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Compliance Corder covers articles related to employment decisions due diligence.

Class action charges LinkedIn with violations of FCRA

According to a new putative class action filed in California federal court, social networking site LinkedIn runs afoul of the Fair Credit Reporting Act (FCRA).

The plaintiffs claim that LinkedIn’s reference search functionality allows prospective employers, among others, to obtain reports on job applicants with profiles on the site. LinkedIn’s dissemination of “Reference Reports” – that are created based on a user’s profile and connections to form a list of former supervisors and co-workers as possible references – are available for users who pay a monthly or annual subscription fee.

“LinkedIn has created a marketplace in consumer employment information, where it sells employment information, that may or may not be accurate, and that is has obtained in part from unwitting members, and without complying with the FCRA,” according to the complaint, which noted the site has more than 300 million members and one million jobs listed.

The Reference Reports bring LinkedIn within the purview of the FCRA, and yet the company fails to comply with a host of statutory requirements, according to the complaint.

Specifically, the complaint alleges that the site violates Section 1581(b) by furnishing consumer reports for employment purposes without obtaining the certifications required by the statute or a summary of the consumer’s rights and also does not maintain any of the procedures required by Section 1681e(a) to limit the furnishing of consumer reports to the limited purposes of the statute. In addition, Section 1681e(b) mandates that all consumer reporting agencies follow reasonable procedures to assure the maximum possible accuracy of consumer report information, Section 1681e(d) requires that a user notice be provided to individuals when a report is provided about them, and Section 1681b states that reports can only be provided after an inquiry to ensure the report is used for a “permissible purpose.” None of these statutory requirements were met by LinkedIn, the suit alleges.

“[A]ny potential employer can anonymously dig into the employment history of any LinkedIn member, and make hiring and firing decisions based upon the information they gather, without the knowledge of the member, and without any safeguards in place as to the accuracy of the information that the potential employer has obtained,” Sweet and the other plaintiffs claim. “Such secrecy in dealing in consumer information directly contradicts the express purposes of the FCRA.”

The main plaintiff alleges that she located a job opening on the site and submitted her resume through LinkedIn. She received a notification from the site that the general manager of the employer had viewed her profile and she was offered the job after an interview. The general manager declined the plaintiff’s offer to provide a list of references but later called back to rescind the offer, telling her that he had checked some of her references and changed his mind.

The plaintiffs seek to certify a nationwide class of LinkedIn users who had a Reference Report run on them as well as a subclass of users who applied for employment via the site and had a Report generated by a potential employer. As for remedies, the putative class requests actual, statutory, and punitive damages, as well as attorney’s fees and costs.

To read the complaint in Sweet v. LinkedIn Corporation, click here.

December 3rd, 2014|Categories: Compliance Corner for Employment Decisions|Tags: , , , |

SEC considers background check rule proposed by FINRA

Financial institutions could face expanded obligations to conduct background screening of applicants for registration pursuant to a rule proposed by the Financial Industry Regulatory Authority (FINRA) to the Securities and Exchange Commission (SEC).

As currently drafted, the National Association of Securities Dealers (NASD) Rule 3010(e), the Responsibility of Member to Investigate Applicants for Registration, provides that a firm “must ascertain by investigation the good character, business reputation, qualifications and experience of an applicant before the firm applies to register that applicant with FINRA,” the regulator explained.

Seeking to “streamline and clarify members’ obligations relating to background investigation, which will, in turn, improve members’ compliance efforts,” FINRA proposed the addition of background checks to the Rule for the SEC’s consideration.

The change would mandate that firms verify the accuracy and completeness of the information in an applicant’s Form U4 (Uniform Application for Securities Industry Registration or Transfer) for first-time applicants as well as transfers. Written procedures for conducting the background check – including a public records search – must also be established.

While the rule is prospective, FINRA announced that it would take a look at currently registered representatives. The financial regulator intends to begin its efforts with a search of all publicly available criminal records for the roughly 630,000 registered individuals who have not been fingerprinted within the last five years; going forward, FINRA will periodically review public records “to ascertain the accuracy and completeness of the information available to investors, regulators and firms,” the agency said.

To read the Federal Register notice: click here.

December 3rd, 2014|Categories: Compliance Corner for Employment Decisions|Tags: , , , |

New York City’s new bill would restrict using credit reports for employment decisions

Last month, the New York City Council’s Committee on Civil Rights held a hearing on a bill that would amend the city’s administrative code, prohibiting employers from using consumer credit reports for personnel decisions. Although the hearing ended without a disposition, it is expected that this bill will pass in some form in the near future. The Committee is holding a separate hearing in December on a bill that would prohibit employment discrimination based on an applicant’s or employee’s criminal history.

October 15th, 2014|Categories: Compliance Corner for Employment Decisions|Tags: , , |

Congress proposes bill that protects regulated employers’ background checks

While the Equal Employment Opportunity Commission (the “EEOC”) is continuing its challenge of employers’ use of criminal history and credit report information in personnel decisions, and new “ban-the-box” laws are rapidly gaining momentum, on September 9, 2014, Congress proposed legislation that protects certain regulated employers from EEOC, state agency and private actions when they strive to comply with the screening laws that are particular to their industries. The Certainty in Enforcement Act of 2014 would amend Section 703 of the Civil Rights Act of 1964 (42 U.S.C. 2000e-2), and cover employers that include those engaged in “health care, childcare, in-home services, policing, security, education, finance, employee benefits, and fiduciary duties.”

October 15th, 2014|Categories: Compliance Corner for Employment Decisions|Tags: , , , |

Class action for unauthorized disclosure of PHI is a new twist under FCRA

A recent class-action is seeking damages for the unauthorized disclosure of personal health information (“PHI”) under the Fair Credit Reporting Act (the “FCRA”). The plaintiffs claim that the defendant hospital allowed the unauthorized access of confidential records of the putative class members, including PHI, held by a third-party records vendor without their knowledge or consent and without sufficient security. Among other claims, the plaintiffs allege that the hospital violated the FCRA by failing to implement adequate safeguards to protect their personally identifiable information and PHI from a data breach suffered by the third-party vendors. The plaintiffs argue that the hospital was a CRA that created “consumer reports” containing sensitive information including names, dates of birth, Social Security numbers, billing information and confidential health records, and disseminated this information to medical service providers affiliated with the defendant, and that the defendant allowed employees of the vendor and others to gain unrestricted access to their personally identifiable information and PHI, which was allegedly misused and intentionally disclosed to third-parties for profit.

September 19th, 2014|Categories: Compliance Corner for Employment Decisions|Tags: , |

District of Columbia joins ban-the-box movement

On August 22, 2014, District of Columbia’s mayor signed new legislation titled the Fair Criminal Record Screening Amendment Act of 2014 that prohibits most employers in DC from both inquiring about criminal history information during the application process and obtaining a criminal background check until after a conditional offer of employment is made to the applicant. The law, which imposes a host of other restrictions and requirements on using criminal record information for personnel decisions, will take effect following a 30-day period of Congressional review as provided in the District of Columbia Home Rule Act and publication in the District of Columbia Register.

September 19th, 2014|Categories: Compliance Corner for Employment Decisions|Tags: , , , |

New Jersey’s new ban-the-box law goes into effect March 1, 2015

Signed into law last month, The Opportunity to Compete Act will effect March 1, 2015, preventing many private employers in New Jersey from asking job candidates about their criminal history on the initial job application. In “banning the box” for private employers, New Jersey joins the District of Columbia, Hawaii, Illinois, Massachusetts, Minnesota, Rhode Island, and cities of Philadelphia (PA), Newark (NJ), Buffalo (NY), Seattle (WA), San Francisco (CA), Baltimore (MD), and Rochester (NY)) in postponing inquiries about criminal record information until later in the hiring process, and imposing other requirements on the use of such records in employment decisions.

September 19th, 2014|Categories: Compliance Corner for Employment Decisions|Tags: , , , , |

Reminder: San Francisco’s tough ordinance that restricts asking about and using criminal records in employment and housing decisions starts August 13, 2014

 

Effective August 13, 2014, the Fair Chance Ordinance (the “FCO”) (see also the FCO FAQs) requires covered employers, contractors, and housing providers to review an individual’s qualifications before inquiring about his/her criminal history and follow strict rules for using the information.

The FCO applies to private employers that are located or doing business in the city and county of San Francisco, and employ 20 or more persons worldwide. This 20-person threshold includes owner(s), management, and supervisory personnel. The FCO covers positions (including contractor and other status) located within San Francisco, regardless of where the employer is located, as long as the position is “in whole, or in substantial part, within the city.” San Francisco’s Office of Labor Standards Enforcement (the “OLSE”) interprets “in substantial part” to mean an average of eight hours of work performed per week in San Francisco.

Along with banning inquiries about a criminal history or pending charges on the job application or during the first live interview, the FCO prohibits asking about six categories of criminal record information altogether, and mandates significant measures for individualized assessment, including considering only “directly-related convictions that have a direct and specific negative bearing on the

[applicant’s] ability to perform the duties or responsibilities necessarily related to the position,” the time elapsed since the conviction, evidence of inaccuracy, evidence of rehabilitation and/or other mitigating factors.

An aspect of the ordinance that is especially noteworthy is that employers are prohibited from inquiring about or considering convictions that are more than seven years old, with “the date of conviction being the date of sentencing.” Under California law, there already is a seven-year limitation on such records, but the look-back period starts from the date that a person is released from custody. Also of note is that before taking any adverse action based on a criminal record, the ordinance requires that the employer wait seven days (from the date of the potential adverse action notice) before taking such action. If during the seven-day waiting period the individual gives the employer notice, orally or in writing, of evidence of an inaccuracy, rehabilitation, or any other mitigating factor, the employer must delay the adverse action for a “reasonable” time to reconsider the action.

Employers must also ensure that criminal background inquiries later in the process comply with the notice guidelines published by the OLSE, as well as with the already existing background check disclosure/authorization requirements under California’s ICRAA and the FCRA. Highlighted below are the ordinance’s more significant notice requirements:

  • Covered employers must post, in a conspicuous place at every workplace, including a temporary site, or other location in San Francisco under the employer’s control where applicants or employees visit, a notice of rights provided by the OLSE. The notice must be posted in English, Spanish, Chinese, Tagalog and any other language spoken by 5% or more of the employees in the workplace, job site, or other location. (Translations of the notice in Chinese, Spanish, and Tagalog are available on the OLSE website.)
  • Employers must state in all job solicitations or advertisements that are reasonably likely to reach potential applicants seeking employment in San Francisco that the employer will consider qualified individuals with a criminal history.
  • Employers mustsendthe notice toeachlaborunionorrepresentative withwhomtheemployerhasacollectivebargainingagreementorotheragreementthatisapplicabletoemployeesinSanFrancisco.
  • Prior to any criminal history inquiry, including from procuring or conducting a background check, an employer must provide this notice to an applicant or employee when he/she is given the required FCRA/ICRAA disclosure and authorization form to sign.

August 8th, 2014|Categories: Compliance Corner for Employment Decisions|Tags: , , , |

Class-action against U.S. Census Bureau alleges race-bias in using criminal background checks

On July 1, 2014, a magistrate judge in the U.S. District Court for the Southern District of New York certified as a class-action an unprecedented lawsuit brought under Title VII of the Civil Rights Act of 1964, that alleges the U.S. Census Bureau’s process of using criminal background checks when selecting temporary workers for the 2010 census unlawfully screened out approximately 250,000 African-Americans. Filed in April 2010, the complaint charges that in hiring nearly a million temporary workers, most of whom went door-to-door seeking information from residents, the Bureau erected unreasonable and largely insurmountable hurdles for applicants with arrest records, regardless of whether the arrests were decades old, were for minor charges, or led to criminal convictions.

July 9th, 2014|Categories: Compliance Corner for Employment Decisions|Tags: , , |

Cities of Rochester, NY and Baltimore, MD join fast growing list of ban-the-box jurisdictions

Effective November 18, 2014, the City of Rochester, New York ordinance no. 2014-0155 will prohibit employers from requiring applicants to disclose any criminal conviction information during the application process. The employer may inquire about a criminal conviction only after the initial interview. And if the employer does not conduct an interview, it must inform the applicant whether a criminal background check will be performed, before employment is to begin. Additionally, it must wait until after a conditional job offer has been extended before conducting the criminal check or otherwise inquiring into the applicant’s criminal history. The ordinance applies to any position where the primary place of work is located within Rochester, and to any city employees (except fire or police) or vendors regardless of location. Excluded from the ordinance are criminal record inquiries that are authorized by another applicable law.

Baltimore’s Fair Criminal-Record Screening Practices ordinance, which becomes effective August 13, 2014, similarly bans private employers from inquiring about or conducting criminal checks on applicants until a conditional offer has been extended. The ordinance applies to any employer with 10 or more employees within the city of Baltimore, but excludes entities serving minors or vulnerable adults. Unlike some other ban-the-box laws, the Baltimore ordinance does not require that employers provide additional notices to applicants other than those required under the Fair Credit Reporting Act.

For more information on ban-the-box legislation,see the recently published briefing paper by the National Employment Law Project titled Statewide Ban the Box–Reducing Unfair Barriers to Employment of People with Criminal Records.

July 9th, 2014|Categories: Compliance Corner for Employment Decisions|Tags: , , , , , |
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