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OK, maybe HR credibility isn’t the same as “street cred,” but, hey, I am a w ell-­‐rated presenter at HRSouthwest and SHRM chapters around the country.
I’m a 20-­‐year HR veteran and a Senior Professional in Human Resources. I’m also 2013 President for the F ort Worth Human Resource Management Association. Additionally, I sit on the board of the Texas Association of Business.
I’ve delivered dozens of presentations to S HRM chapters and conferences around the country and dozens of w ebinars on a variety of topics. Hit up my w ebsite if you need a speaker for an upcoming event. http://imperativeinfo.com/hrci-­‐recertificati on-­‐
topics/
All that said, I’m not a lawyer and I’m especially not YOUR lawyer. Wiser people than I decline to express their opinion for fear of some knucklehead misapplying what they said and getting them sued. Just realize that you didn’t pay me for this presentation and you might only be getting w hat you paid for. B e prudent. Use this information to start a discussion in your organization and with your own legal counsel. If they disagree with m e, go get another lawyer.
There is a healthy dose of the G ospel According to Coffey (in other words, opinion) in this w ebinar and handout. I hope it is helpful to you!
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Say “Cheese!”
I’ll post the picture I took on my Facebook pages. You can find me at:
Facebook: Imperative Information Group company page
https://www.facebook.com/imperativeinfo
Facebook: Mike Coffey, SPHR professional page
https://www.facebook.com/mikecoffeysphr
LinkedIn: Imperative Information Group company page
https://www.linkedin.com/company/imperative-­‐i nformation-­‐group
LinkedIn: my profile
https://www.linkedin.com/in/imperative
Twitter: my account
https://twitter.com/mrcoffey
Twitter: Bad Hire Days
https://twitter.com/badhiredays
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65-­‐7 0 million Americans – one in four adults – have some sort of criminal record. Many, if not most, of those convictions are for minor offenses.
Though groups like the National Employment Law Project have claimed that these former offenders “need not apply” because employers routinely bar them from employment, regardless of the severity or age of their offenses. We all know this isn’t true but i t makes for great headlines.
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A background check alone is not a solid screening process. In fact, many employers’ background screening processes create more risk than they mitigate. A solid process results in well-­‐i nformed hiring decisions that are legally compliant and minimize litigation risk. Such a process includes: • A documented review of the risk profile of each position,
• A criminal offense relevance matrix that relates job-­‐related risks to specific kinds and patterns of past behavior,
• An employment application, c riminal history i nquiry, and interview process designed to explore the candidate’s past behavior and identify potential risk concerns based upon the risk profile and criminal offense relevance matrix, and • Verification that the candidate has been honest throughout the process through a thorough background screening process.
Imperative offers tools and consulting to help our c lients make hiring decisions are well-­‐
informed and legally defensible.
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Title VII of the Civil Rights Act of 1964 makes employment discrimination based on color, race, national origin, sex, or religion illegal. “ Bright line rules”, absolute exclusions based on criminal history that do not c onsider the severity of the offense, the risks associated with the position, the age of the offense, and other factors, were found to c reate a disparate impact on minorities i n the 1975 Green v. Missouri Pacific Railroad case. In recent years, the EEOC has been aggressive in investigating and suing (so far, unsuccessfully) employers for the impact of their criminal history policies on minorities.
The EEOC is a law enforcement agency – not a rule-­‐making body. The only power they have is to use federal funds to finance investigations and bring c ivil suits against employers. They still have to prove their c ases in c ourt l ike any other plaintiff. Courts have sometimes used the EEOC’s guidance documents in their interpretation of Title VII but they have also criticized both the agency and their guidance documents. The OFCCP has also expressed concerns about disparate impact i n federal contractors’ employment practices. In J anuary, 2013, the OFCCP issued Directive 306, “ Complying with Nondiscrimination Provisions: Criminal Record Restrictions and Discrimination Based on Race and National Origin.” adopting the EEOC’s guidance document on the use of criminal records in employment decisions. http://www.dol.gov/ofccp/regs/compliance/directives/dir306.htm
For more on the guidance, see our Background Screening Policy Considerations To Avoid Discrimination Claims webinar.
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A matrix like this one makes it easy to identify how an offense will affect a candidate’s eligibility for employment. It is also is good documentation of the business justification of your use of criminal history.
• Whenever an item has a “Y”, the individual would be eligible for the position.
• Whenever an item is a “C” or “R”, management should review the entire applicant, including his history since the offense, and the available details of the offense. In some cases, it may be necessary to obtain c opies of documents from the court file in order to make an informed decision. These are the situations where the EEOC would expect to see an individualized assessment.
• Where an item has an “N”, the nature of the offense within the given time period would exclude the individual from that position. This should be used very narrowly.
See our recorded webinar, Creating a Criminal History Evaluation Tool, for more information about these tools.
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The employment application and criminal history i nquiry are the least expensive integrity test you’ll ever give your applicant.
It i s important to have a thorough application process. Applicants should be required to account for any gaps in employment, provide detailed reasons for termination, and accurate contact information for former employers. Education and licensure claims should also be documented. Good employment applications should also include l anguage authorizing former employers, education institutions, military authorities, and law enforcement and court authorities to release all information to the employer or its agents concerning the applicant, i ncluding i nformation that may be deemed negative. Finally, authorization to procure a consumer report at any time related to the individual’s prospective or continued employment should be included. Imperative also recommends including i t in the FCRA-­‐required consumer report disclosure document discussed later.
Many employers do not i nclude date of birth on the employment application for fear of inviting age discrimination c laims. Others do not request social security numbers because of data security concerns. This information can safely be captured on the FCRA-­‐required consumer report disclosure document discussed later.
The questions you ask on the application and during the interview should be compliant with Title VII and the relevant state laws. They should also be designed to c omply with the requirements of regulatory and accrediting bodies.
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The National Employment Law Project maintains a list of cities and counties and states that have implemented some sort of Ban the Box, also know as “Fair Chance Laws.”
Currently 13 states and at least 64 municipalities have put some limitation on when public (government) or private employers can inquire about criminal records. “The Box” i s the criminal history inquiry on the employment application. Proponents want to ban the box under the belief that former offenders will suffer less discrimination i f employers first meet them in an interview. The faulty underlying assumption is that employers automatically disqualify applicants with c riminal histories without regard for the relevance of the offense to the position. The actual result is simply that the evaluation of the offense with relation to the position i s made later in the process, wasting the time of both the applicant and employer.
Here’s a summary of a few state’s restrictions:
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Hawaii, Illinois, Massachusetts, Minnesota, New Jersey, and Rhode Island: Public and private employers may not i nquire about criminal records on the initial written application.
Details vary about when the inquiry may be made and what may be requested.
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California, Colorado, Connecticut, Delaware, Maryland, Nebraska, & New Mexico: Public employers may not i nquire about criminal records on the initial written application.
Virginia’s governor has signed an executive order prohibiting state agencies from making the inquiry until after an application.
More than 60 c ities and counties have passed similar ordinances including Austin and Travis County (county and city departments only). See our webinar Outside of the Box: Developing a Legally Compliant and Effective Criminal History Inquiry for more information on Ban the Box and creating a useful and legal criminal history question.
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The background check is i deally only a verification that the applicant told you the truth.
Every employment, education, or licensure claim made by the applicant should be verified either by the employer or by a background screening company. Also, verify all c riminal records disclosed by the applicant. Often, we find other more serious offenses. For some reason, they seem to think that revealing a little negative information will help hide more serious negative information.
Whenever you use a third party to gather information about your applicant or employee, you are likely procuring a consumer report and all of the FCRA information on the following pages applies!
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The Fair Credit Reporting Act is the federal law that governs the use of information purchased for use in making employment decisions. Ignore the word CREDIT in the title, the law governs consumer reports.
FCRA § 603(c): The term “consumer” means an individual.
In the employment context, this would be an applicant or current employee. FCRA § 603(d): The term “consumer report” means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit c apacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for… employment purposes.”
This would include c redit reports, employment background checks, applicant information verification services like The Work Number or The National Student Clearinghouse, and for-­‐
fee reference services like Skill Survey.
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FCRA § 603(h): The term “Employment purposes” when used in c onnection with a consumer
report means a report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.
The Federal Trade Commission has defined this very broadly to include c ontract or 1099 employees, agents, and volunteers. I agree with them except for volunteers. There is no l itigation history on this and it seems a stretch to consider volunteers as “employees.” At the same time, the cost of compliance may be minor in c omparison to the risk of a lawsuit from a volunteer.
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FCRA § 603(e): The term “investigative consumer report” means a consumer report or portion thereof in which i nformation on a consumer's character, general reputation, personal characteristics, or mode of living i s obtained through personal interviews with neighbors, friends, or associates of the consumer reported on or with others with whom he is acquainted or who may have knowledge concerning any such items of information.
So when you background screening company calls a former employer and verifies dates of employment, title, salary, termination reason, and eligibility for rehire, that is not an investigative consumer report (though it i s a consumer report). However, as soon as they ask about the applicant’s behavior, interactions with others, job performance, etc., i t i s an investigative consumer report. This will become relevant when we discuss the required disclosure and authorization language.
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§ 603(d)(2): The term “consumer report” does not i nclude any report containing i nformation solely as to transactions or experiences between the consumer and the person making the report. In other words, when the prospective employer calls previous employers or schools directly, the info is not a consumer report. When the background screening company makes the calls or the information comes to the employer through any third party (The Work Number or National Student Clearinghouse, for instance), then it i s a consumer report.
When the consumer calls the background screening company, any report to the employer of the conversation with the consumer is not a consumer report.
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FCRA § 603(y) Exclusion of Certain Communications for Employee Investigations.—
(1) Communications described in this subsection.— A communication i s described in this subsection if—
(A) but for subsection (d)(2)(D) of this section, the communication would be a consumer report; (B) the communication i s made to an employer in c onnection with an investigation of— (i) suspected misconduct relating to employment; or (ii) compliance with Federal, State, or local l aws and regulations, the rules of a self-­‐regulatory organization, or any preexisting written policies of the employer; (C) the communication i s not made for the purpose of investigating a consumer’s credit worthiness, credit standing, or credit c apacity; and (D) the communication i s not provided to any person except— (i) to the employer or an agent of the employer; (ii) to any Federal or State officer, agency, or department, or any officer, agency, or department of a unit of general local government; (iii) to any self-­‐regulatory organization with regulatory authority over the activities of the employer or employee; (iv) as otherwise required by law; or (v) pursuant to section 1681f of this title. (2) Subsequent disclosure.— After taking any adverse action based in whole or i n part on a communication described in paragraph (1), the employer shall disclose to the consumer a summary containing the nature and substance of the communication upon which the adverse action i s based, except that the sources of information acquired solely for use in preparing what would be but for subsection (d)(2)(D) of this section an investigative consumer report 15
need not be disclosed. 15
While the FCRA places limits on the information that consumer reporting agencies can provide to employers, it places no limitations on the information that can be reviewed by employers as long as the information is used to violate an equal opportunity l aw.
A few states do have limitations on the information that employers can use. Texas does not.
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Texas’ only restriction on reporting information to employers (limiting all i nformation to seven years) was preempted by the Fair and Accurate Credit Transactions Act (FACTA), though it i s still widely quoted by attorneys and screening firms unfamiliar with the interplay of the state and federal laws.
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Employers must certify:
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their identity,
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their “permissible purpose” (i.e., employment),
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that the information obtained in the consumer report will be used for no other purposes,
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That they will c omply with the FCRA’s disclosure requirements,
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That they will c omply with the FCRA’s pre-­‐ and post-­‐adverse action requirements, and
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That they will not use the information i n violation of any equal opportunity l aws.
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That they will disclose to c onsumers that investigative consumer reports will be or have been requested, and
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They will provide the nature and scope of the investigation to the consumer upon request.
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School bus contractor First Student and sister company First Transit , both operated by FirstGroup North America, recently settled a class action suit brought by applicants and employees on whom the company ran background checks without first obtaining the FCRA-­‐
required authorizations. The $5.9 million settlement included payouts even for applicants or employees against whom the company took no adverse employment action. Hunter, et a l. v. First Transit, Inc. and Joshaway, et al. v. First Student, Inc.,
Domino’s Pizza settled a federal class action suit from applicants and employees who claim that Domino’s disclosure document did not c omply with the FCRA. In an order denying Domino’s Motion for Dismissal, the court stated that Domino’s inclusion of a release of liability statement on the disclosure form was likely out of compliance with the FCRA. The settlement is for $2.5 million.
In November 2014, Publix Super Markets Inc. settled for $6.8 million a class action l awsuit alleging that they failed to provide a “stand alone” disclosure document. Erin Knights a nd Tresca Prater, et al. v. Publix Super Markets Inc., Case No. 3:14-­‐c v-­‐0 0720, in the U.S. District Court for the Middle District of Tennessee
In April 2014, Swift Transportation agreed to pay $4.4 million to settle claims that they failed to provide appropriate disclosures to applicants before running background checks and failed to follow the pre-­‐adverse and adverse action requirements.
Ellis v. Swift Transportation Co. o f Arizona LLC, Case No. 3:13-­‐c v-­‐0 0473, in the U.S. District Court for the Eastern District of Virginia.
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In Pitt v. Kmart Corporation, the plaintiff alleged that Kmart provided an outdated copy of the Summary of Your Rights Under the Fair Credit Reporting Act, resulting in a $3 million settlement.
In Marcum v. Dolgencorp Inc, the plaintiffs alleged that “(a.) they were denied employment with the defendant because of their employment-­‐purposed consumer report; (b.) either the adverse employment decision had been made before the plaintiffs received a copy of their report and summary of rights or the defendant did not provide these in a meaningful and reasonable time before this decision; and (c.) the Summary of Rights form defendant eventually sent was an outdated summary and not the current form required by both the [Consumer Financial Protection Bureau] and the [Federal Trade Commission].” This resulted in a $4.1 million dollar settlement.
In March 2015, Food Lion’s parent company, Delhaize America, settled for $3 million a c lass action c laiming that they failed to provide appropriate disclosure documents and failed to follow the adverse action procedures.
Jeneen Brown v. Delhaize America, LLC et al. Case No. 1:14-­‐c v-­‐0 0195, filed in the U.S. District Court for the Middle District of North Carolina
Other recent settlements include:
Dollar General -­‐ $4.1 million
Kmart -­‐ $3 million
Talecris -­‐ $130,000
US Xpress $2.75 million
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These are a few of the dozens of current class action c ases against employers alleging FCRA violations.
In November, 2013, a plaintiff in California filed suit against The Walt Disney Company alleging that Disney failed to follow the FCRA’s pre-­‐adverse and adverse action notifications when a background check from Sterling Infosystems incorrectly reported a criminal conviction. In November 2014, Uber was hit with a class action l awsuit claiming that it failed to provide the necessary pre-­‐adverse action i nformation to i ts drivers.
In December 2014, a background check class action l awsuit was filed against Michaels Stores Inc., alleging the craft supply retailer neglected to properly inform job applicants that the company regularly performed background checks on potential employees during the application process. In J anuary 2015, a second FCRA class action was filed against Michaels Stores, claiming that the FCRA disclosure information was embedded within an online employment application which appears as one long c ontinuous Web page that applicants fill out, and which c ontains a liability release, among reams of other extraneous information.” UBS Financial Services Inc. i s facing a class action l awsuit claiming that they failed to follow the FCRA’s pre-­‐adverse and adverse action requirements. 21
The federal Fair Credit Reporting Act requires that employers disclose to applicants or employees that a consumer report (background check) will be procured prior to requesting it from their background screening partner. Under the law, this document can only c ontain the disclosure language. Many employers have been sued by applicants simply because their disclosure document contained releases of liability or other information.
The law also requires that the employer obtain the individual’s written consent before procuring the background check. The law allows for this authorization to be included i n the disclosure document along with i dentifying information necessary to conduct the background check. Imperative recommends including the disclosure and authorization l anguage in the same document. We also recommend including the authorization l anguage in the employment application, as well. 22
This is the kind of extraneous information employers often include i n the FCRA disclosure document. Under the FCRA, the employer may not request a consumer report unless “a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes.”
The courts have repeatedly ruled that this kind of language unrelated to making the disclosure and obtaining the consumer’s authorization to procure the report are a violation of the FCRA. Employers can include this kind of information in their employment application fine print but not i n the FCRA disclosure document!
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Every time that a report is ordered, the employer must make several certifications to the background screening company:
• That a legal disclosure has been made and that the consumer provided authorization in accordance with the FCRA,
• The information in the report will not be used in violation of any federal or state equal employment opportunity l aw or regulation,
• If the request is for an investigative consumer report (which usually means that requesting employment verifications, reference checks, or other personal interviews with associates of the consumer) that a specific disclosure relative to investigative consumer reports has been made in accordance with the FCRA and that the employer will disclose the nature and scope of the investigation upon request in accordance with the FCRA.
• That the employer will make the notifications required by the FCRA before taking an adverse action based on the report (the pre-­‐adverse action notice discussed later).
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Before taking an adverse action based upon a background check, the Fair Credit Reporting Act requires that the employer provide the applicant/employee with a copy of the report and the consumer’s rights under the FCRA, which are laid out in a document prescribed by the Federal Trade Commission and Consumer Financ Protection Bureau.
Though not strictly required at this stage, Imperative Information Group encourages clients to also provide the applicant/employee with i nformation on how to c ontact us in order to discuss their report. Under the FCRA, we have 30 days to i nvestigate any consumer disputes of our information but we normally finish the disputes in a matter of hours. The majority of calls we get from consumers are along the lines of “my lawyer said this wasn’t going to be on my record,” which usually aren’t really disputes of the accuracy of the information.
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Here is an opportunity to i ncorporate the individual assessment, as suggested by the EEOC, into the process. If the background check comes back with a criminal offense that may adversely impact the candidate, the employer has to provide the candidate with a copy of the report and A Summary of Your Rights Under the Fair Credit Reporting Act. This might be a good opportunity to i nclude an invitation to the individual to provide additional i nformation that he/she believes well help the employer put the offense in the correct context. 27
CRAs have 30 days to reinvestigate any disputed information. If the disputed information cannot be verified as accurate, the CRA must remove it from the report. Good CRAs resolve most disputes in hours whenever possible. Great CRAs have extremely few disputes.
There is no requirement that the employer forestall the adverse action decision until the reinvestigation is completed. However, we recommend that if a change in the information would result in a different employment decision, employers should consider waiting for the completion of the reinvestigation rather than risk missing an opportunity to hire a qualified applicant. 28
Sometimes when the applicant says “It wasn’t me” it really wasn’t.
From Imperative’s files: When we conducted a background check on an individual with a very unusual name (let’s call him Ezekiel Uriah Jones), we found records for someone with his name and date of birth i n South Carolina and Navarro, Texas. However, there was not indication that he had ever lived i n these jurisdictions – in fact, he had consistently been in employed in Fort Worth for the last fifteen years. Further research showed that the criminal files in each of the cases had different SSNs (one belonged to a woman and the other hand never been issued). Finally, after talking to our client, i t turned out the the applicant (the real “Mr. Jones”) was a 6’ 2 ” tall black man. As is clear from the booking photos above, this wasn’t our guy. More info on our blog at imperativeinfo.com
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After taking the adverse action, employers must provide a second notice that includes:
• Notice of the adverse action to the consumer;
• The name, address, and telephone number of the consumer reporting agency that furnished the report to the person; • A statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken; and
• notice of the consumer's right to obtain, under section 612 [§ 1681j], a free copy of a consumer report on the consumer from the consumer reporting agency and to dispute with a consumer reporting agency the accuracy or c ompleteness of any information in a consumer report furnished by the agency.
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