ORDER A REPORT
SECURE FILE UPLOAD

Employment decisions refer to any employer actions that determine, influence, or change the terms, conditions, or outcomes of employment. This includes decisions about recruitment, hiring, promotion, reassigning, evaluating performance, disciplining, terminating, setting wages, or assigning work hours. These decisions are legally significant because they must comply with federal and state employment laws, including anti‑discrimination rules enforced by the EEOC.

Paying for ambiguity: the myths of instant background checks and national databases

The cottage industry of data-collection agencies that provide inexpensive background information is flourishing even in this tough economy. Many prospective employers with tight budgets believe they can save money by relying on the “national” records that are spewed out within minutes of entering a credit card number. So just what do you get for $19.99? Not much. Or a lot…a lot of worthless data, that is. Unverified name-match only records come up by the hundreds if the name is fairly common. And it is nearly impossible to determine case details or duplicate filings, as the cryptic printouts often require specialized knowledge that is specific to each state, municipality or records venue.

Many subjects who are flagged as criminals in these databases have never been convicted of a crime. In fact, according to the U.S. Bureau of Justice statistics for felony defendants in large urban counties, one-third of felony arrests never lead to a conviction. And there is no standardized process for reporting arrests and dispositions or updating the records at the various court levels. Some reported offenses are not actually violations of the criminal code in the particular state, but may still show up in these databases.

There are few regulations governing the use of background information beyond the provisions of the Fair Credit Reporting Act (FCRA). The Federal Trade Commission (FTC) does not mandate that data aggregators provide guidance on how to properly interpret their records. The only possible value of these so-called national databases is to serve as an indicator that a record may exist, and use the search results to supplement a full investigation. Since the FCRA requires that all “reasonable procedures to assure maximum possible accuracy of the information are followed” and that “the information is complete and up-to-date,” searches for employment purposes must be conducted either manually or through direct access in the particular court where the record is filed.

Employment experts at a July 2011 Equal Employment Opportunity Commission (EEOC) hearing urged the Commission to consider the comprehensive recommendations put forth by the National Employment Law Project (NELP) in its report on the effect of criminal background checks in employment decisions. Among its recommendations, the NELP suggested that the EEOC revise its now 20-year-old guide on conviction records in view of the “intervening proliferation of instant computerized background information…” The EEOC should also address the “use of arrest records and third-party databases that are considered a part of the hiring process.”

October 17th, 2011|Categories: Commercial Transactions Due Diligence|Tags: , , , |

Risk-based approach to employment screening rates high on value chain

In today’s world just about every company knows that an effective employment screening program is invaluable for hiring qualified individuals, reducing turnover, deterring fraud and other criminal actions, and avoiding or mitigating litigation.

Recognizing that a “bad” hire is a threat to the bottom line, many companies, from investment bankers to law firms, are taking a risk-focused approach to background investigations and deciding what is appropriate or how much should be done to ensure organizational success. For example, obtaining a credit report or checking civil records for an entry-level applicant with low risk responsibilities may be of limited use, while reviewing such record histories for someone who will handle money or have access to sensitive information may be imperative in assessing his/her suitability for a position of trust.

Best practices in both the government and in the private sector indicate that a risk designation should be determined for every position, based on its description of duties and responsibilities. The risk grade should be commensurate with the employee’s assigned trust level, financial accountability, access to sensitive and confidential information and critical data systems, autonomy, discretionary authority, and potential opportunity for misconduct.

To be effective and non-discriminatory, employment screening policies need to specify a uniform set of background investigation elements for all position/assignment levels, including new hires, temporary workers, interns, transferred and promoted employees, contractors and volunteers.

SI has a full suite of employment background investigation products. Please visit our website at https://scherzer.co/ to learn more or order an investigation.

September 13th, 2011|Categories: Compliance Corner for Employment Decisions|Tags: , , |

Controversy abounds in employment decisions based on social media searches

In May 2011, the Federal Trade Commission (FTC) ruled that companies providing social media information to employers – and employers who use the reports – must follow the same Fair Credit Reporting Act (FCRA) regulations that apply to more traditional sources. The FTC also stated that postings on any social media site can be saved by on-line background screening companies for up to seven years.

According to the FTC’s letter dated May 9, 2011 to a company that sells information from social networking sites for employment purposes, such a company is considered a Consumer Reporting Agency (CRA) and thus must take reasonable steps to ensure the accuracy of the information obtained from online social networks (as well as other sources) and positively identify it with the subject. It also must comply with other FCRA provisions, such as providing a copy of the report to the subject and maintaining an established protocol if the subject disputes the reported information. As with “traditional” background investigations, employers who use a report prepared by a CRA must certify to the CRA that the report will not be used in violations of federal or state equal employment opportunity laws or regulations. Additionally, both the CRA and the employer have a legal obligation to keep and dispose of the reports securely and properly. (For more information, see the FTC blog, “The Fair Credit Reporting Act & Social Media: What Businesses Should Know.”)

Social media legal experts and various literature point to a multitude of issues and risks faced by both the CRA and the employer who uses social media checks, which include, but are not limited to:

  • Problems under FCRA section 607(b) in exercising “reasonable procedures to assure maximum possible accuracy” of the information.
    Since the information on social media sites is self-reported and can be changed at any time, it is often difficult if not impossible to ascertain that the information is accurate, authentic and belongs to the subject. Online identity theft is not uncommon, as are postings under another person’s name for the purpose of “cyber–slamming” (which refers to online defamation, slander, bullying, harassment, etc.)
  • Information may be discriminatory to job candidates or employees, or in violation of anti-retaliation laws.
    Social sites and postings may reveal protected concerted activity under the National Labor Relations Act (NLRA,) and protected class information under Title VII of the Civil Rights Act and other federal laws, such as race, age, creed, nationality, ancestry, medical condition, disability, marital status, gender, sexual preference, labor union affiliations, certain social interests, or political associations. And while the information may have no impact on the employment decision, the fact that the information was accessed may support claims for discrimination, retaliation or harassment.
  • Accessing the information may be in violation of the federal Stored Communications Act (SCA).
    To the extent that an employer requests or requires an employee’s login or password information, searches of social networking sites may implicate the SCA (18 U.S.C. § 2701) and comparable state laws which prohibit access to stored electronic communications without valid authorization. A California court recently ruled that the SCA also may protect an employee’s private information on social networking sites from discovery in civil litigation.
  • Assessing the information may violate terms of use agreements and privacy rights.
    While certain social media sites have stricter privacy controls than others, most if not all limit the use of their content. The terms of use agreements typically state that the information is for “personal use only” and not for “commercial” purposes. Although the definition of “commercial” in connection with employment purposes is interpretive, most legal experts indicate that employment screening fits that scope.
  • Information may be subjective and irrelevant to the employment decision.
    Blogs, photos and similar postings often do not provide an objective depiction of the subject or predict job performance. The California Labor Code, for example, specifically provides that an employer is prevented from making employment-related decisions based on an employee’s legal off-duty conduct. Employers may use such information only if the off-duty conduct is illegal, if it presents a conflict of interest to the business or if it adversely affects the employee’s ability to do his/her job. And the evidence of such activities must be clear.

The popularity of employment-related background checks that include social media searches is growing rapidly. But the unreliable and unverifiable information from these sources is a potential landmine of legal liabilities.

August 8th, 2011|Categories: Compliance Corner for Employment Decisions|Tags: , , |

Challenges of international background investigations

Many transactions today, whether they involve an employment hiring decision or a new business relationship, are cross-border or have an international component. The need for effective risk management both in the U.S. and abroad has vastly expanded in recent years with the passing of legislation and increased enforcement actions. Behind just about every business decision, there is a widening range of stakeholders — from regulators to shareholders to board members — who expect that the due diligence process will minimize unlawful activities.

International background investigations, which are essential for a comprehensive approach to due diligence, present special challenges since each country has its own laws, customs, and procedures. Language barriers, name variations and transliterations, limited information and technology, broad definitions of crimes, and proliferation of fraudulent educational and accreditation institutions, are just some of the factors that add to the complexity of these investigations.

As a general rule, in most European countries, criminal records are not available to the public. In Asia, public accessibility to most court filings is limited. In South America, public records vary greatly from country to country. South Africa provides some disclosure of police records and warrants to the public, along with   civil filings. Canada’s public records availability differs by province, and only a few permit criminal records release. India and Australia have the most searchable records, similar to the U.S.

For employment purposes, the Fair Credit Reporting Act (FCRA) imposes certain obligations for international background screening performed by a U.S. Consumer Reporting Agency (CRA), including mandating reasonable procedures to ensure the accuracy of the information it reports. If a public record such as a criminal conviction is found, the CRA must ascertain that the information is correct, up-to-date, and reported in a way that does not violate data or privacy protection rules.

In 2000, an agreement between the U.S. Department of Commerce and the European Commission established privacy and data protection guidelines, the “Safe Harbor Principles,” to enable U.S. companies to satisfy a requirement under European Union law for adequate protection of personal information transferred from the European Economic Area (the 25 member states of the European Union plus Iceland, Liechtenstein and Norway.) In addition to these principles, the Gramm-Leach-Bliley Act (GLBA) requires financial institutions and businesses that receive personal information to establish safeguards for the handling and disclosure of that information. And the Fair and Accurate Credit Transactions Act (FACTA), a federal legislation, also contains provisions to help reduce identity theft and obligates the proper disposal of personal consumer information.

The cost of an international background investigation typically is higher than domestic searches, and varies with each country, the type of information that needs to be obtained and the purpose of the investigation. When performed by a reputable firm with qualified foreign contacts, an international background investigation can reduce negligent hiring liability, and prevent a catastrophic investment or reputational damage.

July 25th, 2011|Categories: Compliance Corner for Employment Decisions|Tags: , , |

Maryland resident charged with making false statements on federal job applications

The Department of Justice reported yesterday that Karen M. Lancaster, of Upper Marlboro, MD, has been charged with four counts of making false statements, three counts of submitting false documents and one count of engaging in a concealment scheme in connection with her multiple job applications to U.S. federal government agencies.

According to the indictment, Lancaster was employed in various positions with the U.S. Department of Defense (DoD) from 1991 until March 2005. She subsequently was notified by DoD that she was being fired due to performance failures. In October 2006, according to the indictment, Lancaster reached a settlement with DoD whereby she was allowed to resign, retroactive to March 2005.

Between 2006 and 2008, Lancaster applied for jobs at the U.S. Departments of State, Commerce and Defense, as well as with the SEC. The indictment states that as part of the application processes, Lancaster allegedly submitted documents that falsified and concealed information about her criminal history, employment history and suitability for employment with the federal government. Specifically, Lancaster allegedly concealed and falsified informatabout her prior arrests, charges, convictions and prison terms, the unfavorable circumstances under which she had resigned from prior federal employment, the roles and responsibilities she had at previous federal jobs; and her salary history.Lancaster will be arraigned on March 25, 2011, in U.S. District Court in Alexandria. The maximum penalty for each count of making a false statement, submitting a false document and engaging in a concealment scheme is five years in prison. Lancaster also faces a maximum fine of $250,000 per count.

The Department of Justice notes that an indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty in a court of law.

March 17th, 2011|Categories: Compliance Corner for Employment Decisions|Tags: , , |

Beware of background investigation companies that offer FBI NCIC checks

All you need to do is type in a few key words into Google and headlines pop up promising easy access to FBI criminal records. But when you click on the link, it goes nowhere or to a background screening company’s Web site which then states that it searches public records only, and makes no further mention of the teasing lead.

And except for a few non-government entities, such ones performing authorized criminal justice functions under contract with law enforcement agencies, entities whose purpose is to provide information to authorized agencies to facilitate the apprehension of fugitives or locate missing persons and stolen property, or similar objectives, and federally chartered banking institutions, their bank subsidiaries and direct affiliates, the records are off-limits to the public. Of course, an individual can request his/her own record, typically for a personal review, to challenge the information on file, to meet a requirement for adopting a child in the U.S. or internationally, to satisfy a mandate to live, work, or travel in a foreign country, or to obtain certain professional licenses.

So exactly what is the FBI’s National Crime Information Center? The NCIC, as it is commonly known, is the United States’ central database for tracking crime related information. Maintained by the FBI’s Criminal Justice Information Services Division, the NCIC is interlinked with similar systems held by each state. Data is received from federal, state, local and tribal law enforcement agencies, along with railroad police, and non-law enforcement agencies, such as state and federal motor vehicle registration and licensing authorities.

The NCIC was launched January 27, 1967 with five files and 356,784 records. By the end of 2009, it amassed more than 15 million active records in 19 files, separated into seven property files containing records of stolen articles, boats, guns, license plates, parts, securities, and vehicles, and 12 person-related files containing information in connection with supervised releases, national sex offender registry, foreign fugitives, immigration violators, missing persons, protection orders, unidentified persons, U.S. Secret Service protective list, gangs, known or suspected terrorists, wanted persons, and identity theft. Also a part of the system is the Interstate Identification Index, which provides images that can be associated with NCIC records to help identify people and property items.

The database is not infallible. Its many critics say that the underfunded system is limited in content, contains errors and has outdated information. But the black market for NCIC records is flourishing, despite risks of prison time and financial penalties. While in most instances the motivation for misuse is monetary gain, in an extreme example of personal incentive, a former law enforcement officer in Arizona obtained NCIC information from three other officers and used it to track down and murder his girlfriend.

January 26th, 2011|Categories: Compliance Corner for Employment Decisions|Tags: , , |

More on legal troubles from employer misuse of social media information

Legal experts say that litigation resulting from employer misuse of social media information is likely to rise, at least until more case law is established. And even if the company prevails in such lawsuits, there may be reputational risks as the cases grab national spotlight.

Media sources reported that next week, for example, a National Labor Relations Board judge will rule whether American Medical Response of Connecticut illegally fired a worker after she criticized her boss on
Facebook. In what labor officials and lawyers view as a ground-breaking case involving employees and social media, the NLRB stepped in to argue that workers’ criticisms of their supervisors or companies on social networking sites are generally a protected activity and
that employers are violating the law by punishing workers for such statements. According to media reports, American Medical denied the board’s allegations, stating they are without merit, and that “the
employee was discharged based on multiple, serious complaints about her behavior.” The company added that “the employee was also held accountable for negative personal attacks against a coworker posted publicly on Facebook…”

Media sources reported on another pending case, filed in Georgia against a school district, a former high school teacher is claiming that she was essentially forced to resign over Facebook photos that
showed her drinking alcohol during a European vacation.

And in a case settled in 2009, two workers in New Jersey sued their employer, Hillstone Restaurant Group, after they were fired for violating the company’s core values. According to court documents, their supervisors gained access to postings on a password-protected
Myspace page meant for employees but not managers. The jury found that the employer violated the federal Stored Communications Act and the equivalent New Jersey law, and awarded the employees $3,403 in back pay and $13,600 in punitive damages. Hillstone appealed before the parties reached an undisclosed settlement.

Labor relations pros caution that before taking any adverse action based on social media postings, the employer should consider whether the information could be construed as a complaint or report of inappropriate or unlawful behavior. This includes, but is not limited
to discrimination, harassment, unpaid overtime and other wage violations, or any activities that may trigger an employee’s whistleblower protection.

January 23rd, 2011|Categories: Compliance Corner for Employment Decisions|Tags: , |

Lawsuit shows legal risks in using information from social media

Media sources reported that a settlement was reached January 18, 2011 in a civil rights case re C. Martin Gaskell v. University of Kentucky, whereby the University agreed to pay Gaskell and his attorneys $125,000. Gaskell was a leading candidate in 2007 to be the director of a new observatory at the University of Kentucky; however, he was denied employment allegedly in part because of his apparent views on evolution. Media reports and court documents stated that during the candidate selection process, committee members conducted searches on Gaskell on the Internet, and discovered his personal Web which contained an article entitled “Modern Astronomy, the Bible, and Creation” among other notes. The sources also reported that “Gaskell had given lectures to campus religious groups around the country in which he said that while he has no problem reconciling the Bible with the theory of evolution, he believes the theory has major flaws. He recommended students read … critics

[of evolution] in the intelligent-design movement.”

According to the Courier-Journal, the University “acknowledged that concern over Gaskell’s views on evolution played a role in the decision to choose another candidate.” But it argued that this was a valid scientific concern, particularly with regard to the prospect that “Gaskell’s views on evolution would interfere with his ability to serve effectively as director of the observatory. And there were other  factors, including a poor review from a previous supervisor and UK faculty views that he was a poor listener.”

January 19th, 2011|Categories: Compliance Corner for Employment Decisions|Tags: , |

Scraped information for sale to employers

Employers legally can’t discriminate based on gender, race and other factors which they may get from social-media profiles, but some indeed are using such data in their employment decisions. Media sources reported that scraping for employment purposes is growing, and that an employment screening company in Florida began offering limited social-networking data, including some that is scraped, about a year ago. Scrapers operate in a legal gray area. Internationally, anti-scraping laws vary, and in the U.S., court rulings have been contradictory. Media reports quoted Eric Goldman, a law professor at Santa Clara University saying: “Scraping is ubiquitous, but questionable. Everyone does it, but it’s not totally clear that anyone is allowed to do it without permission.”

December 23rd, 2010|Categories: Compliance Corner for Employment Decisions|Tags: , |

No background check was done on Michael Jackson’s doctor

Media sources reported that among several wrongful death lawsuits filed by the Jackson family, is a September 2010 action against event production company AEG Live and others alleging that they are responsible for the singer’s death because his “This Is It” tour contract with AEG created a legal duty to keep him healthy.

In its complaint, among other causes, the Jackson family accuses AEG of “negligent hiring” and retention of Dr. Conrad Murray to care for Jackson instead of his usual doctor. Earlier this year, prosecutors charged Murray with involuntary manslaughter, to which he pleaded not guilty. The doctor is accused of administering the drug Propofol to Jackson without the necessary resuscitation equipment or nursing support, and subsequently causing his death. The ‘Negligent Hiring’ cause of action in the complaint filed in Los Angeles County states:

“In undertaking to hire Murray, AEG performed absolutely no diligence in investigating or checking into Murray’s background, specialties, ability, or even whether he was insured, which it had a duty to do. In choosing to hire and employ a physician to treat Jackson, AEG undertook to act, and it needed to do so reasonably. AEG did not act reasonably and breached its duty.”

“During the course of Murray’s treatment, it became clear to AEG that Jackson was not doing well at all. AEG did nothing to terminate Murray and instead negligently retained him as an employee, and in so doing violated its duty of care. AEG insisted that Jackson continue treatment with Murray and receive no treatment from other physicians, a further breach of its duty of supervision.”

Along with negligent hiring, training and supervision, the complaint calls for unspecified damages for breach of contract, fraud, and negligent infliction of emotional distress. And in the most recent case filed November 30, 2010 in the Los Angeles County Superior Court, Joe Jackson is also claiming negligent hiring, training and supervision and negligence by the Murray-affiliated clinics and negligence against the pharmacy (and Murray.) A similar suit filed this past June did not include the pharmacy, and was dismissed.

Shortly after Michael Jackson’s death, ABC News reported that Murray was arrested on domestic violence charges in 1994 after an incident with his then-girlfriend. The doctor was tried and acquitted. When a company fails to conduct a background check, the employer can be held legally liable for a worker, independent contractor or volunteer who causes injury to a customer, co-worker or the general public. Whether the individual was acting within the capacity of the job for which he/she was hired does not matter. The legal theory is that even if an employer did not possess direct knowledge of the liability posed by an employee, the company is legally responsible because the employer should have known about the threat presented by the individual. Currently, fewer than 50% of the states uphold the doctrine of negligent hiring, and the criteria for determining negligent hiring differ from state to state.

December 8th, 2010|Categories: Compliance Corner for Employment Decisions|Tags: , , |
© 2012- SCHERZER INTERNATIONAL | ALL RIGHTS RESERVED
Go to Top