Employment Decisions

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|Educational Series|

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|Educational Series, Employment Decisions, Risk Management|

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|Employment Decisions|

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|Educational Series, Employment Decisions|

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|Criminal Activity, Educational Series, Employment Decisions, Lawsuit|

More on credit reports for hiring decisions

According to September 2010 congressional testimony by the Society for Human Resource Management (SHRM), credit checks are a useful tool to “assess the skills, abilities, work habits and integrity of potential hires.” However, SHRM states that only 20 percent of employers conduct credit checks on all applicants. Fifty-seven percent of these employers perform the checks only after contingent offers, and 30 percent after job interviews; 65 percent allow job candidates to explain their credit results before the hiring decision is made, and 22 percent accept explanations after the hiring decision.

A bill in the U.S. House, called the Equal Employment for All Act, would amend the Fair Credit Reporting Act (FCRA) to ban the use of credit checks on prospective and current employees for employment purposes, with the following exceptions:

jobs that require national security or Federal Deposit Insurance Corp. clearance;
jobs in state or local government that require the use of credit reports;
supervisory, managerial, and executive positions in financial institutions.

The states of Illinois, Oregon, Hawaii, and Washington already have passed laws to prevent employers from using credit reports in employment decisions.

November 30th, 2010|Employment Decisions, Legislation|

Massachusetts employers cannot ask about criminal history on initial job applications

As of November 4, 2010, Massachusetts employers are prohibited from asking about criminal records on the initial job application, except for positions for which a federal or state law, regulation or accreditation disqualifies an applicant based on a conviction, or if the employer is mandated by a federal or state law or regulation not to employ
individuals who have been convicted of a crime.

The new law also has two provisions that will become effective February 6, 2012. Under the first provision, an employer in possession of criminal record information must disclose that information to the applicant, prior to asking about it. And similar to the requirements of the Fair Credit Reporting Act, if an employer decides not to hire an
applicant in whole or in part because of the criminal record, the employer must provide the applicant with a copy of the record.

The second provision requires employers who conduct five or more criminal background investigations annually to implement and maintain a written criminal record information policy. The policy, at minimum, must specify procedures for (1) notifying applicants of the potential for an adverse decision based on the criminal record, (2) providing
a copy of the criminal record and the written policy to applicants, and (3) dispensing information to applicants about the process for correcting errors on their criminal record.

The law imposes penalties (including imprisonment for up to one year or a fine of up to $5,000 for an individual and $50,000 for a company) for those who request or require an applicant to provide a copy of his/her criminal record except under conditions authorized by law, and prohibits harassment of the subject of the criminal record (punishable by imprisonment of up to one year, or a fine of not more than $5,000.)

November 16th, 2010|Criminal Activity, Educational Series, Employment Decisions, Legislation|

Illinois Employee Credit Privacy Act (096-1426)

Effective January 1, 2011, the Act will prohibit employers, in many circumstances, from inquiring about or using an employee’s or prospective employee’s credit history as a basis for employment, recruitment, discharge, or compensation. The Act also will prohibit an employer from retaliating or discriminating against a person who files a complaint under the Act, participates in an investigation, proceeding or action concerning a violation of the Act, or opposes violation of the Act. Pursuant to the Act, an employer will not:

Fail or refuse to hire or recruit, discharge, or otherwise discriminate against an individual with respect to employment, compensation, term, condition, or privilege of employment because of the individual’s credit history or credit report.
Inquire about an applicant’s or employee’s credit history.
Order or obtain an applicant’s or employee’s credit report from a consumer reporting agency.

Exceptions to the Act are as follows:

State or federal law requires bonding or other security covering the individual holding the position.
Duties of the position include custody of or unsupervised access to cash or marketable assets valued at $2,500 or more.
Duties of the position include signatory power over business assets of over $100 or more per transaction.
Position is managerial, and involves setting the direction or control of the business.
Position involves access to personal or confidential information, financial information, trade secrets, or state or federal national security information.

The Act also states that nothing in its provisions shall prohibit employers from conducting a thorough background investigation which may include obtaining a consumer report and/or investigative report without information on credit history, as permitted by the Fair Credit Reporting Act (FCRA).

September 10th, 2010|Educational Series, Employment Decisions, Legislation|

The FCRA and Employer’s Obligations

In recent years, negligent hiring and retention lawsuits have seen a dramatic rise, with settlement payouts averaging over a million dollars. These cases are predicated on the theory that an employer may be held liable for its negligence in placing a person with certain known propensities for criminal or other unfit behavior in an employment position where the individual poses a threat to others. The most common defense against negligent hiring or retention actions is based on foreseeability, which is often determined through a background investigation. Some courts have been more flexible than others in damage awards, but regardless of their stance, the closer the connection between the perpetrator’s dangerous propensity and the actual tortious conduct, the stronger the case against the employer. The law in both negligent hiring and negligent retention also recognizes that a company’s duty to avoid employing dangerous people does not end when an individual is hired–it extends to negligent supervision, negligent training and negligent firing.

Nearly every investigation that touches on employment is covered by the Fair Credit Reporting Act (FCRA), which defines employment (purposes) as “evaluating a consumer for employment, promotion, reassignment or retention as an employee.” If an employer uses a third party screening service to conduct a background investigation of an applicant or employee, that company is considered a “consumer reporting agency” (CRA) under the FCRA. The CRA’s reports, known as consumer reports, may contain information from educational institutions, professional licensing boards, former employers, courts, credit bureaus, references, motor vehicle departments, regulatory entities, media sources, etc.

The FCRA is a complex federal statute that has been significantly revised since 1970. But the Act’s primary mandate remains that CRAs adhere to “reasonable procedures” to protect the confidentiality, accuracy, and relevance of consumer information. Under its Fair Information Practices, the FCRA has established rules concerning personal information that include rights of data quality (to access, dispute and correct), data security, usage limitations, data destruction, disclosures, user consent, and accountability. The FCRA requires the employer/user to affirm to the CRA that it is in compliance (with FCRA) and has enacted the following directives prior to the initiation of a consumer report:

Verified that there is a legitimate need for requesting a consumer report
Certified that written permission was obtained from the applicant or employee and proper disclosures were provided
Stated the reason for requesting a consumer report
Certified that the information will be used for employment purposes only.

Before any adverse action is taken based on information in the consumer report, the FCRA obligates the employer to provide the applicant or employee a copy of the report and summary of consumer rights prescribed by the FCRA. And if adverse action is taken, the employer must deliver an “adverse action notice” to the affected individual. Further, the employer must certify that it will not use any information from a consumer report in violation of the applicable federal or state equal opportunity laws and regulations.

The FCRA makes a distinction between a “consumer report” and “investigative consumer report.” Its delineation of a “consumer report” is that it is comprised of verifications of facts about education, employment or other claims made by the applicant, while an “investigative consumer report” is a compilation of information about character, general reputation, personal characteristics, or mode of living through interviews. Thus, an employer who uses investigative consumer reports must comply with the provisions of the FCRA that apply generally to consumer reports as well as the provisions that are specific to investigative consumer reports which include “clearly and accurately” disclosing in writing that it may obtain the aforementioned information. This notice must contain a statement advising the individual of the right to request additional disclosures concerning the nature and scope of the inquiry, along with a written summary of consumer rights. Also, for an investigative consumer report, the disclosure must be made within three days after such report is requested, while in a consumer report, notice must be given before the report is procured.

The FCRA rules also apply when an employer uses a third party to investigate employee misconduct. The employee must be notified “clearly and conspicuously” and authorize, in writing, the undertaking of an investigative consumer report. If the employer disciplines or adversely treats the employee based upon the information in the report, the employer must provide the employee, within 60 days of the adverse decision, the following:

Notice of the disciplinary action
Name, address and telephone phone number of third party that prepared the report
Statement that said third party had no input into the decision to discipline the employee and thus will not provide information about the action taken
Notice that the employee is entitled to a free copy of the report and can request that the employer state the reason for the disciplinary action.

The FCRA does not apply to investigations of misconduct conducted by internal personnel or by third parties which do not regularly prepare such reports.

Violations of the FCRA can lead to civil and/or criminal penalties for the CRA and the employer. Civil penalties may carry nominal damages (up to one thousand dollars if no actual damages exist), actual and punitive damages, and attorneys’ fees and costs, if there is “willful noncompliance.” Civil penalties for “negligent noncompliance” are confined to actual damages and attorneys’ fees and costs. Criminal penalties may be imposed when a party knowingly and willfully obtains information from a CRA under false pretenses.

Establishing a relationship with a reputable CRA is one of the best assurances of FCRA compliance. An experienced company can provide guidance not just in the legal process of the FCRA, but also instill trust that it has met its related obligations.

September 6th, 2010|Educational Series, Employment Decisions, Legislation|

Belford University: another diploma mill case from our files

So why did the applicant for a professional level position with one of our clients choose Belford University in Humble, Texas to get a Bachelor of Science degree in accounting? Maybe because Belford grants original degrees printed on traditional degree paper with a gold-plated seal which identifies it as a degree from a reputed and reliable institution. Or perhaps because the university offers free three-day shipping on a complete $249 degree package (a 4.0 GPA is $75 extra), consisting of one original accredited degree, two original transcripts, one award for excellence, one certificate of distinction, one certificate of membership and four education verification letters. We will never know for sure. But we do know that the university’s claims on its two Web sites (www.belforduniversity.net and www.belforduniversity.org) of being “an accredited institution recognized by two renowned accreditation agencies for on-line education, namely the International Accreditation Agency for Online Universities (IAAOU) and Universal Council for Online Education Accreditation (UCOEA)” are meaningless as the accreditations are not approved by the U.S. Department of Education. It is a bit suspicious too that on its “.org” site, the links to “University Briefs” are inactive, and thus we cannot find out the details of Belford’s “Clair’s Award for Excellence” and why Clair (spelled without an “e”) is giving out awards.

The Houston Press got on Belford’s haft in 2006 when it exposed the institution as a degree mill, operating from Humble, Texas with an indeed humble office (so humble that it’s non-existent as someone closed its account at the USA 2ME mailbox drop.) An entry in the Wikipedia stated that the degrees are actually mailed from the United Arab Emirates. The Houston Press checked out some of the names of Belford’s professors and its distinguished alums, which include Michael Fonseca, who was “promoted to the post of Divisional Head for Romuna Securities, a subsidiary of Romuna Group.” But the impressive-sounding Romuna appears to have its empire only in the mirage of Belford University.

David Linkletter of the Texas Higher Education Coordinating Board said that the board reported Belford to the state Attorney General’s office in March 2006, noting that “this is not a legitimate institute of higher education, as no legitimate university offers a complete degree on the basis of one’s life experience…To the extent that Belford University is in Texas, it is operating in violation of the Texas Education Code.” Since September 2005, the code makes it illegal to use a fraudulent or substandard degree for purposes of employment, business promotion or to seek admission to a university.

Despite Belford’s history of bamboozlement, as many as 500 resumes in LinkedIn, including those of a New York-based director of human resources and a CEO in the pharmaceutical industry, boast degrees from this university, according to a February 2010 post on a “consumer ally” Web site.

August 11th, 2010|Educational Series, Employment Decisions, Fraud|

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This is the development site for Scherzer International and the information may not be up to date.Please visit our production website.

Employment Decisions

This is the development site for Scherzer International and the information may not be up to date.
Please visit our production website.