The law is not effective until January 1, 2023.

The amended law makes a number of detailed changes related to pay discrimination. In addition to addressing pay equity, the law also creates:

  1.  1. A wage history ban
  2.  2. A wage range disclosure requirement

Rhode Island’s Salary History Ban

Rhode Island’s salary history ban is similar to others across the country, including  in Nevada and Toledo, Ohio. Rhode Island’s law prohibits employers from:

  • Using wage history when deciding whether to consider an applicant for employment.
  • Requiring that an applicant’s prior wages meet a minimum or maximum criteria as a condition of being considered for employment.
  • Relying on an applicant’s wage history when determining the wages the applicant will be paid after being hired.
  • Seeking an applicant’s wage history.

After making an initial offer of employment with an offer of compensation, employers may use an applicant’s wage history to support a wage higher than the wage offered by the employer. However, an employer can only use wage history for this purpose if the wage history was voluntarily provided by the applicant, without prompting from the employer.  If an employer does use wage history for this purpose, the employer can seek to confirm the wage history.  Employers should take note that employers can only rely on wage history in the circumstances outlined above to the extent that it does not create an unlawful pay differential, as provided by Rhode Island law.

But what if an employer learns of a candidate’s salary history? First, there’s no penalty if the candidate is an employee of the company and the employer has knowledge of the candidate’s wage history with the employer. Employers can still obtain a background check that does not seek wage history.  But if the background check discloses the applicant’s wage history – they may want to proceed with caution. Even with the knowledge, employers can’t use it to make certain decisions. That includes determining wages, other compensation, or benefits for an applicant during the hiring process, including employment contract negotiations.

Additionally, employers are allowed to verify voluntarily provided information about an applicant’s unvested equity or deferred compensation that would be cancelled or forfeited by the applicant’s resignation from their current employment or any voluntary disclosure of non-wage related information.

Wage Range Disclosure Requirement

To add more transparency to the hiring process, Rhode Island’s amended law includes a wage range disclosure requirement. Upon request, employers must give applicants the wage range for the job. The law also states that employers should provide the wage range for the job the applicant is applying for before discussing compensation during the hiring process. In addition to applicants, employers must also give employees the wage range for their position at the time of hire, when moving into a new position, and anytime upon the employee’s request during the course of employment.

Employers may not refuse to interview, hire, promote, employ, or retaliate against an applicant or employee who either didn’t provide wage history or requested the wage range for a position.

Employers should work with their trusted legal counsel to determine if changes are needed to their current process.

Complaint Filed Against Walmart for Hiring Policies

The United States’ largest private employer faces a proposed nationwide class action lawsuit based on its screening policy. A complaint filed on July 16, 2021 alleges that Walmart “denies employment to many qualified applicants because of unrelated and/or stale criminal history” It also alleges the company “fails to account for evidence of rehabilitation or mitigating circumstances” related to criminal records.

One Experience Highlights the Experience of Many

The complaint against Walmart outlines the experience of named plaintiff Jacqueline Ramos. It alleges that Ramos is “a Black and Latinx woman who had a previous criminal conviction at the time she applied for employment at Walmart that was unrelated to the employment” she applied for.  The complaint claims that Ramos was qualified to work for Walmart, despite her conviction history, having completed a six-month internship with a Walmart subsidiary doing the same work she would have performed for Walmart.

Ramos states that she received an offer of employment from Walmart, but that “her job offer was… rescinded by Walmart because of her criminal history.”  According to the complaint, Ramos provided “strong evidence of her rehabilitation and mitigating circumstances”, but Walmart “failed to account for, or even consider” the evidence that was submitted.

Complaint Highlights Racial Disparities in the Justice System

The complaint makes the allegation that “[a]s a result of its overbroad policy, Walmart denied employment to Plaintiff and disproportionately denies employment to countless other Black and Latinx applicants.”

It states that “Walmart’s criminal history policy must be understood in the context of the reality that individuals who are Black or Latinx are significantly over arrested, convicted, and incarcerated in the United States.”

The filing alleges “Walmart’s criminal history screening policy and practice of denying opportunities to individuals with criminal convictions… constitutes unlawful discrimination on the basis of race, color, and/or national origin”, in violation of:

1. Title VII of the Civil Rights Act of 1964 (“Title VII”), as amended, 42 U.S.C. §§ 2000e et seq.

2. New Jersey Law Against Discrimination (“NJLAD”), N.J.S.A. 10:5-1 et seq.

It further alleges, in clarification of its discrimination claims, that Walmart’s criminal history policy has a disparate impact on Black and Latinx applicants and is not job-related or consistent with business necessity.

The class action complaint proposes two separate classes of individuals.  The first is a “Nationwide Class” of all “Black and Latinx individuals nationwide who, during the relevant statute of limitations period, were denied employment at Walmart based in whole or in part on their criminal history.”  The second is a “New Jersey Class” of all “Black and Latinx individuals in New Jersey who, during the relevant statute of limitations period, were denied employment at Walmart based in whole or in part on their criminal history.”

The allegations against Walmart remain allegations at this stage in litigation – no wrongdoing has been established at this point.  Verified Credentials will attempt to provide you with updates to this case as they become available.

Like the recent cases against Macy’s and New York Life Insurance Company, the claims against Walmart serve as a reminder that any employer that uses background checks for employment purposes should take care to ensure that their background screening policies comply with anti-discrimination laws.

If you have further questions about background screening compliance, you may wish to speak with trusted legal counsel.

I-9 Compliance Flexibility Extended Until the End of 2021

I-9 compliance has looked different for some employers since the beginning of the COVID-19 pandemic. The U.S. Department of Human Services (DHS) has offered continued I-9 flexibility to employers. On August 31, 2021, the U.S. Immigration and Customs Enforcement (ICE) announced that the flexibility will continue through the end of the year.

I-9 compliance flexibility will remain in place for employers with remote-only staff. According to ICE, employers may use flexible rules for employees hired on or after April 1, 2021. This policy applies to staff that works “exclusively in a remote setting due to COVID-19-related precautions.”

The extended policy expires on December 31, 2021.  DHS states that it will continue to monitor the ongoing national emergency and provide guidance as needed.  Employers are required to monitor DHS and ICE websites for additional updates on when extensions will be terminated, and normal operations will resume.

A Quick Review

While you may be familiar with this ongoing I-9 compliance flexibility, here’s a recap of the policy:

  • The flexibility refers to the physical inspection of an employee’s identity and employment authorization documents. Eligible employers can inspect their employee’s documents through methods like video, fax or email first. Employers must still obtain, inspect and retain copies of the documents within three business days. I-9 compliance flexibility is available for employers and workplaces that have employees working remotely and only for the employees working remotely. If employees are working on-site, no exceptions apply.
  • Once normal operations resume, employees onboarded using remote verification must report to the employer within three business days to verify the employee’s identity and employment eligibility documentation in-person. Employers that utilize the remote inspection option must provide written documentation of their remote onboarding and telework policies for each employee.
  • DHS has listed specific language for what should be included on the I-9 form when in-person physical inspection of documents has been delayed. Employers that take advantage of the I-9 compliance flexibility may want to review the DHS announcement carefully to ensure that their I-9 forms continue to meet DHS requirements.

For up-to-date details on I-9 compliance flexibility, check out I-9 Central.

Maine Beacons a Change in Hiring Practices

Like lighthouses dotting the coast of Maine, “Fair Chance” laws throughout the country provide a guiding light to prevent employers from running into rocky compliance issues. Maine is one of the latest states to pass this type of law. “An Act Relating to Fair Chance in Employment,” or Maine LD 1167, was signed by Governor Janet Mills on July 6, 2021. The law will be effective on October 18, 2021.

The state of Maine’s new law prohibits employers in the state (with some exceptions) from asking about criminal history record information in certain situations. Let’s better understand more about Maine’s new restrictions.

Application & Job Posting Restrictions

Like many other ban the box-style laws across the country, Maine’s law makes it illegal for employers to request criminal history record information on initial application forms. But the state’s restrictions go beyond the basics.

Maine’s law states that employers cannot make statements on initial application forms, advertisements, or specify, prior to determining a candidate is otherwise qualified for the job, that a person with a criminal history cannot apply or will not be considered for a job.

The state has outlined situations where employers may be exempt from these restrictions, including:

  • When a position is one where federal or state law, regulation or rule creates a mandatory or presumptive disqualification for one or more types of criminal offenses. In this case, questions and statements on the initial application form are limited to the specific criminal offense(s) that creates the disqualification.
  • When an employer is obligated under federal or state law, regulation or rule not to employ a person who has been convicted of one or more types of criminal offenses. In this case, questions and statements are limited to the specific criminal offense(s) that creates the obligation.

Interview Restrictions

In many cases, after the initial application, Maine employers have more freedom. An employer may ask a candidate about criminal history record information during an interview or once the candidate has been otherwise determined to be qualified for the job.

For employers that ask a candidate whether they have been convicted of a crime, Maine requires them to give candidates more room than just answering “yes” or “no” Employers must give candidates the chance to explain the information and circumstances regarding any convictions, including post-conviction rehabilitation.

As we approach fall, and the effective date of this new law, employers in Maine may want to review their applications, job postings, and more to make sure they align with the new requirements. Violations could start to add up for employers that don’t comply. Employers may be subject to penalties between $100 – $500 for each violation of the law.

If you have questions about how this law may impact your hiring process, you should work with your legal counsel.

Fair Chance Act Guidance Updated for New York City Employers

Amendments to the New York City Fair Chance Act (NYC FCA) took effect on July 29, 2021. According to the New York City Commission on Human Rights (NYCCHR) the changes generally “…[add] new protections for people whose criminal history includes unsealed violations and unsealed non-criminal offenses.  [The amendments] expand the protections of the Fair Chance Act to cover current employees and to reach pending cases.”  The NYC FCA applies to specified employers in New York City.

Before the amendments took effect, the NYCCHR issued updated Fair Chance Act guidance for employers. The guidance outlines how the NYCCHR has interpreted the NYC FCA and has tips on actions for employers to take to remain in compliance with the updated law. The revised guidance includes valuable insights for employers in the city. The NYCCHR’s lengthy guidance covers a lot of information, but there are a few key clarifications within the guidance to consider:

1. Examples of Non-Conviction Records that Employers Can’t Consider.

As we discussed, in general, the NYC FCA now prevents employers from inquiring about, denying employment or taking adverse action based on certain non-conviction records. In its guidance the NYCCHR lists some of these types of records that qualify as non-conviction records including an arrest without conviction, dismissed charges, and more. While detailed, the list is not exhaustive. There may also be exceptions for some employers.

The guidance also provides recommendations on how to permissibly ask about conviction history without violating the prohibition on inquiring about certain non-convictions, including providing a model conviction history question that employers can use.  The NYCCHR notes that employers cannot disqualify a candidate based on their refusal to answer an unlawful question about non-convictions.

2. Details on How to Conduct a Fair Chance Analysis.

In New York City, employers are required to do a Fair Chance Analysis if they are considering taking adverse action based on an applicant or employee’s conviction history.   The recent amendments to the law established NYC FCA specific “relevant fair chance factors,” in addition to state law fair chance factors.  The NYCCHR’s guidance details both city and state fair chance factors and provides clarification on when each set of factors should be used to conduct a Fair Chance Analysis.

3. Information on Additional Employee Protections.

After the recent amendments, the NYC FCA now also applies to current employees, in addition to new job applicants. The law protects employees from criminal history backlash unrelated to their role. The guidance provides additional detail on the protections now extended to current employees.  This includes, among other requirements, more information on both the new Fair Chance Analysis and Fair Chance Process for current employees.

4. Information on Additional New Candidate Protections.

The NYCCHR guidance makes one thing clear: “unless an exemption applies, criminal history may not be sought or considered by employers before a conditional offer of employment.” This extends to omitting any mention of a “criminal background check” when disclosing or getting authorization for an employment related background check prior to a conditional offer of employment. The NYCCHR encourages employers to use alternative terms rather than “background check”. It prefers use of “consumer report” or “investigative consumer report” instead.

These preferred terms are also reflected in select sample compliance documents from Verified Credentials. We offer sample documents incorporating this guidance for employers that hire candidates that live or work in New York City to review as they create their own. Clients can find these in our Resource Library.

5. On Considering a Two-Phase Background Check.

The new guidance details what employers should not do or consider before making a conditional job offer. And what they should do and can consider after. The guidance states that requesting and reviewing criminal history can only happen after favorably evaluating an applicant’s non-criminal information.

In fact, the NYCCHR suggests that employers working with a screening company should receive background information in two stages. First, obtain non-criminal background information. If the applicant is still in the running after reviewing that information, and the employer extends a conditional offer of employment to the applicant, then the employer can look at criminal history background information.  Because driving records may contain both non-criminal and criminal information, the NYCCHR instructs employers to only consider and review driving records after a conditional offer has been extended.

Separate review of non-criminal and criminal information, according to the guidance, insulates the employer from potential discrimination liability.

The NYCCHR acknowledges that some employers may face challenges if they are unable to get two separate reports from their screening provider. In those cases, the employer must establish a system to separate information. That way decisionmakers don’t receive the criminal history information until after making a conditional offer. Employers who take this route bear the burden of proving  the criminal history information was inaccessible to decisionmakers only after the conditional offer was made.

While an uncommon practice, Verified Credentials has adapted the screening process into a two-part process for other employers. If you need to learn about this unique process, our team is happy to help!

If you have questions about how you should apply this guidance to your screening, contact your trusted legal team.

Louisiana’s Fair Chance Law Goes into Effect

Like New York City, the state of Louisiana now has its own “Fair Chance”-style law. Louisiana Act 406 places new restrictions on employers that consider a candidate’s criminal history when making hiring decisions. “Employers”, with some exceptions, are any employers, private or public, with 20 or more employees working in Louisiana. Passed through the Louisiana State Legislature in the 2021 regular session, the Act was signed into law by the Governor on June 16, 2021. It went into effect on August 1, 2021.

“Fair Chance”-style laws often restrict the types of criminal information employers can consider during the hiring process, or when certain criminal information can be considered. These types of laws may aim to ensure that candidates are hired based on their merit and qualifications, rather than their past criminal history.

Find out how Louisiana has adopted this type of law.

Restrictions Vary by Record Type

Employers hiring in Louisiana may want to pay attention to what types of criminal records they request or consider when making a hiring decision. Unless otherwise provided by law, Louisiana’s new law prohibits the request or consideration of arrest records or charges that have not led to a conviction, if such information is received in the course of a background check.

New Requirements for Considering Certain Criminal Records

When considering other types of criminal records, employers must “make an individual assessment of whether an applicant’s criminal history record has a direct and adverse relationship with the specific duties of the job.” The assessment should include consideration of the following:

  • The nature of the offense and how serious it was
  • How much time has passed since the offense, conduct, or conviction
  • The nature of the job

Additionally, employers may be required to provide their candidates with additional information. Under Louisiana’s new law, employers are required to provide the candidate with any background check information used during the hiring process upon the candidate’s written request.

Louisiana employers may want to review their hiring processes with their legal team to determine if they comply with the new state law.

The Litigation Saga of Waterloo, Iowa’s Ban the Box Law

Cities have been quick to enact laws around the use of criminal history for employment purposes in recent years. These types of laws are commonly known as “Ban the Box” Laws.  In some cases, there is push back from the business community as to these laws. That’s what happened in the city of Waterloo, Iowa. Let’s catch up on the chain of events that surrounds the city’s ban the box law.

Waterloo’s Ban the Box History

Waterloo became the first jurisdiction in Iowa to enact a law around the use of criminal records for employment purposes. The city’s law took effect in July 2020. As enacted, among other things, Waterloo’s law makes it an unlawful discriminatory practice:

  • For an employer to include a criminal record inquiry on any application in connection with the employment of any person.
  • For employers with fifteen (15) or more persons, with some exceptions, to make any inquiry regarding, or to require any person to disclose or reveal, any convictions, arrests, or pending criminal charges during the application process, including but not limited to any interview.
  • For employers with fifteen (15) or more persons, with some exceptions, to make an adverse hiring decision:
    • Based solely on the applicant’s record of arrests or pending criminal charges that have not yet resulted in a conviction;
    • Based on any criminal records which have been lawfully erased or expunged, which are the subject of an executive pardon, or which were otherwise legally nullified;
    • Based on an applicant’s criminal record without a legitimate business reason.

The law impacts many employers in the city. It does not apply to employers that employ less than four persons in the City of Waterloo, the United States government, the State of Iowa, or any state or federal political subdivisions (except, of course, the City of Waterloo). Employers who are required by federal or state law or regulation to make a criminal record inquiry on an employment application are also exempt under this law.

Waterloo Challenged by Business

Before the law went into effect, the Iowa Association of Business and Industry (IABI) filed a lawsuit related to Waterloo’s law. Alleging it violated state law, the IABI asked the district court to prohibit Waterloo from enforcing its law, as well as declare that the it violates both the Iowa Code and the Iowa Constitution.

The Black Hawk County, Iowa District Court disagreed. The District Court decision noted that “the ordinance is consistent with authority given to cities by… [the Iowa Civil Rights Act] to provide ‘broader or different categories of unfair or discriminatory practices.’”.

Following the court’s decision, the IABI immediately filed an appeal.

A Final Decision?

The IABI’s appeal made its way to the Iowa Supreme Court. The Supreme Court issued an opinion on June 18, 2021, reversing part of the lower court’s decision by invalidating parts of the Waterloo ban the box law while upholding parts of the law

The Supreme Court disagreed with the District Court’s reliance on the Iowa Civil Rights Act. The Supreme Court held that they “…are not persuaded that [the Iowa Civil Rights Act] can sustain the ordinance.”

The Court instead reviewed the Waterloo ordinance in relation to Iowa Code section 364.3(12)(a). This section of Iowa law states that “a city shall not adopt, enforce, or otherwise administer an ordinance, motion, resolution, or amendment providing for any terms or conditions of employment that exceed or conflict with the requirements of federal or state law relating to a minimum or living wage rate, any form of employment leave, hiring practices, employment benefits, scheduling practices, or other terms or conditions of employment.”

In its lawsuit, the IABI had argued that the Waterloo ordinance violates Iowa Code section 364.3(12)(a), as it governs hiring practices and terms and conditions of employment in a manner that exceeds or conflicts with federal or state law.

The Supreme Court first addressed the City of Waterloo’s argument that “the ordinance is not preempted anyway because it does not ‘exceed’ the requirements of state and federal law.  Waterloo’s ‘Ban the box’ law, according to the City, simply implements existing civil rights law.”  The Court held that because the Waterloo ordinance “forbids every employer’s use of a criminal history box on the job application form for every job, even if the employer might have valid business reasons for asking about criminal history” the “requirements [of the Waterloo ordinance] go beyond Title VII (federal law) and the ICRA (state law).”

The Supreme Court then held that Iowa Code section 364.3(12)(a) only “preempts ordinances that prescribe different terms or conditions of employment… to the extent [the Waterloo] ordinance merely delays an inquiry into criminal history, it is not prescribing different terms or conditions of employment.”

The Court ultimately held that the provisions of the Waterloo ban the box law that actually set terms and conditions of employment are prohibited under Iowa state law.  This ruling voids the sections of the ban the box law that do not allow certain employers to turn down persons with certain types of criminal records.  However, the sections of the Waterloo ban the box law that simply address the timing of the criminal record history inquiry do not provide for terms and conditions of employment and are not prohibited by Iowa state law.

After this ruling, the following sections of the Waterloo ban the box law are now invalid under Iowa state law:

  • For employers with fifteen (15) or more persons, with some exceptions, to make an adverse hiring decision:
    • Based solely on the applicant’s record of arrests or pending criminal charges that have not yet resulted in a conviction;
    • Based on any criminal records which have been lawfully erased or expunged, which are the subject of an executive pardon, or which were otherwise legally nullified;
    • Based on an applicant’s criminal record without a legitimate business reason.

The Supreme Court determined that the other requirements of the Waterloo ordinance are allowed under Iowa state law and remain valid.

Employers in Waterloo may have questions about the final court ruling. You may want to review the final decision with your legal advisor to learn how this may impact your background checks.

Seeing Dollar Signs (or Not) on Salary Verifications in Nevada

Las Vegas is famous for high-rollers and big spending. It might seem like the city, and the broader state of Nevada, are all about the money. But now, a new state law is putting the brakes on discussions or inquiries about pay history, including wages and salary, for employment purposes.

Nevada’s Restrictions & Transparency Requirements on Pay

Nevada’s law is similar to others in place across the country like in Toledo, Ohio and Maryland. SB 293 was signed into law by Governor Sisolak on June 2, 2021. As of the effective date of October 1, 2021, employers in the state and employment agencies recruiting for employers in the state cannot:

  • Seek the wage or salary history of an applicant;
  • Use the wage or salary history of an applicant to determine whether to offer them employment or determine their rate of pay;
  • Refuse to interview, hire, promote or employ an applicant, or discriminate or retaliate against them, if they do not provide wage or salary history

But employers don’t have to be left in the dark. They can still ask applicants for their wage or salary expectations for the job.

In addition to the restrictions, employers are required to provide certain wage and salary information. This includes disclosing the wage or salary range or rate to:

  • Applicants that interviewed for the job
  • Current employees that applied and interviewed for a transfer or promotion and requested the wage or salary range or rate for the transfer or promotion

Talking About Pay Could Cost Employers

Here’s where Nevada employers may want to start thinking about money again. Once in effect, a person can file a complaint with the Nevada Office of the Labor Commissioner against employers and employment agencies for violating the new law.  Employers and employment agencies that fail to follow the law could face monetary penalties from the state’s Labor Commissioner. Every violation can result in up to a $5,000 administrative penalty in addition to any other remedy or penalty. On top of that, if an administrative penalty is imposed by the Labor Commissioner, employers could be responsible for the costs related to the Labor Commissioner’s administrative proceeding. This might include investigative costs and attorney fees.

Potential consequences may not stop there. Individuals that file a complaint with the state may also take legal action. Upon request to the Labor Commissioner, the complainant can get a right-to-sue notice if at least 180 days have passed after the complaint was filed. They person may, within 90 days of receiving the right-to-sue notice, bring a civil action against the employer in district court.

Taking Account of Definitions

The key players at the table are Employers and Employment Agencies and what is considered the applicant’s Wage or Salary History. Here are definitions laid out by the law:

  • An “Employer” means a public or private employer in Nevada, including, without limitation: The State of Nevada, an agency of Nevada, a political subdivision of Nevada, among other entities.
  • “Employment agency” means any person regularly undertaking with or without compensation to procure employees for an employer or to procure for employees opportunities to work for an employer.
  • “Wage or salary history” means the wages or salary paid to an applicant for employment by the current or former employer of the    The   term   includes, without   limitation, any compensation and benefits received by the applicant from his or her current or former employer.

The law may not apply to all employers. Exceptions include:

  • Any employer with respect to employment outside of Nevada
  • Any religious corporation, association, or society with respect to the employment of individuals of a particular religion to perform work connected with the carrying on of its religious activities

Employers that hire in the state of Nevada may want to review the pending law with trusted legal counsel before its enactment this fall. But even those that don’t do business in the state may wish to proceed with caution. Laws limiting inquiries into a candidate’s prior pay continue to pop up around the country – indicating a growing trend that HR professionals may want to watch.

Kentucky in the Lead to Protect Employers with New Reentry Law

You might have noticed a significant push across the country to remove a criminal record as a barrier to employment. Varying new laws have been introduced to  attempt to help the third of American adults that have a criminal record get work. These include ban the box, clean slate, and fair chance laws, to name a few. These laws generally aim to end the discrimination of anyone with a criminal record during the hiring process.

The state of Kentucky is off to the races with a new take. And this one also offers unique benefits to employers.

Kentucky on Track to Certify Employability

House Bill 497 was an immediate winner with the Kentucky Legislature. The bill passed unanimously in March 2021. Governor Andy Beshear later signed it on April 5, 2021. The bill introduces, among other things, a “Certificate of Employability” (COE) program for eligible individuals released from incarceration.

The new law will take effect on June 29, 2021. So how does it work for candidates and employers in the state?

Program Criteria for Participants

The new COE won’t be available for every person leaving incarceration. Those that are eligible will receive a COE from the Kentucky Department of Corrections (DOC). But to receive this certificate, participants must meet all of these requirements:

  • They must achieve one or both of the following:
    • Earn an educational credit, a program completion credit, or a work-for-time credit while incarcerated; or
    • Prior to incarceration, have earned a high school diploma, high school equivalency diploma, a college degree, certification from a vocational or technical educational program that the program was completed, or a diploma or degree from a correspondence postsecondary education program approved by the DOC.
  • They may not receive any major disciplinary violations in the year leading to their release.
  • They must receive a score or level of competence as determined by the DOC on a job skills assessment test.

On top of the COE program, the DOC will help prepare job resumes for incarcerated persons as part of a life skills program. The DOC is required to help incarcerated persons obtain records or documents to assist in preparing resumes.

Impacts on Kentucky Employers

 If you employ people in Kentucky, you might be wondering how this could impact you. The law does not require employers in the state to hire candidates with a criminal history. But the law does potentially reduce the risk for employers that chose to hire a person with a COE.

Employers that hire a candidate with a COE will have certain legal protections:

  • In a proceeding alleging negligence or other fault, a COE may be introduced as evidence of a person’s due care in hiring, retaining, licensing, leasing to, admitting to a school or program, or otherwise transacting business with an individual with a COE if the person knew of the COE at the time of the alleged negligence.
  • In a proceeding against an employer for negligent hiring, a COE may be a defense to the claim if the employer knew of the COE at the time of the alleged negligence.
    • However, employers cannot use a COE as a defense in a negligent hiring proceeding if the employer knew or should have known that the employee should not be hired for the position due to the nature of his or her history, including criminal history.

Employers may want to review the law with their legal team to understand how it may impact their hiring.

Beyond Washington’s Disclosures: Summary of Rights Requirements

Last month we highlighted background report disclosure requirements in the state of Washington.

As we previously discussed, part of the disclosure requirements for “investigative consumer reports,” under Washington law, is providing candidates with additional information. Among other things, a Washington investigative consumer report disclosure must include a written statement informing the candidate of the candidate’s right to request both: (i) A complete and accurate description of the nature and scope of the investigation upon submitting a written request to the employer within a reasonable period of time after receipt of the disclosure; and (ii) A written summary of the candidate’s rights under Washington state law.

Digging Deeper: Washington’s Summary of Rights

This state-specific summary of rights details the rights consumers have based on the  Washington Fair Credit Reporting Act (Washington FCRA). Washington’s summary requirements include:

  • A brief description of the Washington FCRA and all rights and remedies of consumers under the Washington FCRA.
  • An explanation of how the consumer may exercise the rights and remedies.
  • A list of all state agencies, including the attorney general’s office, responsible for enforcing the Washington FCRA. This should include the address and phone number of each agency.

Consumer Rights in Washington

This additional document may not be a surprise. Washington is pretty committed to consumer protections and rights. What are consumer rights and protections are included in Washington law?  The Washington FCRA contains a number of rights for consumers, including, but not limited to:

Employers may want to consult their legal advisor to determine if their Washington Summary of Rights aligns with the Washington FCRA. To help your drafting or review process, Verified Credentials provides a sample Washington Summary of Rights in our client Resource Library.

Continued Form I-9 Compliance Flexibility

The way employers hire has adapted to a more remote workforce. Some government agencies have also introduced temporary policies to assist employers in both promoting remote readiness and meeting COVID-19 restrictions.

It’s been over a year since the Department of Homeland Security (DHS) introduced temporary flexible Form I-9 compliance. Temporary I-9 compliance flexibility has given employers more leeway for certain employees working in remote settings.

For more information on the I-9 flexibility, check out our blog post highlighting some of the accommodations, available here.

Since its initial announcement in March, 2020, the DHS has extended this temporary policy. And we’ve been updating you along the way. On May 26, 2021, DHS, through U.S. Immigration and Customs Enforcement (ICE), announced a new extension.  The policy now extends until August 31, 2021. The summer-long extension is the longest since the pandemic began.

According to ICE, “The current extension includes guidance for employees hired on or after June. 1, 2021, and who work exclusively in a remote setting due to COVID-19-related precautions.” These employees are exempt from the physical inspection requirements associated with Form I-9 until they transition to non-remote work, on a regular, consistent, or predictable basis, or the extension of these flexibilities is terminated, whichever is earlier.

Verified Credentials continues to monitor DHS announcements regarding temporary Form I-9 compliance flexibility. For the latest from the DHS on Form I-9 and E-Verify policies, please check out I-9 Central.  Be sure to talk with your legal counsel before taking advantage of the I-9 compliance flexibility rules to make sure you stay compliant.

Washington’s Vast Approach to Background Check Disclosures

Those that have visited the Pacific Northwest know the beauty of the area. The region is known for lush forests, majestic mountains, and stunning waters. Washington alone is home to Olympic National Park, Mount Rainier, and the Columbia River Gorge. One could easily get lost in the wilderness of Washington.

But getting lost in Washington could mean more than just the physical area, especially for employers. The state ranks among the top in labor protection laws – meaning there is a lot for employers in the state to navigate. That includes laws around background checks.

Washington Fair Credit Reporting Act

Like California, New York, and others, Washington has state-specific laws regulating background reports. Chapter 19.182 of the Revised Code of Washington was enacted in 1993. Known as the (Washington) Fair Credit Reporting Act, the Washington state law covers state-specific requirements for background reports.

  1. Consumer Reports

Washington state law defines a “consumer report” (“background report”) as any information, with some exceptions, by a consumer reporting agency bearing on a candidate’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living used for:

  • Employment purposes
  • Establishing eligibility for credit or insurance to be used primarily for personal, family, or household purposes
  • Other reasons authorized by state law

 Washington Consumer Report Disclosure Requirements:

Employers in Washington must pay attention to state-specific disclosure requirements before obtaining a background report for employment purposes.

If obtaining a background report for employment purposes for someone that isn’t a current employee:

  • The employer must provide a clear and conspicuous disclosure, in writing, to the candidate that they may obtain a consumer report for purposes of considering the candidate for employment. Before getting the report, they must provide the disclosure to the candidate. Employers can include the disclosure in a written statement contained in employment application materials; or
  • The candidate must authorize the procurement of the report.

If getting a background report for employment purposes for a current employee, the employer must provide a written notice to the employee stating that purpose. This can happen at any time after the person became an employee.

  • According to Washington state law, “A written statement that consumer reports may be used for employment purposes that is contained in employee guidelines or manuals available to employees or included in written materials provided to employees constitutes written notice…”

Employers should note additional requirements if the background reports they obtain for employment purposes contain information on a candidate’s creditworthiness, credit standing, or credit capacity.  Employers cannot get a background report on a candidate with this credit information unless the information:

  • Is substantially job-related, and the employer discloses their reasons for the use of credit information to the candidate in writing; or
  • Is required by law
  1. Investigative Consumer Reports

Some employers may want more personal information about their candidates. This might include details about what the candidate is like as an employee, how they perform in certain work situations, or their strengths and weaknesses. For this information, employers may choose to take a more exploratory approach and obtain information about their candidates through personal interviews.

If your background report contains information obtained through personal interviews, you may be obtaining an “investigative consumer report.”  Washington state law defines an investigative consumer report as, with some exceptions, a background report that contains information on a candidate’s character, general reputation, personal characteristics, or mode of living obtained through personal interviews with neighbors, friends, associates, or acquaintances of the candidate.

Washington Investigative Consumer Report Disclosure Requirements:

Washington law requires employers to provide candidates with a unique written disclosure for investigative consumer reports. An employer cannot obtain an investigative consumer report unless either:

  • They disclose clearly and accurately to the candidate that they may use an investigative consumer report, including information as to the candidate’s character, general reputation, personal characteristics, and mode of living, and the disclosure:
    • Is made in writing and either mailed or delivered to the candidate within three days after requesting the investigative consumer report; and
    • Includes a written statement informing the candidate of the candidate’s right to request both: (i) A complete and accurate description of the nature and scope of the investigation upon submitting a written request to the employer within a reasonable period after receipt of the disclosure; and (ii) A written summary of the candidate’s rights under Washington state law.
  • They will use the report for employment purposes for which the candidate has not specifically applied.

Wondering where to start? We offer sample compliance documents to help. You can review our sample Washington disclosures when creating your own. Simply log into your Verified Credentials Employee® account and go to the Resource Library. Download the “Washington Consumer Report Disclosure” and “Washington Investigative Consumer Report Disclosure” samples to get started.

The state of Washington established these requirements to protect candidates. Employers may want to explore the vast set of rules they face further. Those that hire in the state should work with their legal counsel to learn how these requirements apply to their screening program.

Philadelphia Inches Closer to Certain Drug Testing Limits

There has been a rise in legalizing medicinal and recreational cannabis across the United States. Some areas have expunged records related to marijuana. Others have decriminalized the use of marijuana. It seems attitudes about the drug have changed in the country. Maybe you’ve thought about how this impacts how you approach screening marijuana use for employment purposes.

We’ve been keeping tabs on the topic. Last year we talked about how Virginia passed a law that bans asking about certain marijuana-related offenses. This month we are looking at changes coming to Philadelphia.

Philadelphia’s New Law

Recent legislation in Philadelphia will make it an unlawful employment practice for an employer, labor organization, or employment agency to require a prospective employee to submit to testing for the presence of marijuana as a condition of employment.

There are certain exceptions. This restriction will not apply to candidates applying for jobs in certain professions, including:

  • Law enforcement positions
  • Roles requiring a commercial driver’s license
  • Any position requiring the supervision or care of children, medical patients, disabled, or other vulnerable people
  • Any job where the employee could significantly impact the health and safety of others determined by the city and identified in future regulations.

This restriction will also not apply to drug testing required by:

  • Federal or state law, regulation, or order that requires drug testing of applicants for safety or security purposes
  • Contracts between the federal government and employers or grants awarded by the federal government that require drug testing of applicants as a condition of receiving the contract or grant
  • Valid collective bargaining agreements that specifically address the pre-employment drug testing of applicants

What’s the Timeline?

Philadelphia’s City Council passed the proposed law on April 22, 2021. Mayor Jim Kenney signed the law on April 28, 2021. The law will become effective on January 1, 2022.

Verified Credentials will continue to monitor this legislation. If you think this law might impact your drug testing program, consider speaking with your legal advisor.

Another Disclosure Violation Case

We’ve highlighted many cases of companies accused of violating the Fair Credit Reporting Act (FCRA). So many of these situations fall back on disclosure forms.  We have previously discussed cases involving FCRA disclosures, such as Gilberg v. California Check Cashing Stores, LLC. Each case gives us a better understanding of how the courts interpret the FCRA. Employers may want to take note of these decisions to get a clearer picture of their requirements.

Another company is facing potential financial loss after the US District Court for the Northern District of California found, in Arnold v. DMG Mori USA, Inc., it violated the FCRA. In a recent decision granting summary judgment to the plaintiffs in this class-action lawsuit, the court found that DMG Mori USA, Inc. (DMG), a cutting machine tools maker, didn’t follow the FCRA disclosure requirements.

DMG’s Misstep

Plaintiffs in this class action case included certain U.S.-based DMG applicants. DMG obtained background reports on them for employment purposes from April 19, 2016, and after. During the application process, DMG gave them disclosure forms that outlined their rights under the FCRA. The problem? DMG’s disclosure also included their rights under state laws in:

  • California
  • Maine
  • Minnesota
  • New York
  • Oklahoma
  • Oregon
  • Washington

Plaintiffs claimed this directly violated the FCRA’s requirement for a standalone disclosure, i.e., a clear and conspicuous disclosure that a consumer report may be obtained for employment purposes, in a document that consists only of the disclosure.

The court agreed, stating “the undisputed facts amply establish that DMG violated the FCRA.  DMG provided plaintiffs with a standardized disclosure and authorization form, which plaintiffs signed.  In addition to the disclosures required by the FCRA, the form contained statements about the laws of several states.  The Ninth Circuit interprets the FCRA ‘as mandating that a disclosure form contain nothing more than the disclosure itself, without any extraneous information.”

As further background on its decision, the court pointed to precedent set by the Gilberg decision. It stated that “forms such as those used by DMG that contain ‘extraneous information relating to various state disclosure requirements in that disclosure’ violate” the FCRA.

DMG Fails a Redo

Court documents show that after the Gilberg case, DMG removed language about state laws from its disclosure. But there were still issues with the updated document. DMG’s disclosure included extra language about the applicants’ rights. It stated they have “the right, upon written request made within a reasonable time, to request whether a consumer report has been run about you and to request a copy of your report.”

While it appears DMG intended to help applicants with this, the court again pointed to previous cases. In the past, the Ninth Circuit decided that similar language violates the FCRA’s standalone disclosure requirement.

On top of the court’s findings on the violations, it found DMG acted willfully. This means that the company knowingly violated the FCRA. DMG showed “reckless disregard” for the law when it violated one of its clear requirements – the standalone disclosure requirement.

Penalties Coming

The court issued a summary judgment in favor of the plaintiffs on March 31, 2021. Damages in this case are pending a settlement conference. However, the court noted that potential damages under the FCRA range from $100 to $1,000 for each class member.

This case is a good reminder to employers to consult legal teams when developing and updating background check disclosures. Even if you feel like you know the ins-and-outs of what’s required, there is still room for misunderstanding.

 

Illinois Human Rights Act Updates Are Now Law

With the change of seasons we are seeing changes to some laws. In February we talked about Illinois Senate Bill 1480 and about potential changes coming to the Illinois Human Rights Act. The changes are now official. The bill was signed into law by Governor J.B. Pritzker on March 23, 2021 and became effective that day.

What’s Changed Now that the Bill is Signed?

The Illinois legislature passed Senate Bill 1480 on January 13, 2021. The bill amends the Illinois Human Rights Act. Among other things, SB1480, unless otherwise authorized by law, makes it a “civil rights violation for any employer, employment agency or labor organization to use a conviction record… as a basis to refuse to hire, to segregate, or to act with respect to recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, or terms, privileges or conditions of employment (whether “disqualification” or “adverse action”)…”, with some exceptions.  A “conviction record” includes information that a person has been convicted of a felony, misdemeanor or other criminal offense, placed on probation, fined, imprisoned, or paroled.

How Does this Impact Employers in Illinois?

This law may have an impact on how criminal conviction records can be used for employment decisions in Illinois.  For more information on the new restrictions, you may want to review our recent discussion on Senate Bill 1480.

You may also want to talk to your legal advisor to understand how this law and others could apply to you.

Costly Settlement for Alleged FCRA Violation

The Fair Credit Reporting Act (FCRA) outlines the fundamental federal requirements for employment background checks done by consumer reporting agencies. No company wants to face the consequences of a violation. But the truth is, sometimes it happens. In those cases, employers may face litigation.

Continued Confusion Over FCRA Disclosures

The requirements of the FCRA can be difficult to navigate.  One of the most confusing, and litigated, requirements for employers under the FCRA are the disclosure and authorization requirements, as we have previously discussed.  We have seen litigation surrounding FCRA-required disclosures in  Gilberg v. California Check Cashing Stores, LLC and Walker v. Fred Meyer, Inc. In February, another company settled after an accusation of similar violations.

The Complaint Against Quantum Global Technologies, LLC

Quantum Global Technologies, a cleaning contractor based in Pennsylvania, found themselves in a tough spot. A former employee filed a class action complaint alleging the company violated the FCRA based on a disclosure form that Quantum used that reportedly included an extraneous liability waiver.

The complaint accused Quantum of requiring all prospective employees to sign a standard form authorizing a third-party background check. Because Quantum’s form included a liability waiver, in addition to a disclosure concerning a consumer report, the class action complaint alleges that Quantum violated the FCRA’s stand-alone disclosure requirement and, as a result, Quantum never received proper authorizations for any reports it obtained using its standard form.  The named plaintiff also claimed that he was confused by Quantum’s standard disclosure and authorization form and did not understand that Quantum would be requesting a consumer report as defined by the FCRA.

Quantum Accepts Penalties

In this case, Quantum and its former employee ended up settling. On February 16, 2021 the settlement was approved by a federal judge. Quantum will pay $174,980 as a class settlement for the alleged violations.

The amount that Quantum has agreed to pay is extensive, but case settlements can certainly exceed this amount. To avoid potential issues, employers should work with their legal advisor to ensure their disclosures meet federal, state, and local requirements.

Vermont Blocks Wide Use of Credit Checks in Employment Decisions

Some states and cities have introduced and passed bills to place restrictions on using credit checks for employment purposes. Generally, these laws restrict when or how employers use credit history for most employment decisions. These laws could have an impact on the way you conduct background screening. They could also require a cautious approach as to when credit information may be considered.

We’ve covered laws that restrict the use of credit history for employment purposes in Rhode Island, Philadelphia, and New York City. So how does Vermont restrict the use of credit information in the hiring process? Let’s look at what Vermont’s credit report law has to say.

Vermont Taps Multiple Definitions of Credit Information

Vermont defines credit information as more than just reports from credit bureaus. In fact, the state restricts use on two types of data.

1. Credit report

Vermont state law defines a credit report as: “Any written, oral, or other communication of any information by a credit reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, including an investigative credit report.”

But Vermont also specifies what a credit report is not. A credit report is not:

  • A report containing information solely as to transactions or experiences between the consumer and the person making the report.
  • An authorization or approval of a specific extension of credit directly or indirectly by the issuer of a credit card or similar device.

2. Credit history

Vermont defines credit history as details that go beyond a credit report. Credit history includes information collected from a third party, whether or not in a credit report, that reflects on an individual’s prior or current:

  • Certain borrowing or repaying behavior.
  • Financial condition or ability to meet financial obligations. This includes information on debts owed, payment history, savings or checking account balances, or savings or checking account numbers.

When Vermont Bans Credit History Checks

With some exceptions, employers in Vermont can’t:

  • Use a candidate’s credit history or credit report to make employment decisions. This includes failing to hire or recruit, discharge, or otherwise discriminate against an individual with respect to employment, compensation, or a term, condition or privilege of employment because of the individual’s credit report or credit history.
  • Inquire about a candidate’s credit report or credit history.

There are some exceptions to this. Employers are exempt from the credit report and credit history restrictions if:

  • Credit report or credit history information is required by state or federal law or regulation
  • The position involves access to confidential financial information
  • The employer is a financial institution or credit union, as those terms are defined by state law
  • The role is for a law enforcement, emergency medical personnel, or firefighting position, as those terms are defined by state law
  • The position requires financial fiduciary responsibility to the employer or client of the employer
  • The employer can show credit information is a valid and reliable predictor of employee performance in the specific position of employment
  • The position involves access to an employer’s payroll information

So you meet one of the criteria? Great! Keep in mind that even with an applicable reason, employers can’t use credit history or credit reports as the sole factor for decisions regarding employment, compensation, or a term, condition or privilege of employment.

Vermont’s Unique Credit-Related Disclosure

Employers that may get credit reports or credit history may still want to proceed cautiously. The state places additional restrictions on employers when obtaining credit reports or credit history. In Vermont, employers seeking credit reports or credit history must get written consent from the candidate each time. Employers must also disclose, in writing, the reason the employer is accessing the information. In addition to the written disclosure, the employer must:

  • If adverse action is taken based upon credit history or a credit report, provide the reason(s) in writing for taking the adverse action
  • Allow the candidate to contest the accuracy of information
  • Ensure the costs of the credit check aren’t passed on to the candidate
  • Keep all credit information confidential
  • Return the credit history or credit report to the candidate, or destroy the credit information in a secure manner, if the candidate is not selected or no longer employed

Verified Credentials provides clients with state-specific sample disclosure documents in their Resource Library. The library includes a sample Vermont Credit Report Disclosure.  If you’d like to see a sample to reference as you create your own document, log into your Resource Library.

If you hire in the state of Vermont, you may want to work with your trusted legal counsel to understand how this law applies to you. Beyond Vermont, laws may vary from state to state, and city to city. Employers nationwide should be mindful of the varying requirements and bans related to credit checks.

Fair Chance Violation Complaint Delivered to FedEx in New York City

The consequences of violating employment laws can be significant. Employers can face litigation, leading to big penalties. Macy’s recently experienced this in New York City. Now, FedEx Ground Package System, Inc. (“FedEx”) is accused, in a class action lawsuit, of violating New York City’s Human Rights Law (NYCHRL).

New York City’s Unique Package of Laws

As we previously discussed, the NYCHRL includes the New York City Fair Chance Act (FCA). The FCA places restrictions on how employers can use certain criminal history information and creates obligations and responsibilities for employers in NYC.  We also recently covered changes to the FCA that take effect at the end of July 2021.

Not On Time: FedEx Accused of Screening a Candidate Too Early

A class action complaint was filed on March 12, 2021 claiming FedEx violated the NYCHR, specifically the FCA (Franklin v. FedEx Ground Package System, Inc.).

The complaint states that the Plaintiff completed an online application with FedEx for a position in New York City.  The application process included the Plaintiff giving his consent to a criminal background check and providing FedEx with information it would need to conduct one.  In early December 2020, Plaintiff received a letter confirming that FedEx had been authorized to obtain a criminal background report and provided Plaintiff with a copy of the report.  The letter instructed the Plaintiff to report any inaccuracies to the consumer reporting agency and warned the Plaintiff: “If accurate, the information contained in the Report in whole or in part will significantly affect our decision regarding your potential for employment with FedEx Ground.  We are reviewing your application in light of the attached Report.”

The complaint claims that FedEx violated the FCA when it obtained criminal background reports before extending conditional offers of employment to both the Plaintiff and other applicants.  According to the complaint, FedEx told Plaintiff that it would be reviewing his application in light of the report, “but this is precisely what the [FCA] prohibits it from doing (before a conditional offer of employment is extended)”.  The complaint also alleges that FedEx violated the [FCA] when it stated that the content of the report would significantly influence its decision on whether or not to hire Plaintiff, “because the FCA is clear that a criminal background may influence a hiring decision only in a limited number of situations…”

The lawsuit alleges FedEx violated NYCHRL when the company:

  • Declared it would conduct background checks before making conditional offers of employment.
  • Conducted background checks before making conditional offers of employment.
  • Denied employment based on criminal conviction histories.

The case is still ongoing and the claims against FedEx remain allegations. We will continue to monitor the case and provide updates when available.

Like the Macy’s case, the accusations against FedEx show that even large corporations should stay up-to-date on consumer reporting laws. Employers should work with their trusted legal counsel to make sure they are following the laws that apply to them.

Philadelphia Boosts Protections for Credit History Used in Employment Decisions

A consumer’s credit history is highly protected. What shows up affects consumers seeking jobs, housing, vehicles and more. Some laws promote accuracy, fairness, and the privacy of information with credit bureaus. Several federal, state and local laws limit how credit reports are used for employment decisions too.

Unlawful credit checks may cause potential harm and undue limitations to job seekers. One of the most populous U.S. cities, Philadelphia, recently updated laws regarding credit history use for employment purposes.

On January 20, 2021, Philadelphia Mayor Jim Kenney signed three bills into law. One amends the Philadelphia Fair Criminal Record Screening Standards law (FCRSS) and the others update the city’s law regarding credit history use in employment. The city aims to protect those seeking to secure employment. Let’s review what has changed for credit history use in employment.

Credit History Restrictions for Job Seekers

Philadelphia’s existing law places restrictions on the use of credit information for employment purposes.  Section 9-1130 of the Philadelphia Code contains such current credit history restrictions. With limited exceptions, the law makes it an unlawful discriminatory practice for an employer within the city to get or use credit information regarding a candidate in connection with:

  • Hiring
  • Discharge
  • Tenure
  • Promotion
  • Discipline
  • Consideration of any other term, condition, or privilege of employment

Addressing Cracks in Credit History Restrictions

The law defined in Section 9-1130 has been amended by two recent bills. Let’s take a look at those changes:

  1. Taking Account of Previous Exemptions

Credit history restrictions now apply to law enforcement agencies and financial institutions. Under Bill 200413, they are no longer exempt from the credit history ban, unless another exemption for them under the law exists.

  1. Reiterating Federal Adverse Action Requirements

Under the Fair Credit Reporting Act, taking adverse action based on a candidate’s credit history contained in a consumer report requires notices be given to the candidate before the adverse action is taken.  Philadelphia is taking an extra step to make sure those steps are followed. Bill 200614 amends the City’s law to double down on the FCRA. An employer that intends to take adverse action based in whole or in part on credit information is required to, before taking adverse action against a candidate and pursuant to 15 U.S.C. § 1681b(b)(3):

  • Provide them a written copy of the information used for the employment decision
  • Give them an opportunity to obtain and dispute the information

The amendments went into effect on March 21, 2021.

Not sure how to use credit history for employment decisions in Philadelphia? Just like criminal history, this consumer information may be subject to anti-discrimination laws. Better definitions of how and when credit reports may be used for hiring decisions in Philadelphia help guide employers. Need more information on how the amendments to Philadelphia’s law might impact you? Please talk with a trusted legal advisor.

 

Small but Mighty: Rhode Island’s Credit Check Laws

Rhode Island may be the smallest state, but some of its state laws align with some of the nation’s biggest. States like California restrict the use of certain credit information for employment purposes. Some large cities have their own restrictions, like New York City. And as small as it is, the Ocean State has its own laws in place, too. If you do business there, you may have restrictions on using certain “credit report” information when hiring.

How Rhode Island Defines Credit Report

What makes a credit report a credit report varies from state-to-state. Rhode Island defines a “credit report” as any information from a credit bureau about a consumer’s creditworthiness, standing, or capacity used as a factor to determine eligibility for:

  • Credit or insurance purposes;
  • Employment purposes; or
  • Other purposes authorized under the Fair Credit Reporting Act.

Rhode Island’s Disclosure Requirements

So, does Rhode Island have specific employer disclosure requirements regarding applicants who live or work in Rhode Island, before a credit report may be obtained regarding them, as well? If you guessed yes, you got it.

According to state law, anyone who requests a credit report, as defined by Rhode Island law, related to an application for employment must first inform the applicant that such credit report may be requested.

Rhode Island’s requirements go further by addressing adverse action related to such credit reports. If an employer takes adverse action against an applicant based on information in the credit report, it must advise the individual it’s taking adverse action against of this and provide them with the credit bureau’s name and address.

Verified Credentials provides clients with state-specific sample disclosure documents in their Resource Library. The library includes a sample Rhode Island Credit Report Disclosure.  If you’d like to see a sample to reference as you create your own document, log into your Resource Library.

As always, you should discuss your state-specific disclosures with trusted legal counsel to make sure you stay in compliance with applicable laws.

Amendments Update Philly’s Ban the Box Law

The City of Brotherly Love is home to many historic sites. From the Liberty Bell to those famous stairs from the movie Rocky, the city sure is a staple in the history books. In 2011, Philadelphia made history with progressive hiring laws. That year they joined the list of cities with laws around criminal history inquiries during the hiring process.

The Fair Criminal Record Screening Standards (FCRSS) is Philadelphia’s version of a ban the box law. It places restrictions on the use of criminal history for certain employment purposes. The city passed amendments to the law in 2016, expanding its language.

Even with love for history, the city is open to changes and updates to their laws. This year brings more updates for the FCRSS. On January 20, 2021, Philadelphia Mayor, Jim Kenney, signed three bills into law.  Two of the bills update the city’s law regarding credit history use in employment. The other, Bill 200479, amends the local ban the box law further. The amended law will go into effect on April 1, 2021. Let’s break down key areas the amendments address.

Updated Definitions Expand Impact

In the past, the FCRSS had not defined what it meant to be an employee and had a narrow definition of what it meant to be a private employer. New definitions and expanded definitions for these will increase the number of employers that must follow the FCRSS and the “employees” that are protected by it.

 An “employee” is now defined as any person employed or permitted to work for a private employer within the city. The definition includes independent contractors, transportation network company drivers, rideshare drivers, and other gig economy workers.

A “private employer” was defined as any person, company, corporation, labor group, or association that employs any person within the city.  It included job placement and referral agencies, other employment agencies.  It has now been expanded to include any third-party person or entity that facilitates the relationship of work for pay, as full-time or part-time employees or independent contractors.

New Protections for Current Employees

FCRSS protections had applied only to new job applicants, leaving current employees with no coverage. The new amendments expand the requirements of the FCRSS to current employees, as well.

Pending Criminal Charges

The amendments indicate when inquiries into pending criminal charges can be made and allow adverse action to be taken based on pending criminal charges in certain circumstances.  A pending criminal charge is an existing accusation that a person has committed a crime which has not yet resulted in a final disposition.

If an employer has reasonably reliable information that a pending charge has been lodged against an employee, and can show the pending charge relates to the job duties, they can ask the employee about it. In these situations, the employer can require that the employee respond.  Employers may also require employees to report a pending criminal charge, provided that the employer does so pursuant to a written policy detailing what offenses are reportable.

The employer cannot take adverse action against the employee based on a pending criminal charge unless the offense bears such a relationship to the job duties that the employer can reasonably conclude that continued employment presents an unacceptable risk to the business and people and that exclusion of the employee is compelled by business necessity.

Criminal Inquiries Required by Law

The FCRSS previously prohibited inquiries into any criminal conviction before a conditional offer was made.  The amendments prohibit inquiries into any criminal conviction during the employment process, which is defined as the assessment of an applicant’s suitability for employment, as well as consideration of any aspects of continued employment, such as promotions, raises, or termination decision-making, unless required by federal or state law.  If such and inquiry is required by federal or state law, it can only be made after a conditional offer of employment.

Changes to Possible Penalties

Violations of the FCRSS can result in different penalties, including a lawsuit from the candidate.  Remedies in a lawsuit could include attorneys’ fees, damages for loss of employment, and more.

The FCRSS previously allowed a successful complainant to collect punitive damages.  The amendments to the FCRSS remove punitive damages as a remedy, but now allow liquidated damages, equal to the payment of the maximum allowable salary for the job for a period of one month, with a cap of $5,000.

Even if the FCRSS didn’t apply to you before, the amendments might impact you. Talk with a trusted legal advisor to learn if you’re affected.

 

Changes Ahead for the NYC Fair Chance Act

Last month we discussed New York City’s Fair Chance Act (FCA). It places restrictions on how NYC employers can use certain criminal history information. The FCA addresses employment ads, asking job applicants about criminal history, and adverse action restrictions.

On January 10, 2021, NYC enacted several amendments to the FCA. The updates expand the scope of NYC’s ban the box law and will go into effect this summer.

Establishing Fair Chance Factors

The amendments establish NYC FCA-specific “relevant fair chance factors” that an employer is required to consider in certain circumstances.

For arrests or criminal accusations pending at the time of application for employment, and arrests or convictions that occurred during employment, these factors include:

  • The city’s policy to overcome stigma toward and unnecessary exclusion of persons with criminal justice involvement.
  • The specific duties and responsibilities related to the job.
  • If the criminal history impacts the applicant or employee’s fitness or ability to perform any of the job duties or responsibilities.
  • Whether the applicant or employee was 25 years of age or younger at the time of a criminal offense.
  • The seriousness of the offense.
  • The legitimate interest of the employer in protecting property and the safety and welfare of others.
  • Any additional information about the applicant or employee’s rehabilitation or good conduct, including a history of good performance and conduct on the job or in the community.

For arrests and convictions that occurred before employment, other than arrests or criminal accusations pending at the time of the employment application, employers should consider state law factors.

Considering Different Records

The new amendments to the FCA aim to reduce uncertainty about what records employers may consider. This more granular breakout of criminal history helps employers know what can and cannot be considered.

For employment purposes, employers cannot make any inquiry about, deny employment to an applicant, or take adverse action against any employee based on an arrest of or criminal accusation against the applicant or employee when the inquiry, employment denial or adverse action is in violation of state law.

In addition to this restriction, employers, with certain exceptions, cannot inquire about, deny employment or take adverse action based on:

  • Convictions of violations as defined by state law
  • Convictions of non-criminal offenses, as defined by a law of another state
  • Arrests or criminal accusations that resulted in a violation or non-criminal offense conviction as outlined above

Changes Limiting Adverse Action

The updates to NYC’s FCA expand restrictions on when employers can take adverse action against applicants and employees.

With some exceptions, the amendments make it illegal for an employer to take adverse action by reason of either an applicant or employee’s pending arrests or criminal accusations or criminal convictions an employee obtains during employment, or by finding a lack of “good moral character” due to an applicant’s or employee’s pending arrests or criminal accusations or convictions an employee obtains during employment, unless, after considering the relevant fair chance factors:

  • It’s determined that there is a direct relationship between the alleged wrongdoing or conviction and the employment sought or held.
  • It’s determined the applicant or employee would create an unreasonable risk to property or the safety or welfare of others.

An employer can take adverse action if the applicant or employee intentionally misrepresented their arrest or conviction history, provided that the adverse action is not based on information that the employee is not required to divulge based on city or state law. As to such adverse action, the employer must provide the applicant or employee with copies of documents the employer used to determine that there was an intentional misrepresentation and allow a reasonable time to respond.

Fair Chance Process Expansion

The new amendments also expand the “Fair Chance Process.” This formal process outlines the steps an employer must take before taking adverse action. Previously, the process only applied to new job applicants. Employers must now engage in the Fair Chance Process when taking adverse action against both new applicants and current employees.

During the Fair Chance Process, employers, with certain exceptions, must now request information relating to the relevant fair chance factors from the applicant or employee.

On top of those changes, employers must now allow job applicants a minimum of five business days to respond before they take adverse action.  As before, the employer must hold the position open for the applicant during the response period.

The amendments to the current Act take effect on July 29, 2021.  Employers may wish to discuss the NYC Fair Chance Act amendments with their legal counsel to make sure they stay in compliance with the law.

Understanding New York City’s Fair Chance Act

Several “Fair Chance” or “ban the box” initiatives nationwide have been introduced or updated over the past year. Take, for example, the new Federal Fair Chance Act and changes to California’s Fair Chance Act. Adhering to local, state, and federal Fair Chance and ban the box laws can at times feel like swimming through glue. You want to prevent fragmented stop-go hiring decisions. So, getting a clear grasp of these guardrails for fair and equitable hiring decisions can help.

Like others throughout the US, New York City has its own version of a Fair Chance Act (FCA).  In a city of skyscrapers, NYC’s FCA is just as multistoried at New York City itself.  Let’s make sense of the many levels of the current FCA law.

Since 2015, the NYC FCA has placed restrictions on how employers can use certain criminal history information. Read the full text of the current NYC FCA here (see subsections 10, 11, and 11-a of section 8-107).

The NYC FCA creates obligations and responsibilities for employers in New York City.  Keep reading to learn about more about the requirements of the FCA.

NYC FCA Bans Some Language in Employment Ads

On job posting for open positions, you may need to watch what you say.   What are employers banned from saying? The FCA states that employers can’t, with certain exceptions:

  • Declare, print or circulate any solicitation, advertisement or publication or cause such, which expresses any limitation or specification in employment based on a person’s arrest or criminal conviction.
  • Represent that any employment or position, that is otherwise available to a person, is unavailable due to a person’s arrest or criminal conviction.

FCA Imposes Restrictions on Using, or Asking About, Certain Criminal History Information

With certain exceptions, the FCA makes it an unlawful discriminatory practice for employers to:

  • Deny employment to an applicant or take adverse action against an employee by reason of the individual’s conviction of one or more criminal offenses, or by finding a lack of “good moral character” due to criminal convictions, when the denial or adverse action would be in violation of state law.[1]
  • Deny employment to an applicant or take adverse action against an employee, or inquire of an applicant or employee about any criminal accusation or arrest when such denial, adverse action or inquiry would be in violation of state law.1
  • Make any inquiry or statement to an applicant related to a pending arrest or criminal conviction record until after extending a conditional offer of employment.
    • “Any statement” is a statement communicated to the applicant for the purpose of obtaining their criminal background information regarding an arrest record, a conviction record, or a criminal background check.
    • “Any inquiry” is any question directed to an applicant or any searches of publicly available records or consumer reports that are conducted for the purpose of obtaining an applicant’s criminal background information.

Special Pre-Adverse and Adverse Action Requirements for Certain Job Applicants in NYC

 If the restrictions outlined above are applicable, after extending a conditional offer of employment to an applicant, an employer can inquire about an applicant’s arrest or conviction record.  If such employer decides to take adverse action against the applicant based on their arrest or conviction record, they have to engage in NYC’s unique “Fair Chance Process.”  Here’s what needs to happen before taking adverse action. An employer must:

  • Provide a written copy of the arrest or conviction record inquiry in a manner determined by the NYC Commission on Human Rights (NYCCHR).
  • Perform an analysis of the applicant under Article 23-a of the New York Correction Law. They must provide a written copy of the analysis to the applicant in a manner determined by the NYCCHR.
    • They must include the documents that formed the basis for the adverse action and their reasons for taking such action.
  • After giving the applicant a copy of the inquiry and analysis, allow them at least three business days to respond. The covered employer must hold the position open for the applicant during this time.

The NYCCHR provides additional guidance on the FCA, available here.

The city recently enacted several amendments to the FCA that take effect on July 29, 2021.  Check back next month for the details on these amendments. Employers may wish to discuss the NYC Fair Chance Act with their legal counsel. Legal guidance may help you make sure you stay in compliance with the law.

[1] These requirements apply to all employers that may be required to comply with the NYC FCA.  All other provisions do not apply to employers that have fewer than four persons in their employ at all times during the period beginning twelve months before the start of an unlawful discriminatory practice and continuing through the end of the unlawful discriminatory practice.  

Oklahoma! Where the Disclosures Are Written Plain

Some states have their own background report disclosure laws.  Our virtual road trip throughout the United States has introduced us to many states that require specific disclosures, beyond FCRA disclosures, before screening applicants or employees when using a consumer reporting agency like Verified Credentials.  Our stops have outlined disclosure requirements in California, Minnesota, New York, and more.

This month’s stop is in the Sooner State.  A “consumer report” (background report) under Oklahoma law has the same meaning as under the FCRA.  If you obtain such a background report for employment purposes on someone that lives or works in Oklahoma, you may want to keep Oklahoma law in mind as follows:

An Oklahoma background report disclosure must:

  • Be in writing;
  • Be provided to the applicant or employee before the background report is obtained;
  • Inform the applicant or employee that a background report will be used for employment purposes; and
  • Include a box the applicant or employee can check to get a copy of the report.

Employers should take note if their applicant or employee “checks the box” to get a copy of their background report.  If the box is checked, the employer must ask its background screener to provide a copy of the background report to the applicant or employee when it asks its background screener for its copy of the background report.  The background report sent to the applicant or employee is always provided free of charge.

Do you want to see a sample Oklahoma disclosure as you draft your own?  We offer sample compliance documents to help you, including a sample Oklahoma disclosure.  Simply log into your Verified Credentials Employee® account and go to the Resource Library. Download the “Oklahoma Consumer Report Disclosure” sample to get started.

As always, be sure to check with your legal counsel to make sure you stay compliant with state-specific laws.

Illinois Proposes Changes to How Employers Use Certain Criminal History

By now, you are probably aware of the importance of checking up on state and local laws if you obtain background reports on your applicants and employees. We recently covered a court case in Wisconsin that highlights what could happen if an employer considers criminal history when making an employment decision without considering certain state and local laws. So, you probably want to learn about the latest pending revisions to those state and local laws that could have an impact on your background screening strategy. Employers may want to take note of pending legislation in Illinois.

Potential Changes to the Illinois Human Rights Act

On January 13, 2021 the Illinois legislature passed Senate Bill 1480 (SB1480).  This bill is not yet law. But if enacted, it will change how criminal conviction history can be used for employment decisions in Illinois.

The bill amends the Illinois Human Rights Act. Among other things, SB1480 would, unless otherwise authorized by law, make it a “civil rights violation for any employer, employment agency or labor organization to use a conviction record… as a basis to refuse to hire, to segregate, or to act with respect to recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, or terms, privileges or conditions of employment (whether “disqualification” or “adverse action”)…”, with some exceptions.  A “conviction record” includes information that a person has been convicted of a felony, misdemeanor or other criminal offense, placed on probation, fined, imprisoned, or paroled.

When Conviction Records May Be Considered

You may still consider an applicant or employee’s conviction record for employment decisions, but only if:

  • The granting or continuation of the employment would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public; or
  • There is a substantial relationship between one or more of the previous criminal offenses and the employment sought or held.
    • In order for a “substantial relationship” to exist, there must be a consideration of whether the employment position offers the opportunity for the same or a similar offense to occur and whether the circumstances leading to the conduct for which the person was convicted will recur in the employment position.

In determining whether one of the two exceptions apply, you must consider:

  • The length of time since the conviction;
  • The number of convictions that appear on the conviction record;
  • The nature and severity of the conviction and its relationship to the safety and security of others;
  • The facts or circumstances surrounding the conviction;
  • The age of the applicant or employee at the time of the conviction; and
  • Evidence of rehabilitation efforts.

Using a Conviction Record for Employment Decisions

If, after considering all mitigating factors, you make a preliminary decision to use an exception, you must provide the applicant or employee with a written notification of the preliminary decision.  The notification must contain:

  • Notice of the disqualifying conviction(s) that is/are the basis for the preliminary decision and the reasoning for the disqualification;
  • A copy of the conviction history report, if any; and
  • An explanation of their right to respond to the notice before the decision becomes final.
    • The explanation must inform them that their response may include submission of evidence challenging the accuracy of the conviction record or evidence of mitigation, such as rehabilitation.

Now you wait. After providing a written notice of the preliminary decision, you must wait at least five (5) business days for the applicant or employee to respond before making a final decision.

If you make a final decision to take adverse action based solely or in part on an applicant or employee’s conviction record, you must notify the applicant or employee in writing of the following:

  • Notice of the disqualifying conviction(s) that is/are the basis for the final decision and your reasoning for the disqualification;
  • Any existing procedure you have for the applicant or employee to challenge the decision or request reconsideration; and
  • The right of the applicant or employee to file a charge with the Illinois Department of Human Rights.

SB1480 is not yet law.  Verified Credentials will continue to monitor this legislation. Watch for updates as they become available.

This bill could have an impact on how criminal conviction records can be used for employment decisions in Illinois.  You may want to discuss this bill with your legal counsel to determine how it could impact you.

New York City Restricts Use of Candidate Credit History

Do your background reports contain credit information about your candidates?  Some states, and cities, restrict the use of certain credit information for employment purposes.

In New York City, the hub for the financial industry, you may expect the same. If you’re near Wall Street, you might think that looking at job candidates’ financial history would be a no-brainer. In many cases, NYC prohibits the use of consumer credit history for employment purposes.

NYC Restrictions

The Stop Credit Discrimination in Employment Act (SCDEA) is a part of the New York City Human Rights Law (NYCHRL). It places restrictions on the use of consumer credit history information.

In NYC, consumer credit history is “an individual’s credit worthiness, credit standing, credit capacity, or payment history, as indicated by:

  • A consumer credit report
  • Credit score
  • Information an employer gets directly from the individual regarding:
    • Details about credit accounts including the number of accounts, late or missed payments, charged-off debts, items in collections, credit limit, or prior credit inquiries; or
    • Bankruptcies, judgments, or liens

City law generally makes it an unlawful discriminatory practice to request or use an applicant or employee’s consumer credit history for employment purposes.  It is also illegal to discriminate against an applicant or employee regarding hiring, compensation, or the terms, conditions, or privileges of employment based on the applicant or employee’s consumer credit history.

Exceptions to the Law

There are limited exemptions to the SCDEA’s prohibition on the use of consumer credit history.  Consumer credit history can be used for employment purposes if:

  • The employer is required to use it by state or federal law or regulation, or by a self-regulatory organization as defined by federal law
  • The applicant or employee is applying for or is employed in:
    • A police or peace officer position, as defined by NYC law, or a position with law enforcement or investigative function with the NYC Department of Investigation (DOI);
    • A position that is subject to a DOI background investigation provided that the job is both appointed and requires a high degree of public trust;
    • A position that requires an employee to be bonded under city, state, or federal law;
    • A position that requires an employee to possess security clearance under federal or state law;
    • A non-clerical position having regular access to trade secrets, intelligence information, or national security information;
    • A position having signatory authority over third-party funds or assets valued at $10,000 or more;
    • A position that has a fiduciary responsibility to the employer with authority to enter financial agreements valued at $10,000 or more on behalf of the employer
    • A position with regular duties that allow the employee to modify digital security systems established to prevent the unauthorized use of the employer’s or client’s networks or databases.

Enforcement of Credit Discrimination

The NYC Commission on Human Rights (NYCCHR) is the city agency charged with enforcing the SCDEA. It issued legal guidance to assist employers with compliance.

According to the NYCCR, if an employer chooses to claim an exemption, it should:

  • Inform applicants or employees of the claimed exemption
  • Keep a record of its use of such exemptions for a period of five (5) years from the use date.
  • It should maintain an exemption log that includes:
    • The claimed exemption
    • Why the claimed exemption covers the position
    • The name and contact information of all applicants or employees considered for the exempted position
    • The job duties of the exempted position
    • The qualifications necessary to perform the exempted position
    • A copy of the credit history reported
    • How they obtained the credit history
    • How the credit history led to the employment action

Verified Credentials provides clients with a sample New York City Consumer Credit Report Disclosure. This can help you think about how to notify candidates if you decide to claim an exemption to the SCDEA and obtain a consumer credit history for employment purposes. Log into your Resource Library for the sample disclosure.

The NYCCHR states that it will impose civil penalties of up to $125,000 for SCDEA violations.  However, SCDEA violations resulting from willful, wanton, or malicious conduct could be penalized by up to $250,000.

Talk with your legal counsel to determine if the SCDEA applies to you and how to stay in compliance with NYC law.

Regulations from Federal Agencies and the FCRA

If you use background reports for employment purposes, you are probably well-versed in the federal Fair Credit Reporting Act (FCRA).

But did you know that the FCRA grants the Consumer Financial Protection Bureau (CFPB), a federal agency, rulemaking authority to help implement the FCRA? It’s written right into the law.

FCRA Section 623(e) states that “The Bureau may prescribe regulations as may be necessary or appropriate to administer and carry out the purposes and objectives of this title [the FCRA]…”

What are Regulations?

That’s a big question.  Some lawyers spend their entire careers interpreting regulations and studying the rulemaking authority of administrative agencies of the government.

The Congressional Research Service has a quick overview of federal regulations and their making.  Basically, “Congress often grants rulemaking authority to federal agencies to implement statutory programs.  The regulations issued pursuant to this authority carry the force and effect of law and can have substantial implications for policy implementation.”    Regulations made by federal agencies can often fill in gaps created by legislation. They may also provide technical details about how legislation should be implemented.

The FCRA is no exception. Let’s look at the regulations surrounding the FCRA.

Regulation V – FCRA Regulations

The CFPB maintains “Regulation V” (12 CFR Part 1022) to support the FCRA. Regulation V generally applies to anyone that uses consumer reports for employment purposes, among others. The CFPB provides an interactive, easy-to-navigate electronic format of the regulation that is available here. Regulation V covers important FCRA-related topics, such as:

  • Identity theft
  • Duties of furnishers of information
  • Duties of users of background reports
  • Duties of consumer reporting agencies
  • File disclosures to consumers
  • Affiliate marketing
  • Use of medical information

Multiple sections may apply to background report users.  If you use or obtain background reports, you may want to keep reading.

Take “Notice” of Appendix N

The CFPB provides multiple model forms in Regulation V. Under Appendix N, you will find a model “Notice to Users of Consumer Reports.” This notice gives a broad overview of the obligations a user of background reports may have under the FCRA. Essentially everything on your radar for your FCRA obligations is covered at a high-level right there, from adverse action to permissible purpose. This includes sections that cover:

  • Permissible purposes
  • User certifications to consumer reporting agencies
  • Consumer notices of adverse action
  • Obligations when disposing of records
  • Obligations when using background reports for employment purposes
  • And more!

It may be a good idea to read through this notice to understand your obligations. If you already have, it’s never a bad idea to brush up on it. Bookmark it for reference as you navigate the FCRA and when you use background checks. Catch up on other areas in Regulation V while you’re at it!

The FCRA regulations are intended to be helpful to you to determine your legal obligations. If you want more details on the FCRA or Regulation V, you should talk with your trusted legal counsel.

Employment Discrimination Based on Criminal History: A Cautionary Tale

The laws around employment background reports are vast. If you use background reports, you probably take care to follow all applicable federal, state, and local consumer reporting laws.

In addition to consumer reporting laws, you may want to consider anti-discrimination laws, too. Some states and cities have anti-discrimination laws that could prohibit conviction record discrimination.  Failing to consider state and local laws before making employment decisions based on criminal history could land an employer in hot water.

One Company’s Misstep

A Wisconsin employer is learning this lesson as outlined in the recent case of Cree, Inc. v. LIRC.

Cree, Inc., a company that manufactures and sells lighting products, offered a conditional offer of employment to an applicant contingent on a drug screen and background check.  The employer rescinded the offer of employment when the background report revealed that the applicant had “2012 convictions for strangulation/suffocation, fourth-degree sexual assault, battery, and criminal damage to property related to a domestic incident with a live-in girlfriend.”

The applicant had applied for an “Applications Specialist” position that would have the applicant working with more than “1100 employees, including about 500 women” in a facility that “includes a manufacturing space, storage areas with racks of parts, plus offices, conference rooms, cubicle farms, breakrooms, and the like.”  The applicant would have access to the entire facility, including areas without security cameras.  The position also included regular client interaction and unsupervised travel to both client locations and trade shows.

Tough Lesson in Court

The applicant “filed a discrimination complaint with the Wisconsin Department of Workforce Development alleging that [the employer] unlawfully discriminated against him when it rescinded a job offer for an Applications Specialist position based upon his conviction record.”  The Wisconsin Labor and Industry Review Commission (LIRC) found that the employer violated Wisconsin law and rescinded the “job offer based solely on his conviction record.”

A Wisconsin appellate court recently upheld the LIRC’s finding and held that the employer violated Wisconsin law.  The court states that “Wisconsin law prohibits an employer from refusing to hire a prospective employee on the basis of his or her conviction record…  The employer may, however, so discriminate if ‘the circumstances of [any felony, misdemeanor, or other offense] substantially relate to the circumstances of the particular job’ for which the employee is being considered.”

Disagreements on What “Substantially Relates”

Justifying its decision to rescind the offer of employment, the employer noted that the Applicant Specialist position would create “significant opportunity with which [applicant] could ‘commit additional crimes against persons and property.’”  The employer also stated that the applicant “would have… regularly interact[ed] with female coworkers whom he could later harm outside of work.”

The Cree court found that this argument was not enough to rescind the offer of employment to the applicant based on his conviction record.

The court noted that the applicant’s “criminal record does demonstrate a ‘tendenc[y] and inclination…’ to be physically abusive toward women in a live-in boyfriend/girlfriend relationship.”  However, the court held that “it would require a ‘high degree of speculation and conjecture’ to conclude that [applicant] would develop a live-in boyfriend/girlfriend relationship through the Applications Specialist job and… that mere contact with others at the facility and on the job is not substantially related to [applicant’s] domestic violence.”

The Cree court determined that the employer’s decision to rescind the offer of employment was “less focused on the circumstances of the particular job… and more focused on the general sense that [the applicant] is not fit to be unconfined from prison and participating in the community at all due to his prior crimes, even though he has long since finished serving the confinement portion of his sentence.”

Employers would be wise to take note of the Cree decision. Check state and local anti-discrimination laws before making an employment decision based on criminal history.

Not sure if any laws that would prevent you from using criminal history when hiring?  Talk to your legal counsel for the answers you need.

Disclosures Go Down the New Jersey Shore

Does your team live or work up and down the Jersey Shore? Then there are some state-specific disclosure requirements to keep in mind. That’s right, New Jersey law includes specific background report disclosure requirements. We have discussed other state-specific disclosure requirements for Minnesota, Montana, New York, and more. This month, we’re going to dive into the state-specific disclosure requirements in the Garden State.

Permission to Talk to References

Dominated by suburbs, highways, and malls, New Jersey boasts a big workforce of New York City and Philadelphia commuters. Here’s what you need to know if you plan to use Verified Credentials to verify information with references or employers of Jerseyites.

You’ll need to provide your candidates who live or work in New Jersey with a specific disclosure if you obtain an “investigative consumer report” on them, as defined by New Jersey law.

That’s when your background report has information obtained through personal interviews with neighbors, friends, associates, or acquaintances of the candidate or others with knowledge of the candidate.

The Platform for New Jersey Investigative Consumer Report Disclosures

Like beams and planks of a seaside boardwalk, state-specific disclosures must also build a platform on set requirements. What are the pieces that support New Jersey’s investigative consumer report disclosure? This background report disclosure must:

  • Be provided to the candidate before a background report is obtained.
  • Be in writing.
  • Clearly and accurately disclose that an investigative consumer report commonly includes information regarding the candidate’s character, general reputation, personal characteristics, and mode of living obtained through personal interviews of the candidate’s neighbors, friends, associates, acquaintances or others with knowledge of the candidate.
  • Include the precise nature and scope of the investigation requested and advise the candidate of the right to have a copy of the report upon request.

Verified Credentials offers a sample New Jersey investigative consumer report disclosure to help employers like you. You can see this by logging into your account and going to the Resource Library to get started.

Still not sure what state disclosures you need? Your legal counsel can help answer your questions about state-specific laws.

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