Employment Decisions Archives

Class actions against employers for violations of the FCRA are increasing

An auto parts company (CA USDC Case No. 2:14-cv-3470) and a hotel chain (CA USDC Case No. 3:14-cv-01089) are just the latest employers that have been slapped with class action lawsuits for alleged violations of the Fair Credit Reporting Act (the “FCRA”) charging willful non-compliance with the FCRA’s disclosure, authorization, and/or notice requirements. And the payouts in such lawsuits can be in the millions. Within the past three years, a national trucking company reached a settlement for $4.6 million, a national retail chain for $3 million and a national pizza maker for $2.5 million.

The FCRA allows an applicant or employee to bring a private right of action against an employer who negligently or willfully fails to comply with any of the FCRA’s requirements. Under the statute of limitations, an action must be brought by the earlier of (1) two years after the date of violation discovery by the plaintiff, or (2) five years after the date on which the violation occurred. The employer’s liability for negligent non-compliance is actual damages sustained by the applicant/employee, and reasonable attorneys’ fees and costs. A willful violation carries actual or statutory damages ranging between $100 and $1,000, punitive damages, and attorneys’ fees and costs.

Below are general FCRA compliance reminders to employers when procuring and using background check reports prepared by a consumer reporting agency (“CRA”):

Provide disclosure to the applicant/employee in a standalone document that a consumer report may be obtained and used for employment purposes (language must be clear, with no superfluous information or liability waiver, and separate from the employment application);
Provide to the applicant/employee a summary of rights under the FCRA and applicable state notices;
Obtain the applicant/employee’s authorization for the consumer report;
Before taking adverse action based on the report (1) provide a pre-adverse action notice to the applicant/employee along with a copy of the report, and notices of rights, if not given previously, (2) wait a reasonable period of time (at least 5 days) before taking the adverse action, and (3) after deciding to take the adverse action, provide a notice that contains the FCRA required information, such as the name, address, and telephone number of the CRA that provided the report.

May 14th, 2014|Employment Decisions, Judgment, Lawsuit|

FTC and EEOC jointly publish guides on employment-purpose background checks

The Federal Trade Commission (FTC) and the Equal Employment Opportunity Commission (EEOC) have co-published two brief guides on employment background checks that explain the rights and responsibilities of the people on both sides of the desk. See Background Checks: What Employers Need to Know and Background Checks: What Job Applicants and Employees Should Know. For employers, the guidelines cover only the basics that must be considered for procuring and using employment-purpose background checks and do not attempt to explain in detail the many compliance requirements of the Fair Credit Reporting Act, and analogous state and municipal consumer reporting laws, regulations, codes and statutes.

March 29th, 2014|Employment Decisions|

San Francisco enacts ordinance for using criminal records in employment decisions

Effective August 13, 2014, under San Francisco’s Fair Chance Ordinance, companies with 20 or more employees are prohibited from inquiring about an applicant’s criminal history on the employment application or during the first live interview. Along with banning the box, the ordinance imposes several additional restrictions and mandates certain considerations for individualized assessment. San Francisco employers must also ensure that their notice and consent forms for criminal background inquiries later in the process comply with the guidelines that will be published by San Francisco’s Office of Labor Standards Enforcement (OLSE) as well as with the already existing background check disclosure/authorization requirements under California’s ICRAA and the FCRA.

San Francisco is the ninth jurisdiction with legislation that affects private employers. The remaining eight are the states of Hawaii, Massachusetts, Minnesota, Rhode Island, and the cities of Buffalo, NY, Newark, NJ, Philadelphia, PA, and Seattle, WA. Multi-state employers should consider whether their particular circumstances warrant adopting individualized employment applications for jurisdictions with ban-the-box laws, or whether to use a nationwide standard form. Employers who opt for a standard electronic application for all locations need to include a clear and unambiguous disclaimer for applicants in each applicable ban-the-box jurisdiction. It is uncertain whether such disclaimers are sufficient for paper applications of multi-state employers in at least one ban-the-box jurisdiction (Minnesota) or if the box must be removed altogether.

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.

Note: Effective August 13, 2014, with our California employment-purpose disclosure/ authorization form, we will be including a supplemental disclosure/authorization notice as prescribed by the OLSE, to use by San Francisco employers.

March 28th, 2014|Criminal Activity, Employment Decisions|

Proposed Regulation A rules have bad actor disqualification similar to Rule 506(d)

On December 2, 2013, the U.S. District Court for the Western District of Pennsylvania ruled that a combined disclosure and authorization form that contained a liability waiver which the employer gave to a group of former job applicants violates the Fair Credit Reporting Act (the “FCRA.”) The court determined that a significant portion of the 1,800 individuals in this class action are entitled to willful damages under the FCRA and could each receive the greater of his/her actual damages or $1,000 plus attorneys’ fees.

This is a second published decision to hold that liability waivers invalidate the disclosure requirements under the FCRA. The first ruling rendered in January 2012 in the U.S. District Court in Maryland found that “both the statutory text and FTC advisory opinions indicate that an employer violates the FCRA by including a liability release in a disclosure document.” Thus far, only the U.S. District Court for the Western District of North Carolina disagreed, deciding in August 2012 that the liability waiver included in the defendant employer’s combined disclosure and authorization form was kept sufficiently distinct from the disclosure language so as not to render it ineffective.

January 17th, 2014|Dodd-Frank, Employment Decisions|

Proposed federal bill bans credit checks in employment decisions

Introduced by Senator Elizabeth Warren (D-Mass) on December 17, 2013, the “Equal Employment for All Act” (S. 1837), would amend the Fair Credit Reporting Act to prohibit employers from requiring or suggesting that applicants disclose their credit history, from procuring a consumer or investigative report, and from disqualifying employees based on a poor credit rating, or information on a consumer’s creditworthiness, standing or capacity. Positions that require a national security clearance or “when otherwise required by law” are exempt from the prohibition. Ten states (California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington) already have enacted legislation that limits the use of credit reports for employment purposes.

January 17th, 2014|Employment Decisions, Legislation|

New law bans California employers from asking about dismissed criminal records

Effective January 1, 2014, SB 530, will ban most California employers from asking employees or applicants about arrests that did not result in conviction (except for arrests for which the individual is still awaiting trial) or about participation in a pretrial or post trial diversion program. Generally, the new law prohibits most employers from asking applicants to disclose, or use as a factor in employment decisions, any information concerning a conviction that has been judicially dismissed or ordered sealed.

December 10th, 2013|Employment Decisions, Legislation|

E-Verify has new safeguard to combat identity theft

On November 18, 2013, the U.S. Citizenship and Immigration Services (the “USCIS”) announced a new E-Verify safeguard that enables USCIS to “lock” a Social Security number that appears to have been misused, protecting it from further misuse in the E-Verify process.

If an employee attempts to use a locked Social Security number, E-Verify will generate a “tentative non-confirmation” status. The employee will then have the opportunity to contest the result at a local Social Security Administration (‘SSA”) field office. If an SSA officer confirms that the employee’s identity matches the number, the non-confirmation will be converted to “employment authorized’” status.

December 9th, 2013|Employment Decisions|

Reminder to New Jersey employers to provide required CEPA notice

New Jersey employers with 10 or more employees are reminded of their annual obligation to provide to their employees, in both English and in Spanish, the required notice under the Conscientious Employee Protection Act (the “CEPA”). The notice may be distributed in hard copy or electronic format, but having only a poster or a policy in a handbook does not fulfill an employer’s notice obligation under the CEPA.

Enacted in 1986, this anti-retaliation statute is known as New Jersey’s Whistleblower’s Act. The goal of the CEPA is to encourage whistleblowers to report wrongdoing to their employers without fear of reprisals. Overall, CEPA provides a broader range of protections and remedies than other similar statutes, such as the federal False Claims Act.

December 9th, 2013|Educational Series, Employment Decisions, Legislation|

From hair styles to criminal records, increased employment regulations to continue

Recent enforcement efforts by the Equal Employment Opportunity Commission (the “EEOC”) combined with some local and state “ban-the-box” laws are causing trepidation among employers who must not only consider, but also apparently hire, applicants with a criminal history and unprofessional hairstyles.

The EEOC recently filed a lawsuit in Alabama alleging that an insurance claims company violated Title VII of the Civil Rights Act by discriminating against an African-American applicant because she wore dreadlocks. The EEOC’s position is that the company’s policy of requiring a professional/business look “focuses on the racial bias that may occur when specific hair constructs and styles are singled out for different treatment because they do not conform to normative standards for other races.”

The EEOC has also pushed its position that considering criminal convictions in hiring decisions can be racially discriminatory, issuing its well-publicized guidance and filing lawsuits against employers that use background checks. Based on EEOC’s logic, Massachusetts and Hawaii already have adopted “ban the box” laws that apply to both private and public employers, and on January 1, 2014, similar measures will take effect in Rhode Island and Minnesota. The cities of Buffalo, NY, Newark, NJ, Seattle, WA, and Philadelphia, PA, also have passed similar legislation affecting private employers. Many more states and municipalities have “ban-the-box” laws that apply only to public employers. (Generally, “ban-the-box” legislation calls for the removal of the criminal history box/question on the job application, and prohibits employers from asking about criminal records in the initial application process.)

Win or lose, the EEOC is unlikely to let up, and the trend of increased employment regulations will continue into 2014, according to legal commentators. Employers should review their policies and procedures at least annually to ensure that they meet EEOC’s guidelines, comply with all federal, state and local laws and regulations, are fair and consistent and aligned with the business model.

December 9th, 2013|Employment Decisions, Judgment|

New law prohibits North Carolina employers from asking about expunged records

Effective December 1, 2013, employers in North Carolina will not be able to ask job applicants about arrests, criminal charges, or convictions that have been expunge SB 91 prohibits inquiries into expunged matters both on applications and during interviews, and was enacted to clear the public record of any arrest, criminal charge, or conviction that was expunged so that the subject is legally entitled to withhold all information about it from potential employers and others. Notably, employers will still be allowed to ask about arrests, criminal charges, or convictions that have not been expunged and can be found in public records.

October 29th, 2013|Criminal Activity, Employment Decisions, Legislation|