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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.

New Employment Background Screening Legislation for 2017

“Ban-the-box”

“Ban-the-box” measures, which generally prohibit employers from inquiring about a candidate’s criminal history (including performing background checks) until later in the hiring process, and impose significant compliance requirements, will soon be the norm rather than an exception. The city of Los Angeles, with its new Fair Chance Initiative for Hiring ordinance, is just the latest to join the fast growing list of localities (Austin, Baltimore, Buffalo, Chicago, Columbia – MO, District of Columbia, Montgomery County – MD, New York City, Philadelphia, Portland, Prince George’s County – MD, Rochester, San Francisco, and Seattle) and nine states (Connecticut, Hawaii, Illinois, Massachusetts, Minnesota, New Jersey, Oregon, Rhode Island, and Vermont (effective July 1, 2017)) that have enacted similar laws  for private employers.

Juvenile criminal record checks   

Effective January 1, 2017, AB 1843 amends Section 432.7 of the Labor Code to prohibit California employers from inquiring about and considering information regarding “an arrest, detention, process, diversion, supervision, adjudication, or court disposition” that occurred while the candidate was subject to the process and jurisdiction of a juvenile court. Certain employment situations are exempted from these requirements, such as a prohibition by law from hiring an applicant who has been convicted of a crime.

Criminal background checks for transportation network companies

Effective January 1, 2017, under California’s AB 1289, a transportation network company (“TNC”) such as Uber, is required to perform criminal background checks on all drivers. The bill also prohibits a TNC from contracting with a driver who is registered on the DOJ’s national sex offender website or has been convicted of specified felonies, or misdemeanor assault or battery, domestic violence, or driving under the influence of drugs or alcohol within the past seven years.

Credit check restrictions

The District of Columbia is the latest jurisdiction to pass a law that prohibits private employers, with certain exceptions, from conducting credit checks on job applicants. The Fair Credit in Employment Amendment Act, which amends the Human Rights Act of 1977 to include credit information as a protected trait will take effect following approval by Mayor Bowser and other enactment actions. Similar to the laws already in effect in ten states for private employers (California – AB 22; Colorado – The Employment Opportunity Act; Connecticut  – SB 361; Hawaii – HB 31 SD1; Illinois  – HB 4658; Maryland  – HB 87;  Nevada – SB 127; Oregon – SB 1045; Vermont – Act No. 154 (S. 95); Washington – RCW 19.182 and  RCW 19.182.020) and at least two cities (New York City – Stop Credit Discrimination in Employment Act and Philadelphia – Bill No. 160072), it restricts checking an applicant’s credit history except in circumstances where a credit screen is justified by the position’s responsibilities or is required by law.

Wage history inquiries

Pay equity initiatives include California’s AB 1676, which effective January 1, 2017, prohibits employers from using a candidate’s prior salary as the sole basis to justify a pay disparity. California, however, has decided not to follow the Massachusetts provisions (described below) of banning inquiries regarding a candidate’s wage history.

Massachusetts was the first jurisdiction to pass a law that prevents employers from asking job candidates about their salary history. The commonwealth’s Pay Equity Act goes into effect July 1, 2018, and in addition to equal pay requirements, it makes it illegal, among other things, to: (1) require that an employee refrain from inquiring about, discussing or disclosing information about his or her wages, or any other employee’s wages; (2) screen job applicants based on their wages; (3) request or require a candidate to disclose prior wages or salary history; or (4) seek the salary history from a current or former employer, unless he/she provides express written consent, and an offer of employment, including proposed compensation, has been extended.

Effective May 23, 2017, the city of Philadelphia with its Fair Practices Ordinance: Protections Against Unlawful Discrimination will make it unlawful for employers to inquire about a candidate’s wage history during the hiring process, unless a federal, state, or local law specifically authorizes the disclosure or verification of wage information.

Drug testing – marijuana

According to the National Conference of State Legislatures (NCLS), 31 states/jurisdictions (Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Guam, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington) have public medical marijuana and cannabis programs, while several states (Alaska – Ballot Measure No. 2; California – Proposition 64; Colorado – Amendment 64; District of Columbia – Initiative 71; Maine – Question 1; Massachusetts  – Question 4;  Nevada – Question 2; Oregon – Measure 91; and Washington Initiative 502) have passed laws allowing for the recreational use of marijuana by adults.  Since the legal landscape for marijuana use is changing rapidly, employers should review and update their substance abuse policies, including drug-testing. Notably, marijuana remains a Schedule I drug under the federal Controlled Substances Act.

Work authorization verification

California’s SB 1001 is a revival of the 2015  AB 1065, which effective January 1, 2017, makes it unlawful for employers to:

  1. Request additional or different documents than those required under federal law to verify that an individual is not an unauthorized immigrant
  2. Refuse to accept documents provided by the applicant that reasonably appear to be genuine
  3. Refuse to honor documents or work authorization based on specific status or term that accompanies the authorization to work
  4. Attempt to reinvestigate or re-verify a candidate’s authorization to work using an unfair immigration-related practice.

Effective January 1, 2017, Tennessee’s SB 1965 requires that companies with 50 or more employees use the federal E-Verify program to confirm new employees’ work authorization.

As a reminder, starting January 22, 2017, all employers must use the new Form I-9, which is dated November 14, 2016 (the edition date is on the bottom of the form).  Employers that fail to use the new form may be subject to civil penalties.

January 2nd, 2017|Categories: Compliance Corner for Employment Decisions|Tags: , , , , , , |

The EU-US Privacy Shield Framework text is now available

U.S. Secretary of Commerce Penny Pritzker released a statement regarding the historic agreement, noting that the “EU-US Privacy Shield is a tremendous victory for privacy, individuals, and businesses on both sides of the Atlantic.”

The EU-US Privacy Shield Framework (the “Framework”) was designed by the U.S. Department of Commerce (the “DOC”) and European Commission to provide companies on both sides of the Atlantic with a mechanism to comply with EU data protection requirements when transferring personal data from the European Union to the United States in support of transatlantic commerce.

The Framework provides robust and enforceable protections for the personal data of EU individuals, mandating transparency for participating companies, strong U.S. government oversight, and increased cooperation with EU data protection authorities. Offering EU individuals access to multiple avenues to address concerns regarding participants’ compliance and a free dispute resolution, the Framework makes it easier for EU individuals to understand and exercise their rights.

The European Commission proposed that the Framework be deemed adequate to enable data transfers under EU law, which is now in the approval process. Once an adequacy determination is made, the DOC will begin accepting certifications under the Framework. Similar to the certification process of the now invalid Safe Harbor, if a U.S. based-company wishes to join the Framework, it will be required to self-certify to the DOC and publicly commit to comply with the Framework’s requirements. While joining the Framework will be voluntary, once an eligible company certifies compliance, the commitment will become enforceable under U.S. law.

Read the fact-sheet about the EU-US Privacy Shield Framework here.

Read the full text of the EU-US Privacy Shield Framework here.

February 29th, 2016|Categories: Compliance Corner for Employment Decisions|Tags: , , , |

The EU-US Privacy Shield for transatlantic data transfers makes its debut

Announced on February 2, 2016 by the European Commission, the new political agreement called the Privacy Shield, reflects the requirements set out by the European Court of Justice in its ruling on October 6, 2015, which declared the old Safe Harbor privacy framework invalid.

The new arrangement calls for strong data privacy and security measures and robust enforcement of U.S. companies handling Europeans’ personal data, clear safeguards and transparency for U.S. government access, and effective protection of EU citizens’ rights with several redress possibilities.

The College of Commissioners is now preparing an adequacy decision regarding the Privacy Shield–the Article 29 Working Party (the “Working Party”), a data protection authority, is requesting that all documents be provided  by the end of February 2016 so that it can complete its assessment of the new framework at a special plenary meeting shortly thereafter. In a statement issued February 3, 2016, the Working Party provided some assurances that during this period of transition, transfer mechanisms, such as standard contractual clauses (which are data transfer agreements approved by the Commission) and binding corporate rules (generally described as internal data processing rules binding on all members of a global corporate group) to permit intragroup transfers of personal data) can still be used as transfer tools to the U.S.

Organizations that certified compliance under the Safe Harbor regime must continue to meet their obligations in connection with previously transferred personal data to avoid enforcement actions by the Commerce Department or the Federal Trade Commission, which consider the Safe Harbor as still binding. In the interim, implementing the above-mentioned clauses should also be considered to the extent they supplement the Safe Harbor platform. It appears that the Privacy Shield, at least initially, will rely significantly on the Safe Harbor framework, and it is likely that the Department of Commerce will offer a means for Safe Harbor certified organizations to transition to the Privacy Shield.

February 24th, 2016|Categories: Compliance Corner for Employment Decisions|Tags: , , , |

CFPB publishes annual guide about consumer reporting agencies

Every year, the Consumer Financial Protection Bureau (the “CFPB”) updates and publishes a guide to consumer reporting companies, The guide includes information in connection with requesting a consumer report from the three largest nationwide consumer reporting companies and dozens of specialty reporting companies, tips regarding specialty reports, updated information about authentication of identity when requesting a consumer report, information on companies that provide free credit scores, and rights with respect to consumer reports.

The CFPB notes that in prior years, its guide referred to consumer reporting businesses as “agencies” or “bureaus,” and that these terms can be confusing because they may imply these businesses are government entities. They are not—these companies are private-sector, for-profit entities, and in this year’s guide, the CFPB refers to them as “companies” for better clarity.

February 23rd, 2016|Categories: Compliance Corner for Employment Decisions|Tags: , , |

What’s up with California’s new E-Verify law?

The new law, AB 622, which went into effect January 1, 2016, adds Labor Code section 2814 to strengthen current California prohibitions on employers’ use of E-Verify and other electronic employment eligibility verification systems.  Labor Code section 2811 (enacted in 2011) already prohibits private employers from using E-Verify or such other verification systems, unless required by federal law or as a condition of receiving federal funds.

The amended Labor Code section 2814 expands the definition of an unlawful employment practice to prohibit an employer or any other person or entity from using the E-Verify system at a time or in a manner not required by a specified federal law or not authorized by a federal agency memorandum of understanding to check the employment authorization status of an existing employee, or an applicant who has not received an offer of employment, except as required by federal law or as a condition of receiving federal funds. The new law also requires an employer that uses the E-Verify system to provide to the affected employee any notification issued by the Social Security Administration or the United States Department of Homeland Security containing information specific to his/her E-Verify case or any tentative non-confirmation notice. Employers will now face a civil penalty of $10,000 for each violation of these provisions.

  • Read the text of AB 622
  • Read guidance published by the U.S. Department of Homeland Security on conducting internal audits regarding Form I-9 compliance
February 23rd, 2016|Categories: Compliance Corner for Employment Decisions|Tags: , , , |

Employers in New Jersey may face tougher restrictions for employment credit checks

Assembly Bill A2298 which prohibits employment discrimination against a current or prospective employee based on information in a credit report advanced to a second reading on December 14, 2015. The proposed legislation prohibits an employer from requiring a credit check on a current or prospective employee, unless the employer is required to do so by law, or reasonably believes that an employee has engaged in a specific activity that is financial in nature and constitutes a violation of law.  The bill does not prevent an employer from performing a credit inquiry or taking action if credit history is a bona fide occupational qualification of a particular position or certain employment classifications. An earlier version of the legislation passed the Senate in May 2012 in a 22-16 vote but was never voted on in the full Assembly.

December 22nd, 2015|Categories: Compliance Corner for Employment Decisions|Tags: , , |

Portland’s new ban-the-box law goes beyond Oregon’s version

Effective July 1, 2016, covered Portland businesses will be prohibited from asking job applicants about their criminal history or accessing such records until after a conditional offer has been extended. The city’s legislation goes beyond the state’s law, which beginning January 1, 2016, prohibits Oregon businesses, unless exempted, from including criminal history questions during the preliminary hiring stages, but allows the inquiries during the interview process.

Just as with Oregon’s ban-the-box law, businesses within the city of Portland are excluded from coverage when hiring for certain positions, which include law enforcement, criminal justice, and working with children, the elderly, people with disabilities, and other groups considered vulnerable.

December 22nd, 2015|Categories: Compliance Corner for Employment Decisions|Tags: , , , , |

Philadelphia expands its ban-the-box ordinance

On December 15, 2015, Philadelphia Mayor Michael Nutter signed Bill 150815 expanding the city’s ban-the-box legislation. The new ordinance, which goes into effect on or about March 14, 2016, amends Chapter 9-3500 of the Philadelphia Code entitled “Fair Criminal Records Screening Standards,” by modifying certain definitions and adding additional requirements regarding the screening of job and license applicants for criminal history. With limited exceptions, the new ordinance applies to employers having any employees within the city of Philadelphia. (The prior ordinance covered employers with 10 or more employees.)  The highlights of the law include:

  • questions about criminal records must be removed from the job application–the ordinance specifically notes that multi-state applications may not include the question with a disclaimer for Philadelphia applicants not to answer;
  • employment materials cannot contain questions or refer to  the applicant’s willingness to submit to a background check before a conditional offer has been extended;
  • criminal record inquiries must be postponed until after a conditional offer has been made;
  • notice of the background check must state that any consideration of the results will be tailored to the job;
  • employment decisions can only include a conviction that occurred less than seven years ago–employers may add to the seven year period any time of actual incarceration served because of the offense;
  • screening process must include individualized assessment for each applicant;
  • if the applicant is rejected based on a criminal conviction, he/she must be advised of the specific reason and provided with a copy of the record.
December 22nd, 2015|Categories: Compliance Corner for Employment Decisions|Tags: , , , |

Phony job applicants targeting employers to collect on FCRA violations

As we reported throughout the year, class-actions brought against employers under the Fair Credit Reporting Act (“FCRA”) alleging hyper-technical violations are proliferating, with several resulting in multi-million dollar settlements.

But there appears to be a new development in this area. According to a National Law Review article, phony job applicants who have no intention of being employed with the targeted companies are submitting employment applications solely to position themselves as plaintiffs in class action litigation and potentially get a windfall settlement. The National Law Review article reports that the fake applicants typically fill out an online job application (usually with companies that have nationwide operations), sign the background check authorization, and then, after receiving an offer or rejection letter send a demand letter stating that the employer’s background check disclosure form or process does not comply with the requirements imposed by the FCRA and demand huge payouts to settle their claims  and avoid the filing of a class action lawsuit.

The FCRA provides for statutory damages ranging from $100 to $1,000 per violation for non-compliance with the FCRA’s notice and disclosure requirements, even where the plaintiff has suffered no actual harm or damag

December 22nd, 2015|Categories: Compliance Corner for Employment Decisions|Tags: , |

Importance of background checks in employment decisions

 

Performing a background check as part of the hiring process, promotion, or retention in today’s world is essential. Stakeholders expect it. Regulators mandate it.

In a turbulent economy, the pool of job candidates is greater than ever and misrepresentations abound. For many firms, once an offer of employment has been extended, it is common practice to check the candidate’s background. Depending on the risk level of the position and its requirements, background checks can run the gamut from reference calls done internally, to using a consumer reporting agency to perform comprehensive searches to determine the existence of potentially negative information, such as criminal matters, civil litigation, bankruptcy filings, tax liens, judgments, regulatory actions, driving violations, and adverse media publicity, and to verify academic, licensing, employment and other professional qualifications and claims.

The law is clear–an employer who hires or retains a dangerous or incompetent employee can be held liable for that employee’s wrongful acts, if committed in the course and scope of his or her employment. The theories of negligent hiring and retention go even further–someone who is injured by an employee can sue the employer even if the employee’s conduct is outside of the employer’s control. For instance, one court found the owner of an apartment complex liable for a handyman’s assault of a tenant after working hours. The liability existed because the owner failed to screen the handyman’s background, which included a long list of violent crimes.

Underpinning the negligent hiring and retention theories is the negligence of the employer—that is, the employer knew or should have known the employee was unfit for the job, posed an unreasonable risk of harm to others, and did nothing about it. Virtually every state recognizes these theories as causes of action, or if not, has a similar legal theory. One of the best ways to reduce the risk of negligent hiring and retention liability is to perform adequate background checks as part of the hiring process and in connection with promotions or retention.

A well-designed background screening program that is compliant with applicable laws and regulations makes good business sense, as an individual’s prior history is often a predictor of future performance, workplace behavior and cultural fit. Various studies have shown that the cost of a bad hire is one to five times the salary of the job in question, considering the direct and indirect cost involved in recruiting, hiring, training, development, administration, management, and potential litigation, as well as the wasted wages and benefits. Comprehensive background screening can help identify individuals who may have a propensity for violence, theft, fraud, dishonesty, substance abuse, absenteeism, and other misconduct, and at the same time, find the candidates that can make the employer more successful.

Many employers are also required by government regulation, their insurance carriers, and/or their clients to conduct background checks. A comprehensive background check is clearly worth the investment. Employers never want to say “we should have known,” as an uninformed employment decision can result in significant financial losses and quickly tarnish an employer’s reputation.

November 5th, 2015|Categories: Compliance Corner for Employment Decisions|Tags: , |
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