Monthly Archives: June 2013

Updated guide from the FTC: fighting identity theft with Red Flags Rule for businesses

On June 12, 2013, the Federal Trade Commission (the “FTC”) issued revised guidance designed to help businesses comply with the requirements of the Red Flags Rule, which protects consumers by requiring businesses to watch for and respond to warning signs or “red flags” of identity theft. The guidance outlines which businesses – financial institutions and some creditors – are covered by the Rule and what is required to protect consumers from identity theft.

The FTC enforces the Red Flags Rule with several other agencies. Its guide has tips for organizations under FTC jurisdiction to determine whether they need to design an identity theft prevention program, and can help businesses spot suspicious patterns and prevent the costly consequences of identity theft.

June 27th, 2013|Educational Series, Guidance|

FINRA is spot-checking social media communications

In posting a Targeted Examination Letter (often referred as a sweep letter) on its website earlier this month, FINRA invoked Rule 2210(c)(6), which states that each FINRA firm’s written (including electronic) communications are subject to a periodic spot-check procedure.

FINRA’s sweep letter seeks, among other things, an explanation of how the firm is using social media at the corporate level in conducting its business; the identity of all individuals who post and/or update content; how the firm’s registered representatives and associated persons generally use social media to conduct the firm’s business; written supervisory procedures concerning the production, approval and distribution of social media communications; the measures to monitor compliance with the firm’s social media policies; and a tabular list of the firm’s top 20 producing registered representatives (based on commissioned sales) who used social media for business purposes to interact with retail investors.

June 27th, 2013|Legislation|

Virginia takes workers’ privacy to a new level

Starting July 1, 2013, new Virginia Code §40.1-28.7:4 provides that “employers shall not, unless a listed exemption applies, be required to release, communicate, or distribute to a third-party, any current or former employee’s personal identifying information.”

In this context, “personal identifying information” is defined as a “home telephone number, mobile telephone number, e-mail address, shift times, or work schedule.”  Exceptions permitting the disclosure of such information include requirements of federal laws that supersede state statutes, court orders, judicial warrants or a subpoena in a civil or criminal case. Although there is no penalty, the statute establishes a public policy that endorses protection of the personal identifying information and could be used in a lawsuit against employers.

State and local laws for employment-related protection to ex-offenders continue to grow

A new Indiana law (House Enrolled Act 1482) that prohibits employers from asking about or otherwise considering expunged or sealed arrest and conviction records goes into effect July 1, 2013.  And a similar North Carolina law (SB 91) takes effect December 1, 2013.

The City of Buffalo too is giving ex-offenders increased employment opportunities with its May 28, 2013 ordinance which amends Chapter 154 of the Code of the City of Buffalo by prohibiting public and private employers and city vendors from asking job candidates about their criminal conviction history during the application process and prior to the first interview. And a new “ban the box” ordinance has been unanimously adopted in Seattle on June 10, 2013 that will give ex-offenders special rights in the job application process. Seattle’s Council Bill 117796 provides for administrative enforcement but affords no private right of action.

Indiana and North Carolina, and Buffalo and Seattle, are just the latest additions to the fast growing list of states and municipalities that regulate the use of criminal records in employment decisions. And pending before Congress is the federal HR 6220 or “Ban the Box Act” introduced last July, which similar to these state and local laws, would make it illegal for an employer to ask about criminal history in an interview or on an employment application.

New Texas law limits negligent hiring and negligent supervision suits against employers

Rather than denying employers access to potentially consequential information about a candidate’s criminal past, a new Texas law is striving to curb lawsuits against employers. Signed into law on June 14, 2013 and effective September 1, 2013, HB 1188 amends the Texas Civil Practice and Remedies Code to prohibit most causes of action “against an employer, general contractor, premises owner, or other third-party solely for negligently hiring or failing to adequately supervise an employee, based on evidence that the employee has been convicted of an offense.”

Notably, the statute provides exceptions that allow claims if the employer knew or should have known its employee was convicted of: (1) an offense “that was committed while performing duties substantially similar to those reasonably expected to be performed in the employment, or under conditions substantially similar to those reasonably expected to be encountered in the employment;” (2) a sexually violent offense; or (3) certain offenses specified in the Texas Code of Criminal Procedure, Article 42.12- Section 3g including but not limited to murder, indecency with a child, aggravated kidnapping, aggravated sexual assault, and aggravated robbery.

The protections under this statute do not apply in actions “concerning the misuse of funds or property of a person other than the employer, general contractor, premises owner, or third party by an employee if, on the date the employee was hired, the employee had been convicted of a crime that includes fraud or the misuse of funds or property as an element of the offense, and it was foreseeable that the position for which the employee was hired would involve discharging a fiduciary responsibility in the management of funds or property.”

CFPB’s database is now searchable by state and includes complaints about credit reporting

On May 31, 2013 the Consumer Financial Protection Bureau (“CFPB”) announced that its Consumer Complaint Database, now searchable by state, has been expanded to include credit reporting and money transfer complaints. In addition to these two new categories, the database, which can be accessed at, includes complaints relating to credit cards, mortgages, student loans, bank accounts and services, and consumer loans.

When submitting a complaint about credit reporting, consumers can select from five common issues, which are all searchable on the updated database: incorrect information on a credit report; problems with a credit reporting agency’s investigation; improper use of a credit report; not being able to get a credit report or credit score; and problems with credit monitoring or identity protection services.

June 20th, 2013|Educational Series|

EEOC files suits against two employers for use of criminal background checks

The Equal Employment Opportunity Commission (the “EEOC”) announced on June 11, 2013 that it filed lawsuits against two large employers accusing them of using criminal background checks to illegally discriminate against African American workers. The EEOC alleged that the companies, by requiring contracted employees and prospective employees to submit to criminal background checks, violated Title VII of the Civil Rights Act of 1964’s prohibition against race discrimination.

“Title VII of the Civil Rights Act of 1964 prohibits discrimination against job applicants and employees on account of their race,” said EEOC Chair Jacqueline A. Berrien.  “Since issuing its first written policy guidance in the 1980s regarding the use of arrest and conviction records in employment decisions, the EEOC has advised employers that under certain circumstances, their use of that information to deny employment opportunities could be at odds with Title VII.”  The EEOC issued updated enforcement guidance on employer use of arrest and conviction records in April 2012.

June 20th, 2013|Employment Decisions, Lawsuit|

Nevada is the latest state to restrict employment-purpose credit reports

On May 25, 2013, SB 127 was signed into law adding Nevada to the fast-growing list of states that restrict employment-purpose credit reports.  Nevada’s new law, which goes into effect October 1, 2013, follows closely the recently enacted legislation in Colorado.  Eight other states (California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington) have similar laws that limit the employers’ use of credit history in personnel decisions.  Aggressive legislative efforts are likely to continue, as Florida, New Jersey, and Pennsylvania are considering similar legislation. But the most restrictive bill yet is pending before the New York City Council. It would prohibit employers from using credit reports in hiring except in few instances where such checks are required by law.

Go to Top