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.

Are you an employer that conducts pre-employment background checks for new hires, or maybe background checks for existing employees for promotion, reassignment or retention purposes?  Ever randomly wonder if you can use that report and information in it for a purpose other than employment screening?  The short answer is, no.

The FTC recently posted on its blog how to use information in such consumer reports and the fact that an employer or other “user” of consumer reports cannot “double dip.” Meaning, if you receive a “consumer report” (aka a background check report) from a background screening company for employment screening purposes, you cannot use it for a different purpose. If you engage the services of a background screening company make sure to read the Notice to Users of Consumer Reports: Obligations of Users Under the FCRA, which explains employers obligations under the law.  Your background screener should provide you with a copy of this notice.

An employer’s obligations include:

  • Having a “permissible purpose” to request a consumer report from a background screening company — for hiring, promotion, retention or reassignment, the “permissible purpose” is employment. Your background screening vendor should ask you to certify your permissible purpose prior to furnishing a report, which is why you may see language about this in the contract as well as other language related to the parties obligations under the Fair Credit Reporting Act (FCRA) (15 U.S.C. § 1681 et seq.).
  • Providing certain disclosures to the job applicant or employee (i) prior to requesting a background check; (ii) when information contained in the report may affect eligibility for employment; and (iii) if an adverse action is going to be taken as a result of information in the report.
  • Providing notice regarding the background investigation and securing the job applicant or employee’s written consent.
  • Properly dispose of these reports, including by burning, pulverizing, shredding or electronically purging the information — for more on proper disposal of reports click here.

Note section III in the Notice to Users of Consumer Reports: Obligations of Users Under the FCRA as it specifically addresses the use of background check reports for employment purposes.  The FCRA imposes additional requirements when employers use reports for employment screening purposes.

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.

On February 28 at 3:00 pm EST, I (check out my bio) will be speaking on a free webinar hosted by Hire Image called, Hiring and Maintaining a Legal Workforce: What’s New in 2017.

I will be talking about what’s new in 2017 relative to hiring and maintaining a legal workforce. I will cover immigration compliance-related topics such as the President’s Executive Orders—and proposed orders—and the impact they could have on American employers and your workforce.  I will also talk about mandatory E-Verify, increased raids by Immigration and Customs Enforcement (ICE), increased civil penalties for noncompliance with the Form I-9 requirements, and what to expect and how to prepare your organization for an ICE worksite enforcement operation.

This webinar is approved for 1 HR (General) recertification credit hour toward California, GPHR, HRBP, HRMP, PHR and SPHR through HRCI, and is valid for 1 PDC for the SHRM-CPSM or SHRM-SCPSM.

Click here to register.

The wait is over!  U.S. Citizenship and Immigration Services (USCIS) has issued an updated M-274, Handbook for Employers which provides guidance on completion of the Form I-9 and an overview of unlawful discrimination and penalties related to completion of the Form I-9.

New sections include guidance on (i) automatic extensions of employment authorization documents (EAD) in certain circumstances (page 13); (ii) failure of an employee to present acceptable documents (page 26); and (iii) correcting the Form I-9 (page 29).

Click here to view the updated M-274, Handbook for Employers.  Remember — all employers must be using the updated version of the Form I-9 as of January 22, 2017.  The form is available on USCIS’s website.

I would like to congratulate a partner and colleague at my firm — Tom Pahl — who although he is leaving us, is leaving for a very good reason.  Federal Trade Commission (FTC) Acting Chairman Maureen Ohlhausen announced this week that she has appointed Tom Pahl, a partner at the Washington, D.C. law firm of Arnall Golden Gregory LLP, to be the Acting Director of the FTC’s Bureau of Consumer Protection.  This is a big deal!!  Tom replaces Jessica Rich who is leaving the FTC later this month.

To read the FTC’s press release click here.  To read more about Tom’s appointment click here, and here, and here.

Congratulations Tom!

Additional Executive Orders (“EO”) are apparently circulating among administration officials, including more related to immigration and one specifically related to business immigration. It is unclear when or exactly what President Trump will sign but one such draft order is entitled “Executive Order—Protecting American Jobs and Workers by Strengthening the Integrity of Foreign Worker Visa Programs.” The scope of this EO, as presently drafted, will affect foreign worker visa programs (e.g., workers in E, H-1B, H-2A and L status).  It also affects the J-1 exchange visitor program and student visa reform, and orders L-1 site visits.  These are just some highlights of what such this EO could cover.

The focus of this particular EO is to prioritize “the protection of American workers…and the jobs they hold.” The EO requires the Security of Homeland Security to, within 90 days, review all regulations that allow foreign nationals to work in the United States to determine if they are in the national interest or should be rescinded.

Of greatest interest for purposes of this blog is what it says about E-Verify – “within 90 days of the date of this order, submit to the President a list of options for incentivizing and expanding participation by employers in E-Verify, including by conditioning, to the maximum extent allowed by law, certain immigration-related benefits on participation in E-Verify.” Could this mean something akin to the situation where in order for an employee to apply for an extension of their work authorization under STEM OPT their employer must participate in E-Verify?

This E-Verify mandate is in line with then presidential candidate Trump’s “10 Point Plan to Put America First.”  Point #9 was, “Turn off the jobs and benefits magnet. Many immigrants come to the U.S. illegally in search of jobs, even though federal law prohibits the employment of illegal immigrants.”  For this point to be fulfilled, President Trump is pushing for an expansion of the E-Verify program.  Which, by the way, an expansion of E-Verify to make it mandatory is not necessarily a controversial item on Capitol Hill.  I expect that legislation will be taken up this year on Capitol Hill making E-Verify mandatory for all employers in the United States.

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

Please join me and my colleague, Teri Simmons, for a free webinar on January 24th at noon EST during which time we’ll discuss immigration compliance issues relevant to employers.  We’ll also cover what organizations can expect in 2017 under the new Administration.

Teri and I will cover topics related to the Employment Eligibility Verification form (the “Form I-9”), E-Verify, government investigations and penalties related to the Form I-9, and on-site audits when petitioning for H and L nonimmigrant status.  Click here to register and learn more about the topics we’ll address.

The webinar is pending CLE credit approval by the State Bar of Georgia.