Employment Decisions Archives

Class-action against U.S. Census Bureau alleges race-bias in using criminal background checks

On July 1, 2014, a magistrate judge in the U.S. District Court for the Southern District of New York certified as a class-action an unprecedented lawsuit brought under Title VII of the Civil Rights Act of 1964, that alleges the U.S. Census Bureau’s process of using criminal background checks when selecting temporary workers for the 2010 census unlawfully screened out approximately 250,000 African-Americans. Filed in April 2010, the complaint charges that in hiring nearly a million temporary workers, most of whom went door-to-door seeking information from residents, the Bureau erected unreasonable and largely insurmountable hurdles for applicants with arrest records, regardless of whether the arrests were decades old, were for minor charges, or led to criminal convictions.

July 9th, 2014|Employment Decisions|

Cities of Rochester, NY and Baltimore, MD join fast growing list of ban-the-box jurisdictions

Effective November 18, 2014, the City of Rochester, New York ordinance no. 2014-0155 will prohibit employers from requiring applicants to disclose any criminal conviction information during the application process. The employer may inquire about a criminal conviction only after the initial interview. And if the employer does not conduct an interview, it must inform the applicant whether a criminal background check will be performed, before employment is to begin. Additionally, it must wait until after a conditional job offer has been extended before conducting the criminal check or otherwise inquiring into the applicant’s criminal history. The ordinance applies to any position where the primary place of work is located within Rochester, and to any city employees (except fire or police) or vendors regardless of location. Excluded from the ordinance are criminal record inquiries that are authorized by another applicable law.

Baltimore’s Fair Criminal-Record Screening Practices ordinance, which becomes effective August 13, 2014, similarly bans private employers from inquiring about or conducting criminal checks on applicants until a conditional offer has been extended. The ordinance applies to any employer with 10 or more employees within the city of Baltimore, but excludes entities serving minors or vulnerable adults. Unlike some other ban-the-box laws, the Baltimore ordinance does not require that employers provide additional notices to applicants other than those required under the Fair Credit Reporting Act.

For more information on ban-the-box legislation,see the recently published briefing paper by the National Employment Law Project titled Statewide Ban the Box–Reducing Unfair Barriers to Employment of People with Criminal Records.

July 9th, 2014|Employment Decisions, Legislation|

Sixth Circuit affirms dismissal of EEOC’s suit regarding employment credit checks

Last month, the 6^th Circuit affirmed a lower court order granting summary judgment in favor of educational institution Kaplan (6th Cir. April. 9, 2014; No. 13-3408: EEOC v. Kaplan Higher Education Corp.) where the EEOC charged that Kaplan’s use of credit checks causes it to screen out more African-American applicants than white, creating a disparate impact in violation of Title VII of the Civil Rights Act. In granting summary judgment to Kaplan, the district court stated that “proof of disparate impact is usually statistical proof in the form of expert testimony, and here the EEOC relied solely on statistical data compiled by Kevin Murphy, a PhD in industrial and organizational psychology.” The court excluded Murphy’s testimony on grounds that it was unreliable, as the EEOC presented “no evidence” that Murphy’s methodology satisfied any of the factors that courts typically consider in determining reliability under Federal Rule of Evidence 702; and, as Murphy himself admitted, his sample was not representative of Kaplan’s applicant pool as a whole. The EEOC argued that the district court “erred” when it excluded Murphy’s testimony.

This case was decided on narrow grounds, based on its particular facts and circumstances. Accordingly, employers still should review their screening policies to ensure that credit and (criminal history) checks are consistent with Title VII as interpreted by the EEOC. Additionally, ten states (California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington) and several municipalities already have legislation that limits the use of credit reports for employment purposes

May 14th, 2014|Employment Decisions|

Reminder that EEOC’s guide on criminal checks extends to contractors and subcontractors

The guidance issued in 2012 by the Equal Employment Opportunity Commission’s (EEOC) on using criminal checks in employment decisions was also incorporated into the directive of Office of Federal Contract Compliance Programs (the “OFCCP”). As provided in the EEOC guidance, the OFCCP discourages the use of blanket hiring exclusions against individuals with criminal records, and recommends that contractors follow the EEOC’s best practices for employers to avoid liability for discrimination. The OFCCP advises that contractors, as a general rule, refrain from inquiring about convictions on job applications, and if such inquires are made, “limit the inquiries to convictions that demonstrate unfitness for the particular position.”

May 14th, 2014|Employment Decisions|

Class actions against employers for violations of the FCRA are increasing

An auto parts company (CA USDC Case No. 2:14-cv-3470) and a hotel chain (CA USDC Case No. 3:14-cv-01089) are just the latest employers that have been slapped with class action lawsuits for alleged violations of the Fair Credit Reporting Act (the “FCRA”) charging willful non-compliance with the FCRA’s disclosure, authorization, and/or notice requirements. And the payouts in such lawsuits can be in the millions. Within the past three years, a national trucking company reached a settlement for $4.6 million, a national retail chain for $3 million and a national pizza maker for $2.5 million.

The FCRA allows an applicant or employee to bring a private right of action against an employer who negligently or willfully fails to comply with any of the FCRA’s requirements. Under the statute of limitations, an action must be brought by the earlier of (1) two years after the date of violation discovery by the plaintiff, or (2) five years after the date on which the violation occurred. The employer’s liability for negligent non-compliance is actual damages sustained by the applicant/employee, and reasonable attorneys’ fees and costs. A willful violation carries actual or statutory damages ranging between $100 and $1,000, punitive damages, and attorneys’ fees and costs.

Below are general FCRA compliance reminders to employers when procuring and using background check reports prepared by a consumer reporting agency (“CRA”):

Provide disclosure to the applicant/employee in a standalone document that a consumer report may be obtained and used for employment purposes (language must be clear, with no superfluous information or liability waiver, and separate from the employment application);
Provide to the applicant/employee a summary of rights under the FCRA and applicable state notices;
Obtain the applicant/employee’s authorization for the consumer report;
Before taking adverse action based on the report (1) provide a pre-adverse action notice to the applicant/employee along with a copy of the report, and notices of rights, if not given previously, (2) wait a reasonable period of time (at least 5 days) before taking the adverse action, and (3) after deciding to take the adverse action, provide a notice that contains the FCRA required information, such as the name, address, and telephone number of the CRA that provided the report.

May 14th, 2014|Employment Decisions|

Supreme Court ruling extends SOX whistleblower protection to private contractors

On March 4, 2014, the Supreme Court in a split decision ruled that employees of private companies servicing public companies are covered by the whistleblower protections of Sarbanes Oxley Act of 2002 (“SOX”)

[U.S., No. 12-3, 3-4-14]. In this case, two employees of a private company contracted by a publicly-traded mutual fund alleged that they were terminated in retaliation for raising fraud issues about the fund. With this decision, the Supreme Court has expanded the universe of companies regulated by the SOX whistleblower provision from about 5,000 public companies to potentially millions of private ones, including the smallest of businesses. Employers of every size and type have to be prepared for potential SOX whistleblower retaliation claims if they are a contractor or subcontractor of a publicly traded company.

March 29th, 2014|Employment Decisions|

FTC and EEOC jointly publish guides on employment-purpose background checks

The Federal Trade Commission (FTC) and the Equal Employment Opportunity Commission (EEOC) have co-published two brief guides on employment background checks that explain the rights and responsibilities of the people on both sides of the desk. See Background Checks: What Employers Need to Know and Background Checks: What Job Applicants and Employees Should Know. For employers, the guidelines cover only the basics that must be considered for procuring and using employment-purpose background checks and do not attempt to explain in detail the many compliance requirements of the Fair Credit Reporting Act, and analogous state and municipal consumer reporting laws, regulations, codes and statutes.

March 29th, 2014|Employment Decisions|

San Francisco enacts ordinance for using criminal records in employment decisions

Effective August 13, 2014, under San Francisco’s Fair Chance Ordinance, companies with 20 or more employees are prohibited from inquiring about an applicant’s criminal history on the employment application or during the first live interview. Along with banning the box, the ordinance imposes several additional restrictions and mandates certain considerations for individualized assessment. San Francisco employers must also ensure that their notice and consent forms for criminal background inquiries later in the process comply with the guidelines that will be published by San Francisco’s Office of Labor Standards Enforcement (OLSE) as well as with the already existing background check disclosure/authorization requirements under California’s ICRAA and the FCRA.

San Francisco is the ninth jurisdiction with legislation that affects private employers. The remaining eight are the states of Hawaii, Massachusetts, Minnesota, Rhode Island, and the cities of Buffalo, NY, Newark, NJ, Philadelphia, PA, and Seattle, WA. Multi-state employers should consider whether their particular circumstances warrant adopting individualized employment applications for jurisdictions with ban-the-box laws, or whether to use a nationwide standard form. Employers who opt for a standard electronic application for all locations need to include a clear and unambiguous disclaimer for applicants in each applicable ban-the-box jurisdiction. It is uncertain whether such disclaimers are sufficient for paper applications of multi-state employers in at least one ban-the-box jurisdiction (Minnesota) or if the box must be removed altogether.

For more information on ban-the-box legislation, see the recently published briefing paper by the National Employment Law Project titled Statewide Ban the Box – Reducing Unfair Barriers to Employment of People with Criminal Records.

Note: Effective August 13, 2014, with our California employment-purpose disclosure/ authorization form, we will be including a supplemental disclosure/authorization notice as prescribed by the OLSE, to use by San Francisco employers.

March 28th, 2014|Criminal Activity, Employment Decisions|

Another lawsuit reminds employers about FCRA disclosure/authorization requirements

A recently filed class action NDC Ca. No. (4:14-cv-00592-DMR, 2-7-14) is a reminder to employers that under the Fair Credit Reporting Act (the “FCRA”) their disclosure and authorization form to the applicant/employee for obtaining a background check must be in a standalone document, and cannot contain confusing or extraneous information. The lawsuit alleges that the defendant employer used an invalid form to obtain consent to conduct background checks, that it relied on an authorization that was included alongside several other consent paragraphs in an online employment application, and that the consent form contained a release of liability related to obtaining the background check. Two published court decisions already ruled that including a liability waiver constitutes a technical violation under the FCRA. (WD Pa. 2013, No. 2:08-cv-01730-MRH, and Dist. Md., 2012, No. 8:11-cv-01823-DKC.)

March 28th, 2014|Employment Decisions|

Proposed Regulation A rules have bad actor disqualification similar to Rule 506(d)

On December 2, 2013, the U.S. District Court for the Western District of Pennsylvania ruled that a combined disclosure and authorization form that contained a liability waiver which the employer gave to a group of former job applicants violates the Fair Credit Reporting Act (the “FCRA.”) The court determined that a significant portion of the 1,800 individuals in this class action are entitled to willful damages under the FCRA and could each receive the greater of his/her actual damages or $1,000 plus attorneys’ fees.

This is a second published decision to hold that liability waivers invalidate the disclosure requirements under the FCRA. The first ruling rendered in January 2012 in the U.S. District Court in Maryland found that “both the statutory text and FTC advisory opinions indicate that an employer violates the FCRA by including a liability release in a disclosure document.” Thus far, only the U.S. District Court for the Western District of North Carolina disagreed, deciding in August 2012 that the liability waiver included in the defendant employer’s combined disclosure and authorization form was kept sufficiently distinct from the disclosure language so as not to render it ineffective.

January 17th, 2014|Dodd-Frank, Employment Decisions|