I recognize this is a lengthier blog than I normally post, but it’s necessary so I can help employers help themselves.

The Ninth Circuit Court of Appeals issued an important opinion that is relevant not only to employers that are responsible for a providing job seekers with a compliant disclosure and authorization under the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), but also for their background screening vendors that may supply such templates to their employer clients.

In Gilberg v. California Check Cashing Stores (No. 17-16263) (“Opinion”) the Court addressed the issue of the required disclosure and authorization (D&A) and whether it is “clear and conspicuous” and “in a document that consists solely of the disclosure.” (FCRA, § 1681b(b)(2)(A))  At issue was whether the various state-mandated disclosures violated the FCRA’s “standalone document” requirement and are therefore extraneous.  And, the Court also addressed the issue of what is “clear and conspicuous” under the FCRA.  Specifically, the Court considered these questions:

  1. Whether a prospective employer may satisfy the FCRA’s standalone document requirement by providing job applicants with a disclosure containing extraneous information in the form of various state disclosure requirements; and
  2. Whether the specific disclosure provide by the employer in this particular case satisfied the clear and conspicuous requirement. (See, Appendix A of the Opinion for CheckSmart Financial’ s D&A)

Before diving into the Court’s Opinion, let’s briefly describe a key employer obligation under the FCRA when conducting a background check for employment purposes.  Obligation—employers need to provide the job applicant with a D&A that is a standalone, clear and conspicuous disclosure of its intention to conduct a background check.  Employers must advise job applicants of the background check when using the services of a third-party background screening company and must capture the job applicant’s consent for said check. As recent settlements demonstrate, this requirement is not always resonating with employers.  Consider settlements and/or on-going litigation against airline carriers ($2.3 million dollars), retail stores (granted class certification), and healthcare providers ($1.3 million) to list a few examples.

Since neither the Federal Trade Commission nor the Consumer Financial Protection Bureau have provided users of consumer reports (aka “background check reports”) with a standard D&A we look to the FCRA itself for guidance as well as case law.  And in this area, the case law is evolving.  We know, for instance, that inclusion of any type of a release of liability/liability waiver in a D&A is considered extraneous information because it violates the standalone disclosure requirement. (See, Syed v. M-I, LLC, 853 F3d 492 (9th Cir. 2017)  Now, layer in state-mandated disclosures.  Previously, D&A’s included state-mandated disclosures related primarily to receiving a copy of the report (e.g., California, Minnesota, Oklahoma).  And over time, additional state disclosures were added.  That is now definitively a thing of the past.  The same 9th Circuit as in the Syed case is saying that “a prospective employer violates FCRA’s standalone document requirement by including extraneous information relating to various state disclosure requirements in that disclosure.” (Opinion at p. 4).

Court Ruling

  • The Court held that the D&A used by CheckSmart Financial violated the FCRA’s “standalone document requirement” because of the inclusion of state-mandated disclosure information.  Stating, “[b]ecause CheckSmart’s disclosure form does not consist solely of the FCRA disclosure, it does not satisfy FCRA’s standalone document requirement.” (Opinion at p. 14)
  • The Court held that the D&A at issue was not “clear and conspicuous” (although technically the Court found that the D&A was “conspicuous” but not “clear”):
    • Taking issue with use of the term “all-encompassing” related to the scope of the D&A. (Opinion at p.17)
    • Stating that combining federal and state disclosures is confusing. (Opinion at p. 17)
    • On the plus side for employers, the Court did rule that the D&A was “conspicuous” because CheckSmart Financial “capitalized, bolded and underlined the headings for each section of the disclosure and labeled the form so an applicant could see what she was signing.” (Opinion at p. 18)  Although it did “ding” them for the small font—Arial Narrow size 8 font.

Takeaways for Employers

  • Maintain the job application (if one is used) separate and apart from the D&A.  Do not embed the D&A into the job application, regardless of how “clear and conspicuous” you believe it to be.
  • Understanding that employers need flexibility to conduct future checks, clearly use complete sentences when addressing the scope of the D&A.
  • Do not include the state-mandated disclosures with the D&A (specifically on the same page). Include them separately and when doing so, be clear about which disclosure applies to what state residents.
  • Capitalize, bold and underline the D&A and use a font larger than Arial Narrow size 8.

Interesting Sidebar

The lead plaintiff in this case had no criminal history, worked for CheckSmart Financial for a period of time, and then voluntarily terminated her employment.  After that, she pursued this putative class action alleging violations of the FCRA and state law.  (Opinion at p. 9) And, since this is at the appellate level, note that the district court entered summary judgement against the plaintiff and sided with CheckSmart Financial that the D&A was compliant.

If you have any questions about this decision, the FCRA, or how to get to a compliant disclosure and authorization, please don’t hesitate to reach out to me at montserrat.miller@agg.com or anyone on AGG’s Background Screening team.

Happy Friday before the Super Bowl that should have seen the Saints playing the Patriots.  Check out this week’s Compliance News Flash with blurbs about:

  • E-Verify and what employers need to do now that it is again operational.
  • The Form I-9 and tools to assist with determining if documents presented are acceptable.
  • The CFPB and charges for file disclosures.
  • The U.S. may soon have a permanent ombudsman for the Privacy Shield program (thereby making the Europeans happy).
  • H-1B petitions for high-skilled workers and a return to premium processing.

Click here to read this week’s Compliance News Flash.

For prior 2019 editions of the Compliance News Flash click here.

The longest government shutdown is over and employers need to take note that E-Verify is again operational.  Setting aside that Congress and the President have only until February 15 to move beyond short term funding for the Department of Homeland Security (DHS), here is what employers need to know about E-Verify, the electronic employment eligibility verification program run by U.S. Citizenship and Immigration Services (USCIS).  But first, this caveat (click here) direct from USCIS–“E-Verify has resumed operations. Given that E-Verify was unavailable for over a month, we ask for your patience as we reinstate the service.”

  • All of the cases that you, as an employer, are holding because you hired someone during the time period that a E-Verify was offline due to the partial government shutdown now need to be entered into the system.  Employers have until February 11, 2019 to do so, according to USCIS.  Therefore, a case needs to be created for all employees you hired for whom a Form I-9 was completed but you could not create a case in E-Verify because the system was offline due to the shutdown.
    • USCIS Instructions: employers who participate in E-Verify must create an E-Verify case by February 11, 2019 for each employee hired while E-Verify was not available. You must use the hire date from the employee’s Form I-9 when creating the E-Verify case. If the case creation date is more than three days following the date the employee began working for pay, select “Other” from the drop-down list and enter “E-Verify Not Available” as the specific reason.
  • Any pending Tentative Nonconfirmation (TNC) that you and/or your newly hired employee were not able to resolve due to the shutdown needs to be resolved at this time.
    • USCIS Instructions: if your employee received a TNC and notified you of his or her intention to contest it by February 11, 2019, you must revise the date by which your employee must contact the Social Security Administration (SSA) or DHS to begin resolving the TNC. To do this, add 10 federal business day[s] to the date on your employee’s “Referral Date Confirmation” notice. Federal business days are Monday through Friday and do not include federal holidays.  Give the revised notice to your employee.
    • You may reprint a copy of your employee’s “Referral Date Confirmation” by logging in to E-Verify, selecting your employee’s case and selecting the “Print Confirmation” button. Be sure to cross out the old date and insert the new date. Employees have until this new date to contact the SSA or DHS to resolve their cases, as applicable.
    • For TNC cases that were referred after E-Verify resumed operations, do not add days to the time your employee has to contact either SSA or DHS. If your employee decided to contest the TNC when E-Verify was unavailable, you should now refer the employee’s case and follow the TNC process.
  • If you are a federal contractor, contact your contracting officer about enrollment and use and the impact of the government shutdown on you.
    • USCIS Instructions: during the DHS lapse in appropriations E-Verify was not available for federal contractor enrollment or use.  As a result, DHS guidance is that any calendar day during which E-Verify was unavailable due to the lapse in appropriations should not count towards the federal contractor deadlines found in the Employment Eligibility Verification Federal Acquisition Regulation. Please contact your contracting officer for more information on federal contractor responsibilities.

To read the full instructions from USCIS on employer and employee responsibilities now that E-Verify is back online, click here.

Expect delays due to the sheer volume of “past” E-Verify cases that need to be created in addition to the fact that employers continue to hire every day and that adds to the queue of cases being created in E-Verify at any one point in time.  Finally, employers, you only have a little over two weeks to bring yourself into compliance with the E-Verify requirements given the February 11, 2019 deadline.

Check out the current Compliance News Flash with blurbs about:

  • The continuing partial government shutdown;
  • E-Verify (still shutdown);
  • The Federal Trade Commission (also shutdown);
  • Government background investigations and the NBIB (not shutdown);
  • The California Consumer Protection Act; and
  • A recent merger in the background screening industry.

In honor of MLK Day tomorrow:

“Darkness cannot drive out darkness: only light can do that. Hate cannot drive out hate: only love can do that.” Martin Luther King

Happy New Year!

Here are two editions of the AGG Compliance News Flash covering the following topics:

  • E-Verify;
  • California’s Consumer Privacy Act;
  • Ban the box and salary history restrictions in the hiring process;
  • Investigation by the Department of Justice into hiring practices;
  • The Fair Credit Reporting Act and who qualifies as an “employee”; and
  • News about the Consumer Financial Protection Bureau.

Click here for the 12/21 edition of the Compliance News Flash.

Click here for the 1/4 edition of the Compliance News Flash.

It took a few days, but the E-Verify system is down due to the partial government shutdown which started at 12:01 am Saturday the 22nd of December.  One of the agencies affected by the partial government shutdown is the Department of Homeland Security (DHS), which is the agency that runs the E-Verify program.  E-Verify and E-Verify services are offline and will remain so until the government is again funded.  This partial shutdown may continue into the new year so employers should prepare themselves by keeping track off all new hires during the shutdown so that cases can be created once the system is back online.

What does it mean that E-Verify is offline?  Employers and E-Verify Employer Agents will not be able to create cases in E-Verify. VERY IMPORTANT! Just because E-Verify is offline, it does not mean that employers do not need to complete the employment eligibility verification form (the “Form I-9”).  The requirement to complete and maintain the Form I-9 for all new hires within three business days of hire is a separate requirement and employers must continue to complete the Form I-9 for all new hires as well as re-verify the work authorization of employees whose authorization is expiring.  The lapse in government funding does not affect the Form I-9 requirement.

Back to E-Verify.  DHS issued this statement about the “three-day rule” and pending Tentative Non-Confirmations (TNCs) and how to handle such during the partial government shutdown.

From DHS: “We understand that E-Verify’s unavailability may have a significant impact on employer operations. To minimize the burden on both employers and employees, the following policies have been implemented:

  • The “three-day rule” for creating E-Verify cases is suspended for cases affected by the unavailability of E-Verify.
  • The time period during which employees may resolve TNCs will be extended. The number of days E-Verify is not available will not count toward the days the employee has to begin the process of resolving their TNCs….”

Please join Arnall Golden Gregory (AGG) for our annual Employment Law Seminar on Tuesday, October 30, 2018 at the Cobb Energy Performing Arts Centre in Atlanta, GA. Our attorneys—who have been recognized by Chambers USA: America’s Leading Lawyers for Business and Super Lawyers—will address what you need to know regarding employer rights and obligations in 2019.  AGG attorneys speaking include Montserrat Miller, Megan Mitchell, Henry Perlowski, Brad Kelley and Ed Cadagin, to name a few.

Click here to register. Complimentary breakfast and lunch will be provided. State Bar of Georgia CLE credit, Society for Human Resource Management HRCI recertification credit and CPE credit hours have been applied for.

Topics Include:

  • Skeletons in the Closet: Another Year of #MeToo
  • Trick or Treat, Part I: What Federal Regulatory Changes Are In Store
  • Trick or Treat, Part II: A Spate of New State Employment Laws
  • Supreme Court Spell Book: The Expanding Availability of Arbitration for Employment Disputes
  • Stirring the Cauldron: Hot Topics Brewing in Benefits Law
  • R.I.P. Employment Relationship: Minimizing the Risks Associated With Employee Terminations
  • Double, Double, Toil and Trouble: The Increasing Level of Worksite Enforcement by Homeland Security
  • Privacy Pumpkin Patch: Background Screening, Social Media, the GDPR, Email, and Other Privacy Concerns
  • The Wage and Hour Spider’s Web: Navigating Some of the Lesser Known Parts of the FLSA

Apologies, I’m a little behind the curve on this so you will see two Compliance News Flashes this week.

This particular Compliance News Flash we drafted covers the following topics:

  • Employers getting into hot water over the types of documents they request from employees when completing the Form I-9, leading to claims of discrimination.
  • The Bureau of Consumer Financial Protection is on track to have the least (that’s right, least) amount of enforcement actions on record.
  • An enforcement action by the Equal Employment Opportunity Commission (EEOC) related to race discrimination and the use of criminal history information for employment screening practices.

This week’s edition of the Compliance News Flash by Arnall Golden Gregory includes blurbs about the:

  • National Association of Professional Background Screeners (NAPBS) conference in Baltimore;
  • Temporary Protected Status program and an injunction against the government;
  • EU-U.S. Privacy Shield program and enforcement actions against organizations related to their certification;
  • Updated “A Summary of Your Rights under the Fair Credit Reporting Act” model form; and
  • Italy and the General Data Protection Regulation (GDPR).

Click here to read.

Enjoy and have a great weekend!

The Bureau of Consumer Financial Protection (the “Bureau”) has issued an interim final rule tied to passage of S. 2155.  While the new law amends the Fair Credit Reporting Act (FCRA) to include new requirements on credit bureaus tied to security freezes and fraud alerts, relevant to background screeners and employers using a background screening company for pre-employment background checks is the fact that the interim final rule includes an updated version of the model FCRA summary of rights document.

Effective September 21, 2018, new section 605A(i) of the Fair Credit Reporting Act (FCRA), added by the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155 or the “Act”), requires that a new notice of rights be included whenever a consumer is required to receive a summary of rights required by FCRA section 609.

Some of you have already begun your efforts to come into compliance with the notice requirement under the Act since the effective date is next week.  According to the Bureau, “to mitigate the impact of these changes on users of the existing model forms, the interim final rule also provides that the Bureau will regard the use of the model forms published in Appendices I and K on November 14, 2012, to constitute compliance with the FCRA provisions requiring such forms, so long as a separate page that contains the additional required information is provided in the same transmittal.”

In addition to adding the new required notice under the Act, the revised model FCRA summary of rights document also includes revised language related to the duration period of fraud alerts as well as updated contact information for the listed enforcement agencies.

The updated model form, A Summary of Your Rights under the Fair Credit Reporting Act, is found on pages 28-31 of the interim final rule.

If you have any questions please do not hesitate to contact me at montserrat.miller@agg.com.