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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.

Anti-discrimination Suit Raised Against New York Insurance Company

If you’re an employer that uses background reports, compliance is a priority issue. Federal, state, and local consumer reporting laws are not the only laws to consider. From ban the box to anti-discrimination, there are many other types of laws for employers to keep in mind. All are important to consider before obtaining or using a background report.

A recent lawsuit filed against the New York Life Insurance Company serves as a good reminder. The complaint alleges violations of both the New York Human Rights Law (“NYHRL”) and New York City Human Rights Law (“NYCHRL”). Let’s review what the lawsuit says.

Allegations Against New York Life

The complaint against New York Life alleges the following:

  • That New York Life denied employment to qualified job applicants because of arrests that never resulted in a conviction.
  • By taking adverse action based on arrests that did not result in a conviction, New York Life violated both the NYHRL and the NYCHRL. The complaint makes the claim that “both New York State and City make it per se illegal for an employer to inquire about or deny employment because of arrests that were resolved in an individual’s favor.”
  • That New York Life’s practices have a negative societal effect. The complaint states that “discrimination on the basis of arrest record disproportionately impacts New Yorkers of color…”

Of course, these remain only allegations until the lawsuit is resolved. Verified Credentials will monitor this case as the litigation process goes on.

Keeping Anti-Discrimination Laws a Top Priority

Consumer reporting laws, like the FCRA, often steal the spotlight for background check compliance. Some lawsuits serve as a reminder of other compliance matters employers should care about.

In this case, the lawsuit filed against New York Life reminds employers about obligations beyond consumer reporting laws.

Monitoring and following anti-discrimination laws are just as important, as New York Life is finding out.

If you have any questions about background screening compliance, it is highly recommended that you speak with trusted legal counsel.

Ban the Box 2.0 in Montgomery County, Maryland

As the largest county in the state of Maryland, Montgomery County enacted its ban the box law years before the state did so. It took the state of Maryland until 2020 to pass a ban the box law. Not even a year later, Montgomery County took another step forward to update its initial law.

The First Rendition

Montgomery County’s early ban the box law was one of the first in the state of Maryland. Passed in 2014, the county’s first ban the box law:

  • Applied to non-governmental (except Montgomery County) employers in the county with 15 or more full-time employees, with certain exceptions.
  • Prohibited such employers from requiring a job applicant to disclose, on an employment application, the existence or details of their arrest or conviction record.
  • Prohibited such employers, before the completion of a job applicant’s first interview, from: 1) conducting a criminal background check on that applicant; 2) inquiring about that applicant’s arrest or conviction record or criminal history; or 3) requiring that applicant to disclose an arrest or conviction record or criminal history.
  • Required such employers to take certain actions before rescinding a conditional offer of employment made to an applicant based on an arrest or conviction record.

Montgomery County’s New Take

This year the county decided to expand its law. On November 20, 2020, the Montgomery County Council passed Bill 35-20. This bill amends the previous ban the box law.

So what updates were made? Key pieces include:

What employers the law applies to. Employers, as noted above, that employ 1 (one) or more employees are now included. And yes, private employers must comply.

When employers can inquire about criminal records etc. Such employers are now prohibited from doing the things outlined in bullet three above before the extension of a conditional offer of employment to the applicant.

Prohibited Inquiries. Such employers now cannot require an applicant to disclose, conduct a criminal record check to determine, otherwise inquire about or base a hiring or promotion decision on:

  • Arrests that did not result in convictions.
  • First convictions and related arrests for trespass or disturbance of the peace under Maryland law.
  • Misdemeanor convictions if three (3) years have passed since the date of conviction and the end date of incarceration for the conviction.
  • Certain confidential and expunged records per Maryland law.

The amendment further requires regulations to be issued necessary to inform applicants and applicable employers of their rights and responsibilities under Montgomery County’s ban the box law.

The amendment becomes effective on February 19, 2021.

Have questions about how the expansion of Montgomery County’s ban the box law impacts you? Speak with your legal counsel.

Innovating “Applicant”: Updates to California’s Ban the Box Law

The state of California is a leader in the tech world. Silicon Valley is the global hub for technology innovation and startups. Many of the largest tech-based corporations even call this state home. But when it comes to ban the box laws, California was less advanced. The California Fair Chance Act has only been around for a couple of years – 20 years after the first law of its kind in Hawaii.

How the State Joined the Movement

Beginning in 2018, California-based companies with five or more employees faced new restrictions. The state placed limits on how employers can use conviction history when evaluating applicants for employment during the hiring process.

The California Fair Chance Act says that employers cannot, among other things:

  • Ask applicants about criminal records on an employment application.
  • Ask or consider criminal history of any applicant until after making a conditional employment offer.
  • Consider an applicant’s sealed, dismissed, or expunged records.
  • Consider an applicant’s arrests without convictions or referrals to pre- or post-trial diversion programs.

Employers must evaluate an applicant’s records one by one if they look at criminal history during the hiring process. The assessment should consider the:

  • Nature and gravity of the offense
  • Time that has passed
  • Nature of the job

Reshaping Definitions

The Fair Chance Act specifically protects job applicants.  California was concerned that there could be potential loopholes with the law. For example, an employer could have an applicant start work before a post-offer criminal history review. At that time, they could have an “employee” status (even conditionally) with the employer. Then the job applicant could potentially lose their “applicant” status and protections provided by the Fair Chance Act.

Now the California Fair Employment and Housing Council has issued new regulations to address the potential loopholes.  As of October 1, 2020, these Fair Chance Act regulations expand the definition of “applicant.” An “applicant” now includes anyone with a conditional offer of employment, but starts working while the employer performs a post-conditional offer review of criminal history.

The state hopes this will prevent employers from avoiding Fair Chance Act requirements.

The state’s Fair Employment and Housing Council wants to help employers understand the Fair Chance Act. Take a look at the Frequently Asked Questions for additional direction.

Do you still have more questions?  Your legal counsel can help you understand how the California Fair Chance Act applies to you.

Keeping Things Unique in the State of New York

You may have heard this tongue twister before: “Unique New York.” That’s more than just a vocal warm-up for theater folks or a line from Will Ferrell’s character “Ron Burgundy” in Anchorman. It accurately describes the uniqueness of New York City. That one-of-a-kind city is only one part of what makes the state of New York special. It has big-city high rises and upstate cottages, and so much more.

Staying with its unique nature, the state of New York has its own background check disclosure requirements. We have previously talked about state-specific disclosure requirements in Massachusetts, Minnesota, Montana, California, and more. What sets New York apart?

The New York Specific Requirements

If you screen people who live or work in New York, you may want to pay attention to New York law.

Before getting a background report on them as part of an application for credit, employment, insurance, or property rental, you must provide them with a New York specific disclosure.  The disclosure must:

  • Be in writing.
  • State that a consumer (background) report may be requested in connection with the application.
  • Advise that, upon their request, they will be informed if a background report was requested. And, if so, that they can be provided with the name and address of the background report provider.

Extra Steps for Interview-Based Checks

New York has more requirements when you do certain verifications, like reference checks or some job history checks, on people who live or work in New York as part of an application for credit, employment, insurance or property rental. If your background reports contain information from personal interviews (known as an “investigative consumer report” under New York law), you have to provide another disclosure to them.  The investigative consumer report disclosure must:

  • Be in writing.
  • State that you may procure or cause to be prepared an investigative consumer report.
  • Advise that, upon their written request, they will be informed if an investigative consumer report was requested. And, if so, that they can be provided with the name and address of the background report provider.
  • Include a copy of Article 23-A of the New York Correction Law, if the investigative consumer report was obtained for employment purposes.

If you still have questions about whether your New York disclosures pass muster, you may want to talk with your legal counsel.

Unwrapping Ban the Box Updates in St. Louis

The city of St. Louis wrapped up its new Ban the Box law with a bow just in time for the new year. This means all employers in St. Louis have just over a month to renovate hiring processes before the law goes into effect.

Since our last update, the proposed Ban the Box law passed in St. Louis in January 2020.  Known as Ordinance 71074, the new law will create ban the box requirements for all employers in St. Louis starting next year. Let’s do a quick refresher of what will be required starting January 1, 2021.

The Ordinance Specifics

Starting January 1, 2021, the ordinance prohibits all employers in St. Louis with ten or more employees (with certain exceptions) from:

  • Making hiring or promotion decisions based on criminal history or a related sentence, with some exceptions. Employers can consider criminal history or a related sentence if they’re reasonably related to the job. They must show they used all information in making the decisions, including the frequency, recentness, and severity of the criminal history.
  • Inquiring about an applicant’s criminal history too early. Employers should make sure the applicant is qualified before asking about criminal history. In most cases, employers must wait until after an interview before making a criminal history inquiry.
  • Publishing job ads excluding applicants based on criminal history.
  • Using job applications or other hiring forms that include statements that applicants are excluded based on their criminal histories.
  • Asking about criminal history on the job application or other hiring forms.
  • Seeking public information about an applicant’s criminal history.

Violation Penalties

Employers should take note of the new law. Penalties increase with each violation:

  • A first violation could result in a warning or an order to comply.
  • A second violation could lead to an order to comply plus civil penalties.
  • A third violation could result in the loss of a business operating license.

As the countdown to the new year begins, you may need help unwrapping the new city-wide ordinance. Check in with your legal counsel about how the new ban the box law may impact you.

Aloha! to Ban the Box Updates in Hawaii

Grab your cup of Kona coffee, and let’s catch up on hiring on island time. Riding waves of new hires under Hawaii’s existing ban the box law doesn’t have to be a grind.  If you obtain background reports on individuals that live or work in Hawaii, keep on reading.

What Hawaii’s Ban the Box Law Says

Hawaii may be the childhood home to Dwayne “The Rock” Johnson. It’s also home to one of the oldest ban the box laws in the U.S.  Hawaii’s law before the amendments outlined below, with some exceptions, had restricted employers from:

  • Inquiring into and considering conviction records for prospective employees until after a conditional offer of employment.
  • Withdrawing a conditional offer of employment based on conviction records unless the conviction had a “rational relationship” to the position’s duties and responsibilities.
  • Considering conviction records outside of 10 years, excluding periods of incarceration.

To read the version of Hawaii’s law before the amendments outlined below, click here.

Riding a Wave of Tighter Restrictions

First enacted in 1998, Hawaii’s ban the box law paved the way for other laws like it. Now it catches the wave of tighter restrictions. Hawaii has recently amended its ban the box law.  The previous 10-year “look back” period – or how far back a background check may go – has been tightened up.  As of September 15, 2020, Hawaii employers can only consider, with some exceptions:

  • Seven (7) years of conviction history for felony convictions, excluding periods of incarceration.
  • Five (5) years of conviction history for misdemeanor convictions, excluding periods of incarceration.

To see the full text of Hawaii’s amendments to its ban the box law, click here.

Calm Waters: What Has Stayed the Same

The other points of Hawaii’s ban the box law remain.

  • You must still wait. Wait until you make a conditional job offer before looking into conviction history.
  • The conviction history must be relevant. If you consider a job applicant’s conviction history, keep a key point in mind. The conviction must have a “rational relationship” to the duties and responsibilities of the position.

You and your hiring team may need to be well-versed in ban the box laws. Hawaii’s ban the box law is not an island. It is among many state and local laws like it, each with its own complex provisions.  Please check with your legal counsel regarding fair and compliant hiring practices.

Heroes Act: Where the Pandemic and Background Checks Could Intersect

The coronavirus (COVID-19) pandemic has a far-reaching impact on us all. We’ve had to monitor access to courthouse records during state closures, certainly. Verified Credentials also helps employers navigate new hiring challenges. But in many ways, background reports have not had to tangle with the pandemic.  That may be changing soon.  With pending legislation in response to the national emergency, COVID-19 could impact your background reports.

On September 29, 2020, Congress introduced the “Heroes Act” (HR 8406) as a potential COVID-19 relief measure.

Potential Changes to the FCRA

The Heroes Act includes proposed amendments to the Fair Credit Reporting Act (“FCRA”).  If passed, the Heroes Act could place new limits on the ability to include some adverse information in background reports.

Except for felony criminal convictions, The Heroes Act would amend the FCRA to:

  • Prohibit furnishers of information from furnishing certain adverse information if the adverse information was the result of any action or inaction that occurred during COVID-19 (or future declared major disasters); and
  • Prohibit background reports from containing certain adverse information if the adverse information was the result of any action or inaction that occurred during COVID-19 (or future declared major disasters)

To read the full text of the Heroes Act, click here. The proposed FCRA amendments are listed in Section 401.

What Could Change in Background Reports?

If passed, the Heroes Act could have an impact on what appears in your background reports.  The amendments could prevent certain adverse information from showing up in your background reports, including:

  • Criminal information
  • Professional license sanctions
  • Other adverse information restricted by the Heroes Act

The Heroes Act – and its effect on your background reports – is a developing topic. The Heroes Act has not become law and is still in the early stages of the legislative process.  Verified Credentials will continue to monitor this proposed legislation.

Want to prepare for potential FCRA changes? You may want to consult with your legal counsel early to understand how the proposed Heroes Act may impact you.

Into the Wild of Montana’s Disclosure Requirements

The great outdoors called to many of us in recent months. It’s been a much-needed break from at-home offices and busy homes in lockdown. Residents of Montana may have had the best views, with desirable natural features. Let’s get in touch with the background check surroundings in the great state of Montana.

State and federal laws govern background checks. Yes, there are background report disclosure requirements in the federal Fair Credit Reporting Act (FCRA). But like California, Minnesota, and more, Montana has background report disclosure requirements too.

Let’s get to know the legal landscape surrounding Montana’s disclosure requirements. Find out what type of background report needs a Montana disclosure. If you’re getting background reports on someone who lives or works in Montana, you may want to keep Montana’s disclosure law in mind.

The Terrain of Montana’s Disclosure

From a bird’s-eye view, you need to know when Montana requires you to provide a state-specific disclosure. You need one for what’s known as an “investigative consumer report” under Montana law. That’s when your background report has information obtained through personal interviews with neighbors, friends, or associates of the candidate. This background report disclosure must:

  • Clearly and accurately disclose to the candidate that an investigative consumer report, including information about their character, general reputation, personal characteristics, and mode of living, whichever are applicable, may be made.
  • Be in writing.
  • Be mailed or delivered to the candidate within three (3) days after the background report was first requested.
  • Inform the candidate that they have the right to submit a written request to you, within a reasonable period after their receipt of the disclosure, for complete and accurate information about the nature, scope, and substance of the investigation requested.
  • TIP: If you receive a written request for more information from your candidate, time is of the essence. The written response to the request must be mailed or delivered to the candidate within five (5) days after either: (1) your receipt of the request; or (2) your request for the background report, whichever is later.

Solid Ground to Write Your Disclosures

You don’t need to start this journey alone. We offer sample compliance disclosures as your pathfinder. You can see a sample Montana investigative consumer report disclosure on demand. Log into your Verified Credentials Employee® account and go to the Resource Library.  Download the “Montana Investigative Consumer Report Disclosure” to get started.

Still not sure what state disclosures you need? Your legal counsel can help you get a lay of the land regarding state-specific laws.

North Carolina Firing Up Ban the Box

If you like your barbecue sauce true North Carolina style, you know it should drizzle, not stick, to what’s in the pit. A recipe isn’t always needed, but the signature style must be there. In a true North Carolina fashion, ban the box laws need to follow those same rules.

Ban the box has made its way to North Carolina. North Carolina’s new executive order restricts how state government employers can use criminal history. The state aims to have “fair chance policies” at state agencies.

Simple Step-by-step Preparation

Starting November 1, 2020, North Carolina state agencies, with some exceptions:

  • Can’t ask job applicants about their criminal histories during the initial stages of the hiring process.
  • Must remove criminal history questions from employment applications.
  • Can conduct a background check at a later stage in the hiring process. But not until an initial job interview has been conducted.
  • Are limited in what criminal records they can consider when hiring. Records they cannot use include:
    • Expunged or pardoned convictions
    • Charges and convictions unrelated to the job
    • Arrests with no conviction
    • Dismissed or “not guilty” charges
  • May not consider an applicant’s criminal history unless it’s job-related and consistent with business necessity, with some exceptions.
  • Must give the applicant a copy of their criminal record, if they get criminal history during the hiring process, and the FCRA’s Summary of Rights.
  • Must give an applicant with a criminal record a reasonable opportunity to explain that record and provide any proof of rehabilitation.

Secret Sauce of the State’s Fair Chance Order

The order only applies to state agencies and state government jobs under the governor’s purview. The order directs the state’s Department of Administration to determine if it should be extended to state contractors.

Private businesses are encouraged, but not required, to comply.

Just like you would consult the great pitmasters, you can get a professional take on the firmly drawn lines for this order. For more information, North Carolina has packed a punch to common questions. As you prepare to bring it all together, check out its frequently asked questions about the order.

Verified Credentials will continue to monitor ban the box in North Carolina.  You may want to consult with your legal counsel if you have questions how this order may impact you.

Macy’s Learns What’s in Store for Employers Who Engage in Discriminatory Employment Practices Using Background Report Information

Retail stores are no strangers to matters of civil rights. For decades, civil rights laws have helped keep retailers accountable for consumers’ civil rights complaints. Anti-discrimination protections extend not just to the shoppers, though. They reach essential workers keeping the doors open, too. How retailers hire cashiers, store clerks, backroom dock workers and more can be subject to those protections. Let’s revisit the discrimination complaint regarding Macy’s hiring practices as it draws to a close.

Inventory of Claims & (Proposed) Resolutions

Last year a class-action lawsuit was brought against Macy’s.  (To read our industry note about this, click here.)  The complaint alleged that the company improperly used background report information to discriminate against its applicants and employees. The complaint included alleged violations of Title VII of the Civil Rights Act of 1964 and the New York City Human Rights Law.

There has been a new development in the litigation.  Macy’s and the plaintiffs have reached a proposed settlement.  If approved, Macy’s must:

  • Change its applications. Its applications will not be able to mention the requirement for a background check for applicants in New York City.
  • Hire a consultant to review its background check procedures in New York City. The consultant will review them in light of New York laws and Title VII.  Macy’s will make changes to its background check procedures in New York City based on the consultant’s advice.  Macy’s must report changes made to those background check procedures to plaintiffs’ counsel.
  • Maintain any changes made to the background check procedures for a minimum of two years.
  • Pay a monetary settlement of $1.8 million.


Read the full proposed settlement here.

The proposed settlement has not been finalized.  It will take effect when approved by the court.

Keeping Stock of Regulations

This case is a reminder of how important legal compliance is when conducting background checks. It’s not just for big box stores. You should keep in mind background check laws at the federal, state, and local level.  Also keep anti-discrimination laws in mind when taking inventory of your background check programs.

It’s a lot of laws to remember.  What’s the best way to make sure your background screening program maintains compliance with all applicable laws? You should always consult with your legal counsel.

“Minnesota-Nice” Background Check Disclosures

Some states have their own background check disclosure laws. California, Massachusetts, and more may require disclosures, besides FCRA disclosures, before you screen (see our industry notes on these here and here). We’ve traveled coast-to-coast covering some disclosure laws. Now we’re back to the Midwest and our home state. “Ope,” you betcha, Minnesota is on that list.

Do you get a background report for employment purposes on someone that lives or works in Minnesota? If so, you may want to keep Minnesota law in mind.

What’s Required in the Land of 10,000 Lakes

Much like the Mighty Ducks getting in formation of the Flying V, the shape a Minnesota disclosure (as to a background check for employment purposes) should take is spelled out in state law. Like the Ducks, the Minnesota statute on such a disclosure first emerged in the early 90s. It must:

  • Be in writing;
  • Be provided to the applicant or employee before a background report is obtained;
  • Clearly state that a background report may be obtained or caused to be prepared;
    Inform the applicant or employee of the right to request from the screening provider additional information on the nature of the report on their written request;
  • Include a box the applicant or employee can check to get a copy of the report;
  • If information in the report, like references, is to be obtained through personal; interviews of the applicant or employee’s friends, neighbors or associates, advise of this; and
  • Be included in or accompany an employment application.

Get Your (Gray) Ducks in a Row

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

Continue to review your disclosures with your legal counsel to make sure you’re compliant with state-specific laws. We hope these shortcuts to Minnesota resources help.

Full Disclosure: Getting to Know Massachusetts Background Report Compliance Notices

Background checks from a background screening company start after a few basic steps. Consent forms must be signed, and disclosures presented. Once complete, we can get to work on a background report – and your candidates get to work for you. It’s not just federal compliance that drives disclosure and authorization forms. Some states have unique disclosures too. In addition to states like California, Massachusetts has disclosures for select background reports. Let’s get to know what those are.

Finding out if you need a Massachusetts disclosure

A Massachusetts-specific disclosure is not required for every background report. The requirements apply to investigative consumer reports on job candidates and employees.

You may want to check your definitions to apply this disclosure. Massachusetts law defines an investigative consumer report to help you know when it’s needed. Generally, it’s how you’re looking for information on the candidate or employee. If it comes from “personal interviews with neighbors, friends, or associates,” it could be an investigative consumer report.

If a candidate or employee lives and works in Massachusetts, it may be time to present them with this disclosure. What should that disclosure include? Let’s see what the state law indicates.

Pre-background check disclosure requirements

Maybe you’re nodding along already. Who you’re hiring and what information you’re checking is ticking these requirements. To create your disclosure, you need to know what to include. Here are some requirements to address before ordering a background report. Job candidates and employees need to hear specific language (in writing!) from you, including:

  • Clearly and accurately disclose that “an investigative consumer report commonly includes information as to [their] character, general reputation, personal characteristics, and mode of living.”
  • Provide the “precise nature and scope of the investigation requested.”
  • Inform them of their “right to have a copy of the report upon request.”
  • Obtain written permission from them to obtain the investigative consumer report.

Still not sure where to start? We offer sample compliance documents to our clients to help. Verified Credentials clients can access a sample Massachusetts disclosure to review when creating your own. Simply log into your Verified Credentials Employee account and go to the Resource Library. Take a look at the “Massachusetts Investigative Consumer Report Disclosure.” Download the sample to get started.

Getting started with state-specific background check disclosures

A state-specific disclosure for Massachusetts may apply to you if:

  • You have job candidates or employees that live or work in Massachusetts
  • AND you order background check information obtained via personal interviews (e.g. reference checks and some employment history verifications)

You may want to review your disclosure documents to size up compliance with Massachusetts law. Sitting down with your legal counsel is the best way to double-check that your background screening practices are compliant.

Once you have your disclosure language tied up with your legal counsel, talk to us. We can help you get this in front of job candidates. It’s easy to update language in your candidate portal for background checks (Candidate Verification Center). The online delivery puts your disclosure up on your job candidate’s screen for easy compliance.

Holy Toledo! Salary History Ban Moves into Toledo, Ohio

Protecting job candidates means more laws take their corner on privacy rights. More locations are restricting information about employment experience, including salary history.

As of June 25, 2020, Toledo became the second city in Ohio to adopt a salary history ban.

They join Cincinnati that passed a ban [last year].  The new law means employers generally can’t ask job candidates about compensation during the hiring process.

If you are an employer located in Toledo, the new law may apply to you. It’s not just about where you are located. It’s about where your employees live and work. You may find this law may have implications for your business. For example, if you have over 15 paid employees in Toledo, you may need to pay attention to this new ban.

What the salary history ban says

Generally, the salary history ban restricts requests for compensation details from job candidates. The full text of the law offers complete details on rules and exceptions. Here are some highlights from Toledo’s salary history ban:

  • In general, employers cannot:
    • Ask a job candidate about their salary history.
    • Screen job candidate based on their current or prior wages, benefits, or other compensation.
    • Use a job candidate’s salary history to define job offers (salary, benefits, or other compensation) or negotiate job contracts.
    • Refuse to hire or discriminate against a job candidate for not disclosing their salary history.
  • Employers shall disclose the pay scale for a position to a job candidate, at the job candidate’s request, when they present a conditional job offer.
  • This law doesn’t mean employers can’t engage in discussions about job candidate’s pay expectations. After all, salary, benefits, and other compensation are normal parts of job offer negotiations. Employers just can’t ask about salary history.

What to do next

Laws like salary history bans are a serious matter. If you are not sure how or if this law applies to you, your legal counsel may provide the best advice. Not complying could be an unlawful discriminatory practice. There are risks of high costs if you fail to comply. Under the ban, job candidates have a private cause of action to seek compensation for violations.

Blocking in Memphis: Ban the Box Comes to Shelby County, Tennessee

Music landmarks and legends found a home in Memphis. It’s home to the biggest movements in blues, soul, and rock ‘n’ roll. Now the second biggest city in Tennessee is part of a big movement in background screening.

Shelby County, Tennessee, where Memphis is located, has joined the ban the box movement.

The new law blocks public-sector employers from reviewing job candidate’s criminal history before the job offer.

When does the law take affect?

On July 27, 2020, the Shelby County Board of Commissioners passed the ordinance. The ban-the-box restrictions apply to Shelby County government jobs. The ordinance takes effect on August 11, 2020.

What does the Shelby County law say?

Want to get the full details? View Ordinance Number 513 ››

The Shelby County ordinance provides guidance and restrictions on how and when to use criminal history, with some exceptions. Here is a roundup of some of the main points for Shelby County government employers:

Pre-background check:

  • Do not ask for criminal history before a contingent job offer is extended.
  • Give candidates documentation. Job candidates should see a conditional offer letter of employment, notice of rights under the ordinance, and a request for authorization to conduct a background check prior to initiating a background check.
  • Include specific information regarding background checks in job postings.

Post-background check:

  • Limit what criminal records you look at in a criminal background check. Arrests without conviction, expunged records, juvenile history, and more should not be considered.
  • Focus on criminal convictions that apply to the job duties only or automatically bar employment according to other laws.
  • Provide the applicant with a specific notice if the job candidate’s criminal history may hold back hiring.
  • Leave room for the whole story. If a job candidate made amends from past conviction, they may provide evidence to support their fitness to work. That open position should be held for them until a final hiring decision is made.

The ordinance specifically bans the box for government jobs with Shelby County. But not so fast. The ordinance signals to third parties associated with the county, too. In it, they suggest government offices may want to work with partners that have similar hiring practices in place. Any vendor, contractor, or supplier to Shelby County may want to review their hiring procedures. The county “prefers” working with partners that have similar “conviction history policies, practices, and standards” in place. This includes a recommendation that vendor job applications not contain a “box” about prior criminal convictions (unless otherwise required by law).

If you do business with Shelby County, it may be a good idea to discuss the new ordinance with your legal counsel to determine how the ordinance may impact you.

More California Background Report Disclosures: San Francisco

We’ve talked about how, in California, the Investigative Consumer Reporting Agencies Act (“ICRAA”) and the Consumer Credit Reporting Agencies Act (“CCRA”) require employers to make specific disclosures to their applicants and employees before obtaining background reports on them, beyond the disclosures required by the federal Fair Credit Reporting Act (“FCRA”).  The patchwork of California-specific required disclosures to applicants and employees surrounding background reports doesn’t stop at the state level.

San Francisco, California, has its own law, the Fair Chance Ordinance (“FCO”), that requires specific disclosures be made to applicants and employees before an employer covered by the law can obtain background reports on them that contain conviction history, as defined by the law. 

Employers covered by the law (“Employers”) are those located or doing business in San Francisco, and that employ five or more persons regardless of location, including their owner or owners and management and supervisorial employees.  Employers do not include California or federal government employers.  With certain exceptions, conviction history is information from any jurisdiction that a person has been convicted of a felony or misdemeanor for which the person has been imprisoned, fined, placed on probation or paroled.  Conviction history is also information from any jurisdiction regarding an arrest undergoing an active pending criminal investigation or trial that has not yet resolved.

Before obtaining background reports on their applicants and employees containing conviction history, the FCO requires employers to provide them with a specific disclosure provided by the San Francisco Office of Labor Standards Enforcement (“OLSE”), available here.  The San Francisco disclosure consists of a notice developed by OLSE that informs applicants and employees of their rights under the FCO.  Employers must provide the notice in English, Spanish, Chinese, Filipino, and any language spoken by more than 5% of the employer’s employees.

Employers are also required to post the San Francisco disclosure in a conspicuous place at every workplace, job site, or other location in San Francisco under the employer’s control frequently visited by their employees and applicants.

In addition to the San Francisco-specific disclosure, the FCO also details specific responsibilities for employers.  To read the full text of the FCO, click here.  For more information on the FCO, the OLSE provides helpful insight into the requirements for employers, available here.

Because of the complexity of laws surrounding background reports, especially on applicants and employees of San Francisco employers, it may be a good idea to speak with your legal advisor to ensure that you are in compliance with the FCO and other applicable laws.

 

DHS Extends I-9 Compliance Flexibility

Last month, we discussed the Department of Homeland Security (“DHS”) news release announcing a 30-day extension in I-9 compliance flexibility to July 19, 2020. For more information on the I-9 flexibility, check out our recent blog post highlighting some of the accommodations, available here.

DHS, through US Immigrations and Customs Enforcement (“ICE”), has announced that I-9 compliance flexibility is being extended again, with the expiration date for the accommodations now set to expire on August 19, 2020.

While ICE has granted an extension to the physical presence requirements associated with Form I-9, ICE also announced that “no additional extensions will be granted to employers who were served notices of inspection (“NOIs”) by ICE during the month of March 2020.”

Verified Credentials will continue to monitor DHS announcements regarding I-9 compliance flexibility. For the latest information, be sure to visit I-9 Central. As always, be sure to talk with your legal counsel before taking advantage of the I-9 compliance flexibility rules to make sure you stay compliant.

Salary History Restrictions Coming to Maryland

There has been an increase in jurisdictions adopting “salary history bans,” like the salary history bans we have discussed in New Jersey, New York, Philadelphia, Pennsylvania, and Cincinnati, Ohio.  With recent legislation, the state of Maryland can soon be added to the list of jurisdictions with restrictions on an employer’s ability to ask about an applicant’s salary history.

Effective October 1, 2020, Maryland’s salary history ban:

  • Requires an employer, at the applicant’s request, to “…provide to an applicant for employment the wage range for the position for the which the applicant applied.”
  • Prohibits an employer from “Retaliat[ing] against or refus[ing] to interview, hire, or employ an applicant for employment because the applicant: (1) Did not provide wage history; or (2) Requested the wage range… for the position for which the applicant applied.”
  • With some exceptions, prohibits an employer from: “(1) Relying on the wage history of an applicant for employment in screening or considering the applicant for employment or in determining the wages for the applicant; or (2) Seeking the wage history of an applicant for employment orally, in writing, or through an employee or agent from a current or former employer.”
  • Allows an applicant for employment to voluntarily share wage history with an employer.
  • Allows an employer to, after making “an initial offer of employment with an offer of compensation to an applicant for employment”: (1) “Rely on the wage history voluntarily provided by the applicant for employment to support a wage offer higher than the initial wage offered by the employer,” as long as the “higher wage does not create an unlawful pay differential based on protected characteristics” under Maryland law; and (2) “Seek to confirm the wage history voluntarily provided by the applicant for employment to support a wage offer higher than the initial wage offered.”


An employer that violates Maryland’s new salary history ban may receive a letter compelling compliance from the Maryland Commissioner of Labor and Industry for a first violation, a fine of $300 for each instance of non-compliance for a second violation, and a fine of $600 for each instance of non-compliance for subsequent violations.

Verified Credentials will continue to monitor and attempt to provide updates regarding Maryland’s salary history ban as they become available.  Remember, it’s never a bad idea to discuss these upcoming changes with your legal counsel to ensure your hiring complies with applicable law.

DHS Announces Extended I-9 Compliance Flexibility

The Department of Homeland Security (“DHS”) recently issued a news release announcing a 30-day extension in I-9 compliance flexibility, to July 19, 2020, due to continued precautions related to COVID-19.

DHS made the initial I-9 compliance flexibility announcement on March 20, 2020 (available here).  In its statement, DHS recognized the difficulty employers might have attempting to physically review their employee’s identity and employment authorization documents in the employee’s presence due to COVID-19 related remote-work and social distancing guidelines.  DHS stated that it would “exercise discretion to defer the physical presence requirements associated with [Form I-9].”

According to the initial announcement, employers engaging employees in remote-work have some temporary flexibility in I-9 compliance:

  • Employers can inspect their employee’s documents remotely (e.g., over video link, fax or email, etc.) and obtain, inspect, and retain copies of the documents within three business days.
  • Once the employer’s 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.

Even though DHS is granting some flexibility in I-9 compliance, there are some limitations to keep in mind:

  • Employers that avail themselves of the remote inspection option must provide written documentation of their remote onboarding and telework policy 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.
  • This option is only available for employers and workplaces that are operating remotely. If employees are physically present at a work location, no exceptions are allowed for in-person verification of identity and employment eligibility documentation.

With the latest extension announced by DHS, the expiration date for these accommodations is now July 19, 2020.  While this announcement may help employers practice social distancing, it’s always a good idea to talk with your legal counsel before taking advantage of the I-9 compliance flexibility rules to make sure you stay compliant.

Virginia “Bans the Box” (For Certain Offenses)

We have highlighted several new ban the box laws at the local, state, and federal level.  Another month brings a new ban the box law for you to consider.

On May 21, 2020, the Governor of Virginia signed a law that bans the box for certain marijuana-related offenses.

To read the new law, click here.

The new law amends Virginia’s simple marijuana possession statute (Va. Code § 18.2-250.1).  As amended, the simple possession of marijuana in Virginia, while still unlawful without a prescription, is no longer subject to a criminal penalty.  Instead, a person who violates Virginia’s simple marijuana possession law has engaged in a civil offense and is subject to a civil penalty and a fine of no more than $25.  Note that per Virginia law, marijuana possession with the intent to sell, give, or distribute is still a criminal offense. Still, there is a rebuttable presumption in the law that a person who possesses no more than one ounce of marijuana possesses it for personal use.

Because of the changes to Virginia’s simple marijuana possession law, reporting and asking for information regarding this type of offense has also been changed.  According to the new law:

  • “Records relating to the arrest, criminal charge, or conviction of a person for a violation of [Virginia’s simple marijuana possession law]… shall not be open for public inspection or otherwise disclosed,” with some exceptions.
  • “An employer or educational institution shall not, in any application, interview, or otherwise, require an applicant for employment or admission to disclose any information concerning any arrest, criminal charge, or conviction against him when the record relating to such arrest, criminal charge, or conviction against him when the record relating to such arrest, criminal charge, or conviction is not open for public inspection pursuant to [the new law].”
  • “An applicant need not, in answer to any question concerning any arrest, criminal charge, or conviction, include a reference to or information concerning any arrest, criminal charge or conviction when the record relating to such arrest, criminal charge, or conviction is not open for public inspection pursuant to [the new law].”

Take note, an employer or educational institution that willfully violates the law’s prohibition on asking applicants about certain marijuana-related offenses can be found guilty of a Class 1 misdemeanor for each violation.

The new law is set to take effect on July 1, 2020.  Because violations of this new ban the box law may result in criminal penalties for employers and educational institutions, it may be a good idea to discuss the law with your legal advisor to determine how, or if, this new law might impact you.

“Credit Checks” in California? There’s (Another) Disclosure for That!

Last month we discussed California’s Investigative Consumer Reporting Agencies Act (“ICRAA”) and the state-specific disclosures required by the ICRAA if you obtain “investigative consumer reports” as defined by California law on applicants or employees who live or work in California (available here).

However, the California-specific requirements don’t end with the ICRAA.

If you obtain background reports on your applicants or employees who have a mailing address in California bearing on their creditworthiness, credit standing, or credit capacity (known as “consumer credit reports” in California), you may have additional disclosure requirements as outlined in the California Consumer Credit Reporting Agencies Act (“CCRA”).

Before requesting your report, you must:

  • Provide written notice to the applicant or employee that a “consumer credit report” will be used for employment purposes.
  • Identify in the notice the specific basis for the use of the report.
    • Insider Tip: California law strictly limits the particular grounds for the use of a “consumer credit report,” only allowing an employer to use it for very specific positions, as detailed in California Labor Code § 1024.5. Even if you may have a “permissible purpose”, as those terms are defined by the Fair Credit Reporting Act (“FCRA”) or even the ICRAA, it may not be valid for a “consumer credit report” under the CCRA.  Double-check that you have a specific basis for using a consumer credit report under the CCRA before ordering background reports on your California applicants and employees that bear on their creditworthiness, credit standing, or credit capacity!
  • Identify in the notice the source of the report.
  • Provide your applicant or employee with a box in the notice that they can check off to receive a copy of the report.
    • Insider Tip: If your applicant or employee checks this box, be sure to let your background check partner know so they can provide your applicant or employee with a copy of their report. Note – Verified Credentials’ clients don’t need to notify us if their notice is in their Candidate Verification Center. We will automatically send the applicant or employee a copy of the report if the box is checked.

For a sample CCRA notice to review in creating your own, take a look at the “California Consumer Credit Report Disclosure” in Verified Credentials’ Resource Library.

Laws surrounding background reports can be complex, especially in California!  If you have applicants or employees that have mailing addresses in California, and you are thinking about obtaining background reports on them, you may want to check with your legal advisor to make sure that your disclosures comply with California law.

Background Reports in California? There’s a Disclosure for That!

You’re probably aware of the federal Fair Credit Reporting Act (“FCRA”) disclosure and authorization requirements for employers that want to obtain background reports from consumer reporting agencies like Verified Credentials on employees and applicants. If you want a quick refresher on the federal requirements, click here.

But did you know that you may be required to provide additional disclosures if you obtain background reports on applicants or employees that live or work in certain states? It’s true, and it’s something to keep in mind when you develop your background screening practices and procedures.

Let’s touch on some California-specific requirements. If you obtain background reports from Verified Credentials on applicants or employees who live or work in California, you may be required to provide unique, California-specific disclosures under the California Investigative Consumer Reporting Agencies Act (“ICRAA”).

ICRAA governs obtaining and using “investigative consumer reports” on applicants or employees who live or work in California. Keep in mind that the ICRAA defines an investigative consumer report as “a consumer report in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through any means.”

Insider Tip: Even though ICRAA and the FCRA each use the term “investigative consumer report,” the definitions are very different! You may be surprised to find that your background reports might be considered “investigative consumer reports” in California, even if they aren’t “investigative consumer reports” under the FCRA.

If your background reports fall under ICRAA’s definition of “investigative consumer reports,” ICRAA has specific requirements before you can obtain background reports on your California applicants and employees from Verified Credentials (with certain limited exceptions). You must:

  • Have a permissible purpose, as defined by California law.
  • Provide a clear and conspicuous disclosure in writing to the applicant or employee, at any time before the background report is obtained, in a document that consists solely of the disclosure, that: (1) States an “investigative consumer report” may be obtained; (2) Identifies the permissible purpose of the report; (3) States the report may include information on the applicant or employee’s character, general reputation, personal characteristics, and mode of living; (4) Identifies the name, address, and telephone number of Verified Credentials; (5) Notifies the applicant or employee in writing of the nature and scope of the investigation requested, including a summary of the provisions of California Civil Code Section 1786.22; (6) Notifies the applicant or employee of Verified Credentials’ website address, where the applicant or employee may find information about our privacy practices.
  • Obtain the applicant or employee’s written authorization to procure the report.

You may think you have a handle on FCRA disclosure and authorization requirements. Still, if your applicants or employees live or work in California, it might be time to re-evaluate your disclosure documents to comply with California law. Consulting with a trusted legal advisor is the best way to ensure that your background screening practices comply with ICRAA.

Insider Tip: Do you obtain background reports on your applicants or employees who have mailing addresses in California bearing on their creditworthiness, credit standing, or credit capacity”? These are considered “consumer credit reports” in California and are governed by the California Consumer Credit Reporting Agencies Act (“CCRA”), not the ICRAA. The CCRA requires additional, specific disclosures in addition to ICRAA requirements. Be sure to check back next month for more information on the CCRA disclosure requirements.

Suffolk County, New York Passes Ban the Box Law

We have previously discussed several new “ban the box” laws at the local, state, and even federal level. On March 17, 2020, Suffolk County, New York passed their version of a ban the box law.

This law applies to the County AND certain private businesses located in the County. The law defines an “Employer” as “the County or any person, partnership, corporation, labor organization, not-for-profit, or association having fifteen (15) or more employees.”

The new law creates a “Fair Employment Screening” requirement, which places restrictions on when an Employer, as defined by the law, is permitted to ask about an applicant’s criminal history. The new law states that:

Suffolk County and any Employer located within the County shall not ask questions regarding or pertaining to an applicant’s prior criminal conviction on any preliminary employment application. Consideration of the candidate’s prior criminal convictions shall take place only after an application is submitted, after an initial interview, or thereafter.

The Suffolk County ban the box law goes into further detail on the new ban the box restrictions, stating that:

  • It shall be an unlawful discriminatory practice for an Employer to make any inquiry regarding or to require any person to disclose or reveal any criminal conviction during the application process. The application process shall begin when the applicant inquires about the employment sought and shall end when an Employer has accepted an employment application.
  • It shall be an unlawful discriminatory practice for an Employer to make any inquiry regarding or to require any person to disclose or reveal any criminal conviction against such person before a first interview. If an Employer does not conduct an interview, that Employer must inform the applicant whether a criminal background check will be conducted before employment is to begin.

Additionally, the law says that if an Employer does conduct a criminal background check on an applicant after following the new ban the box restrictions, it “shall comply with Article 23-A of the New York State Corrections Law when considering an applicant’s prior criminal convictions in determining suitability for employment.” Article 23-A of the New York State Corrections Law describes, among other things, certain factors an employer should consider before making an employment decision based on a candidate’s previous criminal history. A copy of Article 23-A is available here.

There are some exceptions to the Suffolk County law:

  • Employers hiring for licensed trades or professions, including positions such as interns and apprentices for licensed positions, may ask applicants the same questions asked by trade or professional bodies, in accordance with New York state law.
  • Employers hiring for positions where certain convictions or violations are a bar to employment in those positions under New York state or Federal law can ask questions about those convictions or violations.
  • The law doesn’t apply if criminal conviction inquiries or adverse action are specifically authorized by any other applicable law.
  • The law doesn’t apply to any public or private school, or any public or private provider of direct services specific to the care or the supervision of children, young adults, senior citizens, or the physically or mentally disabled.
  • The law doesn’t apply to select police or fire departments.

There’s still some time to determine if, or how, these new restrictions may impact you. The new law is set to become effective on August 25, 2020.

The new Suffolk County ban the box law is just one of the latest in the expanding ban the box movement. With the rapidly changing legal landscape surrounding these laws, you may want to check with your legal counsel to determine if this Suffolk County law, or any other ban the box restrictions, apply to you.

The Ninth Circuit, Once Again, Addresses FCRA Disclosure and Authorization Requirements

The Ninth Circuit Court of Appeals has recently issued a few well-publicized decisions on Fair Credit Reporting Act (“FCRA”) disclosure and authorization requirements. We have previously discussed two marquee decisions, Gilberg v. California Check Cashing Stores, LLC and Walker v. Fred Meyer, Inc., both of which provide employers with valuable insight into what may or may not be allowed in their background report disclosure and authorization forms.

As most employers know, the FCRA has specific disclosure and authorization requirements before an employer can obtain a background report from a consumer reporting agency, like Verified Credentials, for employment purposes. You can check out a quick refresher on these requirements here.

To add to the ever-expanding list of court decisions interpreting the FCRA’s disclosure and authorization requirements, the Ninth Circuit has recently issued its opinion in Luna v. Hansen and Adkins Auto Transport, Inc.

According to the decision, the employee that brought a suit against his employer alleged that the employer violated the FCRA’s disclosure and authorization requirements “by providing a FCRA disclosure simultaneously with other employment materials, and by failing to place a FCRA authorization on a standalone document.”

The Ninth Circuit disagreed with these arguments and upheld a previous summary judgment decision in favor of the employer, stating that the employee’s arguments are “thwarted by the statute itself.”

In addressing the employee’s arguments, the Ninth Circuit provides some useful interpretations of the FCRA’s disclosure and authorization requirements:

  • “But nothing [in a previous Ninth Circuit opinion on disclosure and authorization requirements] can be read to prohibit an employer from providing a standalone FCRA disclosure contemporaneously with other employment documents.” The employee’s argument that the employer violated the standalone disclosure provision of the FCRA by “presenting the disclosure together with other application materials… stretches the statute’s requirements beyond the limits of law and common sense.”
  • The employer’s disclosure, which contained a brief notice and “employer logos and signature lines” was both “clear and conspicuous” which the Ninth Circuit has interpreted to mean “’a reasonably understandable form’ that is ‘readily noticeable to the consumer.’”
  • The employee’s argument that “co-presentation of the disclosure and authorization renders the disclosure neither clear nor conspicuous” was struck down by the court, which stated that “…applicants, such as big-rig truckers, can be expected to notice a standalone document featuring a bolded, underlined, capital-lettered heading.”
  • The court rejected the argument that the employer violated the FCRA by “failing to put the authorization in a clear and conspicuous, standalone document.” The court states, “FCRA dictates only that a consumer authorization be ‘in writing,’ without specifying its format.” The court also notes that “Crucially, the authorization subsection of the FCRA lacks the disclosure subsection’s standalone document requirement.”

The Luna decision provides employers with some helpful insights into FCRA disclosure and authorization requirements. Keep in mind that this decision only impacts jurisdictions within the Ninth Circuit. However, even though the direct impact may be limited to the Ninth Circuit, the court’s interpretations should still give employers enough to consider when crafting their disclosure and authorization forms.

Please consult with your legal counsel to follow and apply the latest court interpretations of the FCRA. They can help you make sure that your employment practices fit in with the latest FCRA-related court decisions and opinions.

The Ninth Circuit Takes on Background Report Disclosures (Again)… and Pre-Adverse Action Requirements Too

We have previously written about Gilberg v. California Check Cashing Stores, LLC, a recent decision by the Ninth Circuit Court of Appeals that dove into the disclosure requirements for employers that use background screening companies to get background reports (also known as consumer reports) on employees and applicants.

By now, you probably are aware of the Fair Credit Reporting Act’s (FCRA) disclosure requirements that were addressed in the Gilberg case. As a reminder, before obtaining a background report from a background screening company on an applicant or employee, an employer must:

  • 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

These disclosure requirements have been the source of confusion, debate, and multiple court interpretations.  The Ninth Circuit is adding to the debate yet again with its latest interpretation of these requirements in the recently decided Walker v. Fred Meyer, Inc. case.  To read the court’s decision, click here.

The Walker court found that some provisions of the defendant employer’s disclosure document did violate the standalone disclosure requirement of the FCRA, while other provisions did not.  Importantly, the court established a new standard for interpreting whether language in a disclosure document is extraneous.  According to the court’s decision, “…beyond a plain statement ‘that a consumer report may be obtained for employment purposes,’ some concise explanation of what the phrase means may be included as part of the disclosure…”

According to the court, this new “concise explanation” standard may allow additional information to be provided in the disclosure document, potentially including:

  • A brief description of what a consumer report entails;
  • How the consumer report will be obtained; and
  • For which type of employment purposes it may be used.

While this decision does make an allowance for some concise, explanatory language to be included in FCRA-required disclosure document, the court also noted that the sky isn’t the limit. Employers should be aware that too much information in a disclosure document is still a violation of the FCRA’s standalone disclosure requirement.

The court held that language in a disclosure document “…included in good faith in order to provide additional useful information about an applicant’s rights to obtain and inspect information about … [the background screening company’s] investigation of, and file about, the applicant” constitutes a violation of the FCRA, as “[t]his language, however, may ‘pull the applicant’s attention away from his privacy rights protected by the FCRA by calling his attention to the rights’ that he has to inspect … [his] files.”

In addition to the in-depth discussion of an employer’s FCRA disclosure requirements, the court also briefly touched on an employer’s pre-adverse action requirements under the FCRA.  For details on pre-adverse and adverse action requirements, you may want to visit our previous discussion on this topic here.  The Walker court held that the FCRA’s pre-adverse action requirements do not require that an applicant/employee be provided an opportunity to discuss their consumer report directly with the employer before adverse action is taken.

The Walker decision impacts the jurisdictions within the Ninth Circuit.  However, it may not be a stretch to imagine that other courts could adopt the Ninth Circuit’s standards for FCRA disclosure and pre-adverse action compliance.  This case should give employers more to think about when they’re putting together their disclosure forms, as well as pre-adverse action notices.  Of course, it’s always a good idea to discuss your employment practices with your legal counsel to make sure all your documents and employment practices fit with the latest court interpretations of applicable laws.

FTC Takes Action Against Using Consumer Reports for an Impermissible Purpose

We have previously touched on the Fair Credit Reporting Act (FCRA) requirement to have a permissible purpose to obtain a background report (called a “consumer report” under the FCRA).  As we talked about, there are a number of permissible purposes defined in the FCRA including, employment purposes or for certain credit transactions.

We also discussed the Federal Trade Commission’s (FTC) advice for a company that was thinking about using a consumer report for more than one permissible purpose.  But what about using a consumer report for an impermissible purpose?

Just as in our previous article, the FTC has some advice for this scenario, too: Don’t do it.

The FTC announced a settlement with a California-based mortgage broker to settle allegations that the mortgage broker violated the FCRA by using consumer report information for an impermissible purpose, among other claims.

In its complaint, the FTC alleged that the mortgage broker took private information from consumer reports and posted it on the publicly-available review site Yelp. The FTC claimed this was done as a response when a consumer left a negative review of the company on the site.

According to the FTC’s complaint, “…the FCRA enumerates the permissible purposes for which a consumer report may be used.  Section 604(f) of the FCRA, as amended by the FACT Act, makes it unlawful to use a consumer report for any purpose other than those enumerated.”  The complaint goes on to allege that “None of the Yelp responses [by the mortgage broker] containing [consumer] report information was communicated in connection with any pending credit decision related to the reviewing consumer, or for any other permissible purpose…”

As Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, stated in the press release announcing the settlement, “Companies that use [consumer] reports and scores have a legal obligation to keep that information confidential.  They should not disclose that information to third parties without a legitimate reason to do so, and they certainly should not post that information on the internet to embarrass or punish consumers, as happened here.”

Using consumer report information for a permissible purpose is important, and the FTC is taking enforcement action when a company uses a consumer report for impermissible purposes.  The mortgage broker in this case wound up having to pay $120,000 to settle the FTC complaint, in addition to having other prohibitions imposed on it.

Ensure that you’re using consumer reports for a permissible purpose.  Are you unsure if you’re using them for an impermissible purpose?  It may be a good idea to discuss your use of consumer reports with your legal advisors to make sure you’re staying in compliance with the FCRA and other applicable laws.

Litigation Update: Waterloo, Iowa Ban the Box Ordinance

In previous articles, we have discussed both the Ban the Box ordinance passed by the City of Waterloo, Iowa and the lawsuit relating to the ordinance filed against the city by the Iowa Association of Business and Industry (IABI)). There have been new developments in the IABI’s legal challenge to the city’s Ban the Box ordinance.

In a recent Black Hawk County, Iowa, District Court decision (available here), Senior Judge Bauercamper ruled against the IABI in its lawsuit.  granted the City of Waterloo’s motion for summary judgment, agreeing with the city that there are no facts to support the case against brought by the IABI.

According to the Court’s decision, the IABI claimed that Iowa state law limiting the powers of cities “specifically preempt[s] the authority of the City of Waterloo to adopt any regulations regarding the information about a prospective employee’s criminal history that the employer can request, collect, and use in making a decision whether to hire a job applicant” and that, therefore, the City of Waterloo’s ordinance is invalid.  The court noted that the City of Waterloo disagreed with the IABI, claiming that Iowa’s Civil Rights Act gave it the authority to enact the ordinance.

The court sided with the City of Waterloo, concluding that the Ban the Box ordinance is permissible under the Iowa Civil Rights Act. It stated, “The ordinance is consistent with the authority given to cities by … [the Iowa Civil Rights Act] to provide ‘broader or different categories of unfair or discriminatory practices.’”  The court noted that, “Criminal history considerations have been shown to have a disparate impact on minority groups, especially African Americans, as disclosed by the studies presented to the Waterloo City Counsel when …  [the Ban the Box ordinance] was proposed.  These findings support the conclusion that the ordinance does not conflict with state employment law as expressed in the Iowa Civil Rights Act.”

After the ruling, the IABI stated that, “A district court judge… ruled for the City of Waterloo on its local criminal history ordinance that violates the state’s preemption statute.  IABI was profoundly disappointed in the ruling and has already filed our intent to appeal.”  To read the press release from the IABI, click here.

The litigation is currently ongoing.  According to Iowa Courts online records, an appeal has been filed with the Iowa Court of Appeals, assigned Appellate Court Docket Number 20-0575.

The Ban the Box ordinance is scheduled to become effective on July 1, 2020.

Verified Credentials will continue to monitor the ongoing litigation surrounding the City of Waterloo, Iowa Ban the Box ordinance and will provide updates as they become available.

Thinking About Adverse Action? Make a Plan!

If you use a third-party agency to provide you with background reports (which are also referred to as “consumer reports”), you may want to familiarize yourself with the Fair Credit Reporting Act (“FCRA”), a federal law that places certain obligations on users of consumer reports.

If you decide to take adverse action against an individual based, in whole or in part, on any information from a consumer report, you should be aware of additional obligations that you may have under the FCRA. Fortunately, the Federal Trade Commission (“FTC”), a federal agency tasked with enforcing the FCRA, has provided a brief overview of some of the obligations a user of consumer reports may have on their website.

According to the FTC, a user of consumer reports is required to provide notice of the adverse action to the consumer at the time the adverse action is taken. The notice can be provided orally, electronically, or in writing and “tells people about their rights to see information being reported about them and to correct inaccurate information.” The adverse action notice must include:

    • the name, address, and phone number of the consumer reporting company that supplied the report;
    • a statement that the company that supplied the report did not make the decision to take the unfavorable action and can’t give specific reasons for it; and
    • a notice of the person’s right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get an additional free report from the company if the person asks for it within 60 days.

    This adverse action notice is required for any adverse action you may take, regardless of the reason why you obtained the consumer report.

    But, if you use consumer reports for employment purposes, you may have additional obligations before you can take adverse action (or even send out the adverse action notice)!

    Users of consumer reports for employment purposes are required to provide their employees and applicants with a pre-adverse action notice before taking adverse action. According to the FTC, before you reject a job application, reassign or terminate an employee, deny a promotion, or take any other adverse employment action based on information in a consumer report, you must give the applicant or employee:

      • a notice that includes a copy of the consumer report you relied on to make your decision; and
      • a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act.”

      The FTC states that “giving the person the notice in advance gives the person the opportunity to review the report and tell you if it is correct.”

      Additionally, employers cannot take adverse action immediately after providing a pre-adverse action notice. Instead, employers must wait a “reasonable amount of time” before taking adverse action against an employee or applicant after providing a pre-adverse action notice.

      What constitutes a reasonable amount of time? The FCRA doesn’t provide an exact timeline. According to an FTC advisory opinion, the wording of the FCRA mandates that some period of time elapse between the pre-adverse action disclosure and the employment action that triggers the adverse action notice. The FTC’s best advice is that “employers may wish to consult with their [legal] counsel so that they develop procedures that are appropriate, keeping in mind the clear purpose of the provision to allow consumers to discuss reports with employers or otherwise respond before adverse action is taken.”

      To recap, if you’re an employer that is contemplating taking adverse action against an employee or applicant based, in whole or in part, on information from a consumer report, do the following steps: (1) Provide a pre-adverse action notice to the employee or applicant; (2) Wait a reasonable amount of time; and (3) Provide an adverse action notice to the employee or applicant, if applicable.

      Of course, this is just a broad overview of the FCRA’s adverse action process. The FCRA, and state and local laws, may place additional obligations on users of background reports. Be sure to talk with your legal counsel to make sure that your adverse action plan is compliant with all applicable laws.

Columbia, SC Amends their Ban the Box Law

We had previously discussed a Ban the Box law in Columbia, South Carolina, that went into effect in August 2019.

As mentioned in our previous industry note, the Columbia law placed various restrictions and obligations on employers. Significantly, the original law defined an employer as “…the City, private employers, and government contractors; and any person regularly employing five or more persons; any person acting as an agent of an employer, directly or indirectly; or any person undertaking for compensation to procure employees or opportunities for employment.”

For some, this definition of an employer appeared to conflict with the purpose of the Columbia Ban the Box law, which stated that: “[t]he purpose of this article is to ensure that the hiring practices of the City of Columbia do not, and urge private employers and government contractors doing business with the City of Columbia, to not unfairly deny people with arrest and conviction records employment…”

This seeming discrepancy created some confusion among employers, specifically whether the Ban the Box restrictions and obligations were meant to impact private employers or only the City government.

In response to the confusion, the City recently amended the definition of an employer in their Ban the Box law.

The change to the law, which was approved unanimously after a second reading on December 3, 2019, now states:

Employer means the City of Columbia as a municipal corporation.”

The new definition no longer contains references to private employers, government contractors, persons employing five or more persons, agents of employers, or persons undertaking for compensation to procure employees or opportunities for employment. The history of the amendment, including a link to a downloadable copy of the change, can be found on the City’s website.

This definition changes who the Columbia, SC Ban the Box law restrictions and obligations impact. You may want to chat with your legal advisor about this change to determine how it might impact you.

U.S. House of Representatives Passes FCRA-Amending Bill: The Comprehensive CREDIT Act of 2020

On January 29, 2020, the United States House of Representatives passed the “Comprehensive Credit Reporting Enhancement, Disclosure, Innovation, and Transparency (CREDIT) Act of 2020” (the “Act”).

The Act contains a number of provisions that could amend the Fair Credit Reporting Act (“FCRA”) in drastic ways.

Importantly, for employers, one of the Act’s sections places restrictions on when, or if, an employer can perform a credit check on their applicants and employees for employment purposes. The Act’s provisions state:

(A) IN GENERAL. —A person may use a consumer report for employment purposes with respect to any consumer in which any information contained in the report bears on the consumer’s creditworthiness, credit standing, or credit capacity only if—

(i) (I) the person is required to obtain the report by a Federal, State, or local law or regulation;
(II) the information contained in the report is being used with respect to a national security investigation (as defined in paragraph (4)(D)); or
(III) the report is necessary for a background check or related investigation of financial information that is required by a Federal, State, or local law or regulation;

(ii) none of the cost associated with obtaining the consumer report will be passed on to the consumer to whom the report relates; and

(iii) the information contained in the consumer report will not be disclosed to any other person other than—
(I) in an aggregate format that protects a consumer’s personally identifiable information; or
(II) as may be necessary to comply with any applicable Federal, State, or local equal employment opportunity law or regulation.

The Act would also require employers to provide additional, specific disclosures if a credit report is used by a person for employment purposes:

(B) DISCLOSURES. —A person who procures, or causes to be procured, a consumer report described in subparagraph (A) for employment purposes shall, in the disclosure made pursuant to paragraph (2), include—

(i) an explanation that a consumer report is being obtained for employment purposes; (ii) the reasons for obtaining such a report; and (iii) the citation to the applicable Federal, State, or local law or regulation described in subparagraph (A)(i)(I).

Furthermore, the Act creates particular requirements if adverse action is taken based on the information in a credit report:

(C) ADVERSE ACTIONS.—In using a consumer report described in subparagraph (A) for employment purposes and before taking an adverse action based in whole or in part on the report, the person intending to take such adverse action shall, in addition to the information described in paragraph (3), provide to the consumer to whom the report relates—

(i) the name, address, and telephone number of the consumer reporting agency that furnished the report (including, for a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis, a toll-free telephone number established by such agency); (ii) the date on which the report was furnished; and (iii) the specific factors from the report upon which the adverse action (as defined in section 603(k)(1)(B)(ii)) was based.

The full text of the Act and its current status can be found on Congress’ website. These proposed amendments to the FCRA are only a portion of the Act. You may want to discuss the Act with your attorney to determine if, or how, any provisions might impact you if the Act does become law.

It is important to note that the Comprehensive CREDIT Act of 2020 has not yet become law. Verified Credentials will continue to monitor the Act and will provide updates as they become available.

Appeals Court Upholds Philadelphia Salary History Ban

Salary History Bans have been passed in multiple cities and states throughout the country. We have reported on recently enacted Salary History Bans in New York, New Jersey, and Cincinnati, Ohio. Philadelphia, Pennsylvania is the latest place to have Salary History Ban activity.

Initially signed into law on January 23, 2017, as a means to address pay disparities impacting women and minorities, Philadelphia’s Salary History Ban ordinance was subject to a lawsuit upon its passage. Enforcement of parts of the ordinance were reviewed by a United States District Court in 2018, with the District Court concluding that one provision (referred to as the “Inquiry Provision”) of the Salary History Ban ordinance violated the First Amendment of the United States Constitution (to read the full District Court opinion, click here).

In a decision published in February 2020, the Third Circuit Court of Appeals disagreed with the District Court. The Third Circuit stated that, “The City enacted the Inquiry Provision in an attempt to address this persistent problem [pay disparities impacting women and minorities] and the record is clearly sufficient to withstand this First Amendment challenge to it.” To read the full Third Circuit opinion, click here.

What could this mean for employers? Under the Philadelphia Salary History Ban ordinance, it is an unlawful employment practice, with some exceptions, for an employer, employment agency, or employee or agent thereof:

    • To inquire about a prospective employee’s wage history, require disclosure of wage history, or condition employment or consideration for an interview or employment on disclosure of wage history, or retaliate against a prospective employee for failing to comply with any wage history inquiry or for otherwise opposing any act made unlawful by this Chapter.
    • To rely on the wage history of a prospective employee from any current or former employer of the individual in determining the wages for such individual at any stage in the employment process, including the negotiation or drafting of any employment contract, unless such applicant knowingly and willingly disclosed his or her wage history to the employer, employment agency, employee or agent thereof.

    To read the Philadelphia Salary History Ban ordinance, click here.

    With the Third Circuit opinion upholding the legality of the Salary History Ban ordinance, it may be a good idea to check with your legal counsel to determine if this ordinance applies to you.

Grand Rapids, MI Enacts “Ban the Box”- Style Restrictions

We have previously reported on multiple recently enacted Ban the Box laws, both at the state and municipal levels. As you may know, Ban the Box laws often feature restrictions that prevent employers from asking about a job candidate’s criminal history early in the hiring process. The city of Grand Rapids, Michigan has recently joined the “movement,” with their own Ban the Box-style restrictions, which became effective on December 1, 2019. And the city did this despite a 2018 Michigan state law that restricts counties and cities in Michigan from passing Ban the Box ordinances.

According to state law:

“A local governmental body shall not adopt, enforce, or administer an ordinance, local policy, or local resolution regulating information an employer or potential employer must request, require, or exclude on an application for employment or during the interview process from an employee or a potential employee. This section does not prohibit an ordinance, local policy, or local resolution requiring a criminal background check for an employee or potential employee in connection with the receipt of a license or permit from a local governmental body.” (Full text available here).

How did Grand Rapids circumvent the Michigan state law? By placing their Ban the Box restrictions in a new “Human Rights Ordinance”. The ordinances states:

    • The opportunity to obtain employment and advancement opportunities without discrimination on the basis of actual or perceived membership in a protected class as identified in Section 9.955 of this Chapter is hereby recognized and declared to be a civil right. No person shall discriminate against a current or prospective employee with respect to hire, tenure, terms, conditions, or privileges of employment, or any matter directly or indirectly related to employment, unless such act is based on a bona fide occupational qualification.
    • Bona fide occupational qualifications include: (b) Conviction Record. History of criminal conviction may be considered in employment decisions, although arrest with no conviction may not be considered. An outright ban on prospective employees with a criminal background is prohibited. Employers must carefully consider, on a case-by-case basis, the nature and severity of the crime, the age of the individual at the time of the crime, whether there have been repeat offenses, whether the individual maintained a good employment history before or after the conviction, evidence of rehabilitation efforts, and whether the crime for which the individual was convicted may pose a demonstrable risk to the health, safety or welfare of other employees or persons or to property.

    In addition to employers, individuals screening potential tenants should be mindful of Grand Rapids’ Human Rights Ordinance, as well. The ordinance also states:

      • The opportunity to purchase, lease, rent, sell, use, convey, and finance housing without discrimination on the basis of actual or perceived membership in a protected class as identified in Section 9.955 of this Chapter is hereby recognized and declared to be a civil right.
      • In addition to the exemptions contained in Chapter 160 of the City Code, the following considerations may result in exceptions to discriminatory housing practices: (b) Conviction Record. History of criminal conviction may be considered in housing decisions, although arrest with no conviction may not be considered. An outright ban on prospective tenants with a criminal background is prohibited. Landlords must carefully consider, on a case-by-case basis, the nature and severity of the crime, the age of the individual at the time of the crime, whether there have been repeat offenses, whether the individual maintained a good tenant history before or after the conviction, evidence of rehabilitation efforts, and whether the crime for which the individual was convicted may pose a demonstrable risk to the health, safety or welfare of other residents or persons (which would include manufacturing or distributing illegal drugs) or to property.

      The full text of the Human Rights Ordinance can be found here (employment restrictions can be found in Section 9.959 and housing restrictions can be found in Section 9.958 of Chapter 176 of the Grand Rapids, Michigan Code of Ordinances).

      Because the Grand Rapids Ban the Box-style restrictions are tucked into an anti-discrimination law, instead of a traditional Ban the Box law, the restrictions on using criminal history information can be easy to overlook. You may want to carefully review this ordinance with your legal advisors to determine whether these restrictions apply to you.

New Version of Form I-9 Released

You probably know that all employers need to complete a Form I-9 for all newly hired employees to verify their identities and authorization to work in the United States. There have been multiple versions of the Form since it was introduced in 1987. You and other employers may have been on the watch for the latest Form since the agency tasked with maintaining the Form, the United States Citizenship and Immigration Services (USCIS), instructed employers to continue using a previous version of the form (Form I-9 07/17/17 N) past its stated expiration date of August 31, 2019.

The wait is over! The USCIS recently announced the next version of the Form is ready for employers to use. Download the latest version of the Form I-9 here ››

According to a statement from the USCIS, the agency published the Form I-9 Register Notice on January 31, 2020, announcing a new version of Form I-9. The Form I-9 Register Notice states there have been a few changes to the previous version, as well as changes to the instructions for the Form. For example, in the new form instructions, USCIS clarified who can act as an authorized representative on behalf of an employer and updated the USCIS website addresses, among other changes.

Along with the statement, the USCIS released some additional key information to help employers make sure they’re using the correct version of the Form:

      • The latest, and current, version is titled “Form I-9 10/21/2019” and expires on October 31, 2022.
      • Employers should begin using the latest version (Form I -9 10/21/2019) on January 31, 2020.
      • There is a grace period. Employers can continue to use the previous version of the Form (Form I-9 07/17/2017 N) until April 30, 2020.
      • After April 30, 2020, employers can only use the latest version (Form I -9 10/21/2019).

      The latest version of the Form, as well as instructions to use the latest version, have been posted on the USCIS website. For other information on the Form, as well as the latest announcements from the USCIS, Verified Credentials suggests that you visit USCIS’ official “I-9 Central” resource.

      Even though I-9 Central provides great updates for employers, making any changes to your employment forms and documents should always be done with the advice of your legal counsel to ensure that you stay compliant.

Waterloo, Iowa Facing Lawsuit Over “Ban the Box”

We previously discussed the Ban the Box ordinance recently passed in Waterloo, Iowa.

On January 2, 2020, the Iowa Association of Business and Industry (IABI) filed a lawsuit against the city of Waterloo, alleging that the Waterloo ordinance violates Iowa state law.

The IABI, in its petition, specifically states that the ordinance is a violation of Iowa Code section 364.3(12)(a).  According to the court documents filed by the IABI, Iowa Code section 364.3(12)(a) “provides that ‘a city shall not adopt’ any ordinance ‘providing any terms or conditions of employment that exceed or conflict with the requirements of federal or state law… relating to hiring practices… or other terms or conditions of employment.’”

The petition goes on to say that “the 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 IABI is requesting that the Court prohibit the city of Waterloo from enforcing the ordinance, as well as declare that the ordinance violates both the Iowa Code and the Iowa Constitution.

To read the full text of the petition filed in Black Hawk County, Iowa, click here.

According to a press release issued by the IABI, “the lawsuit follows a letter that the IABI submitted to the city during the discussion phase stating the violation of state law and requesting they reconsider the ordinance.”  The letter sent to the city council is available as an addendum in the petition linked above.

Litigation is still ongoing.  Verified Credentials will continue to monitor the Ban the Box ordinance in Waterloo, as well as the ensuing lawsuit, and will attempt to provide updates as they become available.

Federal “Fair Chance Act” Enacted

We have previously covered “Ban the Box” laws in multiple jurisdictions, including both statewide laws, such as the law in Colorado, and municipal ordinances, including Waterloo, Iowa, Columbia, South Carolina, and Saint Louis, Missouri.

The federal government has recently passed legislation implementing its own Ban the Box style law. The federal “Fair Chance Act” was signed into law on December 20, 2019 as part of the National Defense Authorization Act for Fiscal Year 2020.

The Fair Chance Act prohibits, with some exceptions, federal executive agencies from inquiring about an applicant’s criminal history record information prior to making a conditional offer of employment i.e. an employment offer conditioned on the results of a criminal history inquiry, stating 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.

This prohibition extends to all legislative and judicial agencies as well as executive agencies.

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

[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 Fair Chance Act starts at Section 1121 on page 408.

The Fair Chance Act will become effective in December, 2021. When it becomes effective, the Fair Chance Act will only apply to federal agencies as outlined above and entities that have contracts with the federal government. You may want to review this proposed law with your legal counsel to determine if it applies to you.

Salary History Ban Coming to Cincinnati

Starting in 2020, Cincinnati, Ohio will join jurisdictions such as New York and New Jersey in adopting a “Salary History Ban”. Salary History Bans typically restrict when, or if, an employer can ask an applicant about the applicant’s compensation history.

Under the Cincinnati Salary History Ban, it is unlawful (with some exceptions) for employers to:

  • Inquire about the salary history of an applicant for employment; or
    Screen job applicants based on their current or prior wages, benefits, other compensation, or salary histories, including requiring that an applicant’s prior wages, benefits, other compensation or salary history satisfy minimum or maximum criteria; or
  • Rely on the salary history of an applicant in deciding whether to offer employment to an applicant, or in determining the salary, benefits, or other compensation for such applicant during the hiring process, including the negotiation of an employment contract; or
  • Refuse to hire or otherwise disfavor, injure, or retaliate against an applicant for not disclosing his or her salary history to an employer.


The ordinance also requires employers, upon a reasonable request, to provide the pay scale for a position to an applicant who has been given a conditional offer of employment.

Even though inquiries about salary history may be restricted, employers may still engage in discussion with the applicant about their expectations with respect to salary, benefits, and other compensation, including but not limited to unvested equity or deferred compensation that an applicant would forfeit or have cancelled by virtue of the applicant’s resignation from their current employer.

The full text of the Salary History Ban can be found in the Cincinnati Code of Ordinances.

This ordinance will be effective beginning in April, 2020. This gives you some time to examine this new law with your legal advisors and determine how it may impact you. Verified Credentials will continue to monitor and provide updates as they become available.

Waterloo, Iowa: The First Iowa Jurisdiction to “Ban the Box”

The “ban the box” movement – featuring laws that often prevent employers from asking about a candidate’s criminal history early in the hiring process – continues to diffuse rapidly at state and local governments. We have previously discussed recent ban the box laws passed in Colorado and Columbia, SC, as well as a proposed law in St. Louis, MO.

Continuing this prevalent trend, the city of Waterloo, Iowa has recently passed its ban the box ordinance.

Effective July 1, 2020, the law states the following:

      • In connection with the employment of any person, it shall be an unlawful discriminatory practice for an employer to include a criminal record inquiry on any application. It shall further be an unlawful discriminatory practice for an employer who employs fifteen or more persons, but not private schools providing a regular course of instruction for any part of kindergarten through high school education, to engage in the following activity:
        • 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. The application process shall begin when the applicant inquires about the employment being sought and shall end when an employer has extended a conditional offer of employment to the applicant. If the applicant voluntarily discloses any information regarding his or her criminal record at the interview, the employer may discuss the criminal record disclosed by the applicant.
        • 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.
          To make an adverse hiring decision 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.
        • To make an adverse hiring decision based on an applicant’s criminal record without a legitimate business reason.

Waterloo’s new ordinance applies to employers who regularly employ one or more persons within the City of Waterloo. It does not apply to 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 municipal ordinance.

To read the full text of the new ordinance, click here. In the Table of Contents, go to “ORDINANCES PENDING CODIFICATION” then “UNFAIR USE OF CRIMINAL RECORD.”

Waterloo’s new ban the box law marks the first time an Iowa jurisdiction has passed an ordinance of this kind and reflects how these new laws are quickly expanding to many different states, counties, and cities.

Verified Credentials will continue to monitor and will attempt to detail any updates to the ordinance that may occur before it becomes effective in July 2020. With the rapidly changing ban the box landscape, it may be a good idea to speak with your legal counsel to make sure your background screening policies comply with all applicable laws.

Salary History Ban Coming to New Jersey

“Salary history bans” are increasingly being adopted by states and local jurisdictions, like an upcoming salary history ban in New York. We’re seeing the trend of salary history bands moving to New York’s neighbor next, the Eastern Seaboard state of New Jersey.

While the content and restrictions imposed by salary history bans differ between each state, county, or city that imposes them, these types of laws often restrict an employer’s ability to consider or ask about an employee or applicant’s previous salary history for employment purposes.

New Jersey is the latest state set to impose salary history consideration restrictions on employers.

Effective January 1, 2020, New Jersey’s salary history ban makes it an unlawful employment practice (with certain exceptions) for an employer to:

    • Screen a job applicant based on the applicant’s salary history, including, but not limited to, the applicant’s prior wages, salaries or benefits; or
    • Require that the applicant’s salary history satisfies any minimum or maximum criteria.

    An employer may, however:

      • Consider salary history in determining salary, benefits, and other compensation for the applicant, and may verify the applicant’s salary history, if the applicant voluntarily, without employer prompting or coercion, provides the employer with salary history. The applicant’s refusal to volunteer compensation information shall not be considered in any employment decisions.
      • Request that an applicant provide the employer with a written authorization to confirm salary history, including, but not limited to, the applicant’s compensation and benefits, after an offer of employment that includes an explanation of the overall compensation package has been made to the applicant.

      Verified Credentials will continue to monitor and attempt to provide updates regarding New Jersey’s salary history ban as they become available.  Remember, it’s never a bad idea to discuss these upcoming changes with your legal counsel to ensure your hiring complies with applicable law.

Unbiased Employment: Background Checks and the EEOC

As an employer that conducts background checks, you’re probably familiar with the federal Fair Credit Reporting Act (“FCRA”) and know that there’s certain obligations you may have under it (as well as under its state and local counterparts).

But did you know that by improperly using background checks, even if you fully comply with the FCRA to obtain those checks, you could find yourself in hot water with the Equal Employment Opportunity Commission (EEOC), the agency responsible for enforcing federal anti-discrimination laws.

In a joint statement with the Federal Trade Commission (FTC), one of the federal agencies that enforces the federal Fair Credit Reporting Act (FCRA), they want to make sure employers don’t use background information to discriminate against employees and applicants.

To read the full statement, click here.

According to the statement, when using background information to make employment decisions, “you must comply with federal laws that protect applicants and employees from discrimination. That includes discrimination based on race, color, national origin, sex, or religion; disability; genetic information (including family medical history); and age (40 or older).” This is true regardless of how you may receive the information. Even if you don’t partner with a background screening company, you should still be cautious that you don’t use background information you discover in a discriminatory manner.

To help employers think critically about their responsibilities under federal anti-discrimination laws, the EEOC has issued the following recommended guidelines:

    • Apply the same standards to everyone, regardless of their race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older).
    • Take special care when basing employment decisions on background problems that may be more common among people of a certain race, color, national origin, sex, or religion; among people who have a disability; or among people age 40 or older.
    • Be prepared to make exceptions for problems revealed during a background check that were caused by a disability.
  • Remember to keep the EEOC’s anti-discrimination guidelines in mind when conducting background checks for employment purposes, as well as any applicable state and local anti-discrimination guidelines. These laws may prohibit discrimination against classes of people that the federal anti-discrimination laws do not. It is always a good idea to double-check your practices with a trusted legal advisor to ensure that you’re not violating any federal, state, or local anti-discrimination laws. As the EEOC says, “In all cases, make sure that you’re treating everyone equally.”

 

One Background Report: One Permissible Purpose

What’s your reason for completing background checks? Is it to help you make educated hiring decisions? Or possibly for other business purposes? This distinction is essential because the Fair Credit Reporting Act (FCRA) includes restrictions on why background checks are obtained and used.

A user of a background check report, known as a consumer report under the FCRA, can only request and obtain that report on someone if they have a permissible purpose to do so.

A permissible purpose could be:

    • For employment;
    • For a legitimate business need in connection with a business transaction started by the consumer or to review an account to make sure a consumer still meets the terms of the account;
    • For underwriting insurance;
    • For certain credit transactions;
    • In accordance with the written instructions of the consumer;
    • And more.
  • But what if you want to use a background check for more than one permissible purpose? What if, for example, you want to use it for a legitimate business need and then for an employment decision? The Federal Trade Commission (FTC) has come out with advice for any person that’s thinking about “double-dipping”: Don’t do it.

    Whenever you get a background check from a screening provider, you have to certify that you have a single permissible purpose of doing so and identify what that lawful reason is. This, in turn, helps protect the candidate. When a candidate gets their copy of their background check results from a screening provider, they can see precisely what organization obtained the report and why. Using a background report for one purpose helps you, too. The FTC states, “getting a new consumer report when you have a new purpose helps your business ensure that you obtain the most current information about the consumer.”

    Have questions about how this might apply to you? Review the list of FCRA’s permissible purpose options with your legal advisor to identify your permissible purpose.

Improper Use? Macy’s Faces Allegations of Discrimination in Background Check Policies

When completing background checks, ensuring compliance with federal, state, and local consumer reporting laws is only one consideration for an employer. Employers should also keep anti-discrimination laws in mind.

Macy’s, Inc. is currently facing allegations of discrimination against job applicants and employees with criminal records in a pending class-action lawsuit.

The complaint against Macy’s alleges the following:

    • Disparate impact discrimination in violation of both Title VII of the Civil Rights Act of 1964 and the New York City Human Rights Law – The suit claims that “Macy’s criminal history screening policies and practices, which use applicants’ and employees’ criminal histories to screen and exclude them from obtaining and/or continuing employment, have a disparate impact on Black and Latino applicants and employees and are neither job related nor consistent with business necessity.”
    • Discriminatory denial and termination of employment based on criminal history information – The complaint alleges that “Macy’s denied employment … based on … criminal history information,” and by not considering an individual’s criminal history concerning certain mitigating factors, Macy’s violated that law and the New York City Administrative Code.
    • Additional violations of the New York City Human Rights Law and Administrative Code by inquiring into applicants’ criminal histories before extending conditional offers of employment.
  • Of course, the allegations leveled against Macy’s remain only 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.

    The claims leveled at Macy’s in this lawsuit should serve as a reminder to employers that potential background screening suits are not limited to FCRA or other consumer reporting law violations. Any employer that uses background checks for employment purposes should take care to ensure that their background screening policies comply with anti-discrimination laws as well. If you have any questions about whether your background screening program complies with such laws, it is highly recommended that you speak with trusted legal counsel.

Ban the Box Debated in St. Louis, MO

The ban the box movement has been gaining steam, with many jurisdictions passing laws in recent years. We have previously touched on the ban the box laws in Colorado and Columbia, South Carolina, and now, St. Louis, Missouri, looks poised to join the growing movement.

St. Louis has previous experience with the ban the box bandwagon. A 2013 city policy change no longer automatically disqualified applicants who had felony convictions from city employment. Then in 2014, the City of St. Louis no longer required applicants seeking city employment to check a box on an employment application if they had a felony conviction. Even the State of Missouri banned the box in 2016 for applicants seeking certain state government positions.

While the City of St. Louis may have some experience with ban the box, there is a relevant note for employers: ban the box in the city (and state) currently only applies to certain government positions. Private employers are not impacted by existing ban the box laws.

But that may be coming to an end.

Recently, St. Louis Alderman John Collins-Muhammad proposed expanding the city’s ban the box law to cover all employers. The Alderman’s proposal wouldn’t “prohibit hiring managers from asking about criminal history in interviews or doing a background check.” Instead, the proposal, known as Board Bill 120, would prohibit all employers in the City of St. Louis from:

    • Basing a hiring or promotional decision on a job applicant’s criminal history, unless the employer can demonstrate its relevance to that decision.
    • Inquiring about a job applicant’s criminal history until after it has been determined that the applicant is otherwise qualified for the job and has been interviewed; however, such an inquiry may be made of all job applicants who are in the final selection pool from which the job will be filled.
  • However, this wouldn’t apply to jobs which an employer is required by law to exclude an applicant based on their criminal history.

    This proposed bill has not yet become law. Verified Credentials will continue to monitor and attempt to provide updates on the proposed legislation as they become available. Of course, with the rapidly changing ban the box landscape, it’s always beneficial to speak with a trusted legal advisor before conducting criminal history checks to make sure that you’re complying with all applicable laws.

$54 Million Negligent Hiring Lawsuit Verdict Upheld

Avoiding risky hires takes more than just completing a background check to store in a candidate’s personnel file. It’s also essential to have policies and procedures in place with the help of trusted legal counsel to avoid hiring or retaining candidates that could put your business at risk.

In a recent case, an Illinois state appellate court affirmed a $54 million jury verdict against a trucking company. The case involved the negligent hiring and retention of a truck driver that, while on the job, was involved in a serious car accident that left a plaintiff with severe and permanent injuries.

According to court, the trucker’s driver’s qualification file, which included a background check, revealed that:

    • The trucker had never completed a truck driving course, even though he had a commercial driver’s license.
    • Within three years of his employment application, the trucker had been involved in four accidents, had three moving violations, and had his license suspended twice.
    • Four out of seven previous employers over the last ten years had terminated employment with the trucker.
    • In the seven years before his application, the trucker had been convicted of nine traffic-related offenses and four counts of felony reckless aggravated assault.
  • A safety coordinator testified that, based on the company’s safety standards, the trucker’s felony conviction would have automatically disqualified him from employment with the trucking company. The coordinator’s initial decision to reject this trucker’s application was overruled by a superior who admitted that the trucker was “…a marginal candidate” but that the company was “…forced to accept ‘marginal drivers’ in order to make a profit.”

    Additionally, the trucker did not attend mandatory company safety training, had multiple moving violations, and had his license suspended within the first nine months of his employment. The company still retained the trucker, even though company policy would have revoked his driving privileges because the company “never ran his motor vehicle report or monitored his license…” after hiring.

    This case should serve as a cautionary tale for employers. What are your guidelines for the use of background check information? It would help if you gave serious consideration to working with a trusted legal advisor to develop firm guidelines regarding the hiring and retention of employees and applicants based on your background checks. Maintaining a successful background screening program, with strict and well-identified policies and procedures for recruitment and retention, could help protect your company from negligent hiring claims and may help prevent tragedies like the accident that occurred in this case.

Beyond “Ban the Box”: Salary History Ban Passed in New York State

At this point, you may be familiar with the recent trend of “ban the box” laws popping up throughout many states and cities. Typically enacted by state or local governments, these laws often prevent employers from asking about an applicant’s criminal history early in the hiring process.

Did you know that some jurisdictions are going beyond “ban the box” and restricting questions on salary history? We’re starting to see an increase in states and cities that are adopting new “salary history ban” laws. These types of requirements may restrict an employer’s ability to consider or ask about an employee or applicant’s previous salary history for employment purposes.

The State of New York is one of the latest jurisdictions to pass a “salary history ban” law. Signed by Governor Cuomo on July 10, 2019, the new law with restrictions on salary history questions goes into effect on January 6, 2020. With certain exceptions, the new law prohibits employers from:

    • Using wage or salary history of an applicant to determine whether to offer them employment or in determining their wages or salary.
    • Requiring wage or salary history from the applicant or employee as a condition of employment, promotion, interview, or job offer.
    • Requesting an applicant’s wage or salary history from a current or former employer, its agent, or its employee.
    • Refusing to interview, hire, promote or otherwise employ or retaliating against an applicant or current employee based on prior wage or salary history, because they did not provide wage or salary history in accordance with the law, or because they filed a complaint with the State’s department of labor alleging a violation of the law.
  • To read the full text of the law, click here.

    There is still time to determine how this law may impact you and your hiring process before it goes into effect in January 2020. Verified Credentials will continue to monitor and provide updates regarding the law. Remember that it’s never a bad idea to talk with your legal advisors to ensure that your hiring process meets all your obligations and requirements.

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