I will be presenting a free webinar on Wednesday, September 13 at 2 pm EST on Fair Chance Hiring Ordinances, also known as Ban the Box ordinances.  I will discuss what these ordinances are, the role they play during the hiring process, and where/how they apply to private employers (including specific state and city examples).

Nationwide over 150 cities and counties have adopted Ban the Box ordinances requiring employers consider a job applicant’s qualifications first, without the stigma of a criminal record. These initiatives provide job applicants a fair chance by removing the conviction history question on the job application and delaying the background check inquiry until later in the hiring process.  But many Ban the Box ordinances go beyond removing the criminal history question from the job application and require that employers take additional steps during the hiring process, such as conducting individualized assessments. Learn more on the free webinar.

The webinar is sponsored by the ClearStar Academy.  To register please click here.

Please join me next week for a discussion about what employers need to be aware of regarding pre-employment background checks to ensure you have compliant background screening policies and procedures in place. Some of the topics I will discuss include the Fair Credit Reporting Act, state law regarding restrictions on the use of credit information for employment screening purposes, the EEOC’s guidance on the use of criminal history records, and Fair Chance Hiring laws (aka Ban the Box ordinances).

The webinar is hosted by ClearStar.  Please register by clicking here.

Details: The free webinar is Wednesday, March 15, 2017 from 2:00 PM – 3:00 PM EDT.

A series of recent class action complaints against employers leads me to write about what employers can do to mitigate risk with respect to their background screening program.

I’m talking about pre-employment background checks when an employer uses the services of a third-party background screening company. Under the Fair Credit Reporting Act (FCRA) (15 U.S.C. § 1681 et seq.) employers have two critical responsibilities when using the services of a third-party background screening firm to request background checks on prospective employees.

Employers must do the following in order to comply with the FCRA when requesting a background check:

  1. Employers must provide prospective employees a clear and conspicuous disclosure regarding the fact that you will conduct a background check AND you must get the individual’s written authorization to conduct such. This is typically called the disclosure and authorization notice and it must be in a stand-alone document. The FCRA requires that when an employer requests a background check (aka a “consumer report”) for employment purposes they must provide “a clear an conspicuous disclosure” in writing “before the report is procured or caused to be procured, in a document that consists solely of the disclosure” and “the consumer has authorized in writing….” (15 U.S.C. § 1681b(b)(2)(A)(i)-(ii))
  2. Employers must follow the adverse action process, which is potentially a two-step process. The first step is typically referred to as the “pre-adverse action step” and you cannot send a final “no hire” letter until you complete this step. So, hypothetically speaking, after completing step 1 above you receive the results of a background check from your background screening vendor. The report indicates a criminal history or some other adverse item of information.  Based on this information, you may decide not to hire the individual.  Now what?  Before you take any final adverse action you must first provide the individual with a copy of the report you are reviewing and a summary of their rights as prescribed by the Consumer Financial Protection Bureau.  This allows the prospective employee to review the report and alert you if any information contained therein is inaccurate or incomplete and also to act on that incorrect or incomplete information with the background screening company. You should wait at least five business days before taking any final adverse action although realize that in some states and cities, Fair Chance laws and ordinances (aka Ban the Box laws and ordinances) may impose greater time periods. For more about Ban the Box, click here.

At a minimum, employers must follow above two steps to comply with the FCRA.  Depending on what state or city you are in there may be additional requirements, but these are the basics when doing pre-employment background checks on prospective employees.

Which brings me to the class action litigation and a sampling of the cases brought against employers for alleged non-compliance with the FCRA related to steps 1 and/or 2 described above.

  • Class action complaint filed against an airline catering and provisioning company (Case No. 2:17-cv-1298) for allegedly not following the pre-adverse action process.
  • Class action complaint filed against a major retail pharmacy chain (Case No. 5:17-cv-6019) for not providing the proper disclosure that a background check would be conducted and failure to follow the pre-adverse action process.
  • Class action complaint filed against a plasma provider (Case No. 5:17-cv-6018) for not following the pre-adverse action process.

There is a very active plaintiff’s bar filing complaints against both employers and background screening companies for alleged violations of the FCRA.  They do not discriminate based on type of employer or size of your business.  You’ve been warned.

But not all is lost as these are curable compliance issues. You start by reviewing your background screening program–your policies and procedures–with counsel versed in the FCRA and state consumer protection laws and guidance that govern background screening. You need to go step by step through the hiring process to understand where you may have deficiencies and need to shore up your compliance. For instance–if, as an employer, you utilize an adjudication matrix or screening standards to automatically classify individuals as “ineligible” for hire and automatically proceed to send a no hire letter we should talk about your background screening program and whether it complies with the requirements of the FCRA.  Or, your FCRA disclosure and authorization has a lot of “extraneous language” such as a release of liability language, we should talk.  Willful violations of the FCRA are eligible for statutory damages of $100 to $1,000/violation, plus punitive damages and attorney’s fees.

We would be happy to talk to you about your background screening program. Please contact Montserrat Miller at Arnall Golden Gregory at montserrat.miller@agg.com or 202-677-4038 for assistance.

Know Before You Hire: 2017 Employment Screening Trends is the title of a good article by Roy Maurer at SHRM.  Roy interviews multiple industry experts, including myself, asking for their opinions on what is trending in employment background screening.  Some of the trends you will read about include the increase in Ban the Box measures affecting employers, background screening of contingent workers, as well as the use of social media in the hiring process. To read the entire article click here.

Annually my law firm publishes a checklist of legal issues we believe will be relevant in 2017.  To view the list click here.

In no particular order of importance this year’s list includes the following, with brief write-ups by AGG lawyers:

  1. Wage and Hour
  2. Non-GAAP Financial Measures
  3. Ban the Box
  4. EU-U.S. Privacy Shield
  5. Immigration Compliance – Form I-9 and E-Verify
  6. Robust Compliance Programs
  7. Blockchain and Digital Transactions
  8. Cyber Security and M&A Transactions
  9. Online Advertising Practices
  10. Wellness Programs
  11. Tax Reform
  12. The Consumer Financial Protection Bureau
  13. E-Discovery and Defense Costs

Los Angeles is the latest major city to pass a Ban the Box measure (Ordinance 184652) applicable to private employers. It will become effective January 22, 2017 and will be enforced beginning in July 2017. Other major cities with Ban the Box laws include:

And don’t forget that eight states have Ban the Box measures on their books which are applicable to private employers — HI, IL, MA, MN, NJ, OR, RI, VT.

What is Ban the Box?  In its most basic form it means that an employer cannot ask on the job application about criminal history (i.e., arrests or convictions).  Generally, an employer must wait until a conditional offer of employment has been extended to inquire about criminal history and conduct a background check.  Ban the Box moves the criminal history inquiry until later in the process to afford ex-offenders the opportunity to be judged on their merit and not their past. At least in theory that’s what is supposed to happen as a result of Ban the Box measures, which are often referred to as fair hiring policies.

But, nothing in life is simple. Often, Ban the Box measures go beyond simply requiring employers remove the criminal history question from the job application and they include additional requirements, such as requiring:

  • Employers conduct an individualized assessment if criminal history is discovered during an background check (e.g., Austin, San Francisco, Los Angeles).
  • Employers advise the applicant the reason for their decision to not hire if it includes criminal history information (e.g., Chicago, Portland, San Francisco, Seattle, Washington, DC).
  • Employers provide a specific amount of time to allow the applicant to review and respond to criminal history information discovered as a result of a background check (e.g., Philadelphia, San Francisco).
  • Employers provide disclosures about the law (e.g., Philadelphia, San Francisco, Washington, DC).
  • Employers cannot have restrictive language in their advertisements (e.g., Seattle).
  • Important Although above bullet points cover some of the key requirements, they are not exhaustive as Ban the Box measures are similar but not identical.
  • And, and, and (yes, I meant three and’s), don’t forget that as a private employer you must also comply with the federal Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) if you receiving background check reports from a third-party background screening company.

For employers in a jurisdiction that has a Ban the Box law it’s important to understand what your obligations are. A comprehensive background screening policy will assist any employer seeking  compliance with federal and state law.  If that is on your “to do” list for 2017, we can assist in developing policies and procedures.

Nineteen companies joined President Obama as founding companies of the White House’s Fair Chance Business Pledge.  According to the White House Fact Sheet, “The pledge represents a call-to-action for all members of the private sector to improve their communities by eliminating barriers for those with a criminal record and creating a pathway for a second chance.”

Companies signing the pledge include: American Airlines, Busboys and Poets, The Coca-Cola Company, Facebook, Georgia Pacific, Google, Greyston Bakery, The Hershey Company, The Johns Hopkins Hospital and Health System, Koch Industries, Libra Group, PepsiCo, Prudential, Starbucks, Uber, Under Amour/Plank Industries, Unilever and Xerox.

Those signing the pledge are agreeing to:

  • “Voicing strong support for economic opportunity for all, including the approximately 70 million Americans who have some form of a criminal record.
  • Demonstrating an ongoing commitment to take action to reduce barriers to a fair shot at a second chance, including practices like “banning the box” by delaying criminal history questions until later in the hiring process; ensuring that information regarding an applicant’s criminal record is considered in proper context; and engaging in hiring practices that do not unnecessarily place jobs out of reach for those with criminal records.
  • Setting an example for their peers. Today’s announcement is only the beginning. Later this year, the Obama Administration will release a second round of pledges, with a goal of mobilizing more companies and organizations to join the Fair Chance Business Pledge.”

This is part of a larger initiative by the President targeting reforms to the criminal justice system and re-entry of ex-offenders into society.  A rule is expected this year from the Office of Personnel Management regarding federal employment and removal of the criminal history question on job applications.  In essence, a federal Ban the Box measure.

The city of Austin in Texas is the latest major city to pass a Ban the Box ordinance which affects private employers.  Ordinance No. 20160324-019 was approved on March 24, 2016 by a vote of 8 – 2.

What this means for private employers in Austin:

  • An employer may not solicit or consider criminal history information about a job applicant until after a conditional offer of employment.
  • An employer may not take adverse action against an applicant unless an individualized assessment has been conducted and a determination made that the individual is unsuitable for the job based on that individualized assessment.
    • An individualized assessment must include, at a minimum, consideration of the following factors (a) the nature and gravity of any offenses in the applicant’s criminal history; (b) the length of time since the offense and completion of the sentence; and (c) the nature and duties of the job for which the applicant applied.  Note that these are the Green factors described in the EEOC’s 2012 enforcement guidance on the use of criminal history records.
  • The employer must advise the applicant of the adverse action based on criminal history information in writing.
  • The ordinance does not apply to a job for which a federal, state or local law, or compliance with legally mandated insurance or bond requirements, disqualifies the applicant based on their criminal history.
  • Violations of the ordinance will be enforced by the Austin Equal Employment/Fair Housing Office.  Employers may be issued a warning for a first violation, followed by a civil penalty of up to $500.
  • The effective date of the ordinance was April 4, 2016.

 

Philadelphia’s Ban the Box has been on the books since 2011.  However, it was recently amended and certain changes went into effect yesterday (3/14/16).  Here are the basics about the Fair Criminal Records Screening Standards Ordinance (pay special attention to those items in bold/italics):

  • It is illegal (i.e., an unlawful discriminatory practice) in Philadelphia for employers to ask about criminal backgrounds during the job application process.  Employers must wait until they have provided the job candidate with a conditional offer of employment.
  • The ordinance now applies to employers with 1+ employees (previously it was 10+ employees).
  • Permits employers to consider criminal convictions only within seven (7) years from the date of application.
  • Employers are prohibited from asking at any time about arrests or criminal accusations which did not lead to a conviction.
  • Employers must conduct an individualized assessment.
  • Employers must post the poster issued by the Philadelphia Commission on Human Relations (PCHR) in a conspicuous place for job candidates to see (e.g., a company website or on the premises).
  • Complaints can be filed within 300 days of an “unlawful act” with the PCHR and could ultimately be filed in court.  In other words, there is a private right of action which can be enforced in court.
  • Employers can reject a job candidate based on your criminal record only if the person poses an unacceptable risk to the business or to other people.  If a job candidate is rejected, the employer must send the decision to the job candidate in writing with a copy of the background report used to make the decision AND must afford the job candidate ten (10) business days to give an explanation of their record, proof that it is wrong, or proof of rehabilitation.  So the question here is — does an employer send this notice during the FCRA required pre-adverse action phase (when they haven’t technically “rejected” the job candidate) or wait until the FCRA required adverse action step (but then the employer has to wait another 10 days).

For the text of the ordinance click here.

For more on Philadelphia’s Ban the Box click here.

For a complete list of changes to Philadelphia’s Ban the Box click here.