Written by: Roy Maurer
This is the first article in a two-part series. The next installment will examine how employers can ensure data security in the screening process and what to expect with forthcoming artificial intelligence technology.
Employers are ramping up their use of social media screening and real-time employee monitoring in 2019. And the demand for workers in a tight labor market will push more companies to consider applicants they may have once ignored: those with criminal records.
Social Media Checks
Employers have shown increasing interest in screening candidates’ online presence.
In 2019, more background-check providers will offer online and social media searches as part of their suite of products, but employers must ensure that these searches protect candidate privacy and don’t run afoul of the federal Fair Credit Reporting Act (FCRA) or standards set by the Equal Employment Opportunity Commission (EEOC).
“Social media screening presents opportunities for recruiters to find candidates and to reduce risk, but at the same time, these searches can create a legal minefield of potential liability,” said Les Rosen, founder and CEO of Employment Screening Resources, a background-screening firm in Novato, Calif.
Interest in social media screening has grown significantly over the last few years, said Bianca Lager, the president of Santa Barbara, Calif.-based Social Intelligence Corp., a leading provider of social media screening reports. “We now see almost daily news stories of someone getting into trouble with their employer over what they’ve written online,” she said. “Hiring companies know they can’t get away with ignoring social media as part of the background-screening process any longer, but the DIY approach is incredibly troubling for candidates in terms of privacy, accuracy and discrimination.”
If HR professionals are conducting their own online searches on job candidates, they need to stop, said Montserrat Miller, an attorney with Arnall Golden Gregory, based in Atlanta. “The potential for a discrimination claim far outweighs the cost of adding a social media screening option from a vendor.”
Rosen said that employers should be wary of discovering too much information—or “TMI”—on social media. ” ‘TMI’ means by looking at [an applicant’s] social media site or perhaps a photo or something that they have blogged about, you are going to learn all sorts of things as an employer you don’t want to know and [that] legally cannot be the basis of a decision,” he said. Job applicants can sue employers for discrimination if they believe they were not hired due to protected characteristics covered by Title VII of the Civil Rights Act of 1964, including race, color, religion, sex or national origin.
“Even the appearance of a decision not to hire someone based on a negative impression related to race, gender, religion, or other protected classes could subject [employers] to a discrimination lawsuit,” said Christine Cunneen, CEO of Providence, R.I.-based background-check company Hire Image.
Experts agree that if employers decide to screen an applicant through social media, the best way to reduce legal risk is by having a third-party vendor perform the search instead of doing it in-house. Background-check providers that perform social media screening must comply with the FCRA and produce accurate reports scrubbed of protected characteristics.
“Social media reports won’t show whether or not someone is Muslim or gay or a military veteran, to protect the employer from a discrimination claim,” Miller said. “They will only provide instances of actionable, offensive information, for example relating to criminal activity, violent behavior or making racist comments.”
Cunneen added that employers need to be careful not to violate candidate privacy. Social media screens should be drawn only from user-generated, publicly available information and not from third-party content or password-protected sites. “If the applicant’s social media settings are set to public, that information is open for anyone, including potential future employers, to review,” she said. “However, if their profile is set to private, the employer cannot try to bypass those settings without risking exposure to potential liability down the road.”
New technology lets companies go beyond pre-employment checks and rescreens to real-time monitoring of current employees for warning signs of illegal or other concerning behavior.
“Employee monitoring is one of the biggest trends I’m seeing,” said Jason Morris, an employment screening consultant and industry expert with Morris Group Consulting in the Cleveland area.
“Justifiably, employers will always want to know who is working for them—not just [during] hiring but throughout their employment relationship,” Cunneen said. “A current employee can engage in illegal behavior as much now as he or she could have before they were an employee.”
Uber announced plans last year for ongoing monitoring of arrest and conviction data on their drivers. “These tools have been around for a while, but end users are finally seeing the benefits, and the data is getting better,” Morris said.
Uber teamed with San Francisco-based screening firm Checkr to get continuous updates about drivers’ records, including new criminal violations and license suspensions. The technology will notify Uber, for example, when a driver is charged with driving under the influence.
“It is a subscription that listens to a candidate’s data over time, looking for and identifying changes in their background to mitigate risk for companies,” said Tomas Barreto, vice president of product and engineering at Checkr. If new information triggers a full background check, the worker is also notified, he said.
“While there are some industries whose regulations have mandated continuous or some form of periodic screening, such as health care, we are seeing more industries embrace the idea,” said Melissa Sorenson, executive director of the National Association of Professional Background Screeners. “Like any background-screening program, it’s important for employers to ensure they follow both federal and state law related to background screening—including following disclosure and authorization requirements before conducting a background check, as well as adverse action processes in the event that the results of the background check lead the employer to consider not hiring, promoting or retaining the individual.”
Hiring People with Criminal Records
Research shows a majority of HR professionals find little difference in quality of hire between applicants with and without a criminal record.
“The fact that employers cannot find workers due to the current labor shortage has caused them to turn to an untapped and underutilized source of labor: ex-offenders and [former] inmates from the approximately 20 million Americans who have been convicted of a felony,” Rosen said.
The Prison Policy Initiative calculated the ex-offender unemployment rate to be 27 percent, higher than the total U.S. unemployment rate at any time, including during the Great Depression.
Alonzo Martinez, associate counsel for compliance at background-screening company HireRight, said that with the number of unfilled positions now exceeding the labor pool, employers are recognizing the potential in this previously untapped group of candidates.
“While a criminal record should never be an automatic deal breaker—especially for candidates who have misdemeanors on their records, have served their time or have been rehabilitated—in the current market, employers are increasingly considering candidates with criminal records and redefining policies and requirements to lower some of the barriers to employment that ex-offenders face,” he said.
“Companies recognize that hiring from this population is the right thing to do, but it’s also good business,” said Richard Bronson, the founder and CEO of 70MillionJobs, the first for-profit job board specifically for job seekers with criminal records.
“Companies are motivated by the bottom line, and they recognize that unfilled jobs are costly. Every single company I talk to says they are facing a staffing shortage or they have trouble retaining their workers, particularly at the lower end of the wage scale. Perhaps they would not have been eager to consider this population before, but I think they generally recognize that they can ill afford to ignore any large pool of talent out there, and this is arguably one of the largest. One in three adults have a record of some kind.”
The industries most hospitable to people with criminal records have been call centers, construction, health care, manufacturing, retail, and transportation and warehousing. “The technology sector has been woefully reticent to take action,” Bronson said. “They talk a good game but don’t deliver when it comes to actually hiring.”
Martinez said HR must be cognizant of the challenges involved with screening the ex-offender population, such as a longer turnaround time to ensure a complete assessment.
“Companies should continue to perform thorough background checks and conduct individualized assessments of candidates with criminal history, per EEOC guidance,” he said. “It would also benefit companies to review their hiring requirements to determine the types and depth of screening that is necessary for each job position. This can reduce the volume of acceptable hires that are unnecessarily flagged for additional review for reasons that are not related to the role’s responsibilities.”
What a year it’s been in legalizing cannabis—from conservative states legalizing medical marijuana—to city ordinances imposing cannabis requirements. Changes in Cannabis laws are definitely creating a buzz for SF and Utah employers.
Background Checks SF. San Francisco, known for its forward progress in the cannabis space, has done it again. Effective October 1, 2018, employers are prohibited from “inquiring about, requiring disclosure of, or basing employment decisions on convictions for decriminalized behavior, including the non-commercial use and cultivation of cannabis.” The ordinance restricts employers from asking questions about pot convictions and, instead, authorizes the City to impose penalties on employers who violate the ordinance. Some of the penalties include a private right of action for the victim and monetary payment.
Notably, in conformance with California’s Fair Chance Employment Act, the ordinance does allow employers to ask about convictions after a conditional offer of employment has been made. Under the Act, employers can deny an applicant a position of employment because of the conviction, but the employer must make an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job which justify denying the applicant the position. In making the assessment, the employer must consider the nature and gravity of the offense or conduct; the time since the offense; and the nature of the job held or sought. For more information on what else an employer is required to do when contemplating denying employment to an applicant, contact your favorite Seyfarth cannabis attorney.
Could Utah’s cannabis legalization be up in smoke? As previously reported, Utah legalized medical marijuana this midterm through Proposition 2. Proposition 2 failed to include important provisions in its initiative, including what rights employers would have.
However, Utah’s House of Representatives held a special legislative session whereby lawmakers changed Proposition 2 and adopted more restrictive provisions in what is being called the medical cannabis compromise. These restrictive provisions include employer protections. For example, a draft of the medical cannabis compromise states that an employee may not “be under the influence of a controlled substance or alcohol during work hours” nor can the employee “refuse to submit to a drug or alcohol test.” (Section 67-19-33).
The compromise also states that employees cannot manufacture, dispense, possess, use, or distribute a controlled substance if: (1) the activity prevents state agencies from receiving federal grants or performing under federal contracts of $25,000 or more; or (2) the activity prevents the employee from performing his “services or work for state government effectively as regulated by the rules of the executive director.”
Although Utah lawmakers tried to clear the haze left by Proposition 2, a pair of advocacy groups have since filed a lawsuit to block the medical cannabis compromise. The groups argue that the compromise is unconstitutional and interferes with what the voters enacted. The group asked the Utah Supreme Court to allow a referendum on the legislature’s action and allow them to go before voters to challenge the medical cannabis compromise. Alternatively, they seek to overturn the compromise and instead, keep Proposition 2 as the law.
While this lawsuit may be a long shot because the legislature has the legal authority to modify or replace ballot initiatives, you’ll want to stay tuned for further updates as this story develops.
And if you’d like to get a preview of what 2019 may have in store for California and cannabis, check out “Pot-Protective Employment Laws Loom in 2019” in the Los Angeles Lawyer magazine.
The Fair Credit Reporting Act (“FCRA”) provides federally-imposed limitations on all employers who seek information from a Consumer Reporting Agency about an applicant or employee for use in making an employment decision, such as a hiring or promotion. The FCRA contains specific notice, authorization, and reporting requirements related to obtaining a Consumer Report, including credit reports and criminal background checks, and potentially taking an adverse employment action based on that information.
Requirements before you request a Consumer Report:
- You must provide a stand-alone notice to an applicant or employee about whom you (1) intend to get a Consumer Report; and (2) may use the Consumer Report information to make an employment decision.
- The notice should not be part of (or included on) the job application or any other document.
- The notice must be signed by the applicant or employee before you request the Consumer Report.
- You must obtain an authorization from an applicant or employee that authorizes you and your agents to obtain a Consumer Report.
- Although technically the authorization language can be included as part of the notice form, given the potential to include language that a court may deem inappropriate for the notice, we recommend that you provide a stand-alone authorization form.
- The authorization must be signed by the applicant or employee before you request the Consumer Report.
Requirements before you take an adverse employment action based on a Consumer Report:
- Pre-Adverse Action Notice
- You must provide the applicant or employee with a pre-adverse action notice, which contains:
- Notice that the employer is contemplating taking an adverse action;
- A copy of the Consumer Report; and
- A copy of “A Summary of Your Rights Under the Fair Credit Reporting Act,” which can be found here.
- On September 21, 2018, this “Summary” was updated to alert the applicant or employee of their right to place a “security freeze” on their Consumer Report, which would prohibit a Consumer Reporting Agency from releasing information in a frozen Consumer Report without express authorization.
- IMMEDIATE ACTION: Employers should ensure that they are using only the current, updated version of the Summary.
- You must provide the applicant or employee with a pre-adverse action notice, which contains:
- Pre-Adverse Action Waiting Period
- You must provide the applicant or employee with a reasonable period of time to respond to the pre-adverse action notice. We recommend that you wait at least five business days.
- During this time, you should not fill the open job position or take other action that would constitute an adverse employment action.
- If you receive additional information from the applicant or employee, you must consider it, but you are not required to change the decision you made prior to sending out the pre-adverse action notice.
After you take an adverse action based on a Consumer Report:
- Adverse Action Notice
- You must provide the applicant or employee written notice of the actual adverse employment action, which includes:
- The name, address, and telephone number of the Consumer Reporting Agency that provided the Consumer Report;
- A statement that the Consumer Reporting Agency did not make the adverse employment decision and cannot give specific reasons for it; and
- Notice of the applicant or employee’s right to dispute the accuracy or completeness of the information the Consumer Reporting Agency provided, and the applicant or employee’s right, upon request, to get a free copy of the report from the Consumer Reporting Agency within 60 days.
- You must provide the applicant or employee written notice of the actual adverse employment action, which includes:
- Up to $1,000 per discrete violation, plus punitive damages and attorneys’ fees.
- Significant exposure can result from the filing of class action claims.
- For example, if a noncompliant notice form is used for 100 applicants, the employer may be exposed to liability of at least $100,000 in a class action lawsuit.
- The FCRA does not include a liability cap.
Employers should also be aware of state and local restrictions that impact employer background checks, which may include greater protections for the applicant or employee, as well as “ban-the-box”-type requirements that impact when and how the employer can request information related to an applicant’s criminal background.
Written By: Jill L. Rosenberg, Joe Liburt and Jessica R. L. James
Employers across the country should dust off their background check policies and forms and be mindful of recent developments related to the federal Fair Credit Reporting Act (FCRA).
FCRA mandates specific, technical steps for employers using consumer reports to make employment decisions, including hiring, retention, promotion or reassignment. While many employers are familiar with the importance of following FCRA requirements, actual compliance with the law can be tedious and challenging. As the law continues to evolve, employers should be aware of recent updates to the model federal form for consumer rights and recent guidance from a California federal court related to the “stand-alone” disclosure and authorization requirement.
Updated “Summary of Your Rights under the Fair Credit Reporting Act”
Those familiar with the background check process understand that FCRA requires employers to disclose to candidates that consumer reports may be used for employment decisions and to obtain authorization in order to obtain such reports. If the employer relies on information from a consumer report to take an adverse employment action, the employer must provide the candidate with a copy of the report and a copy of his or her FCRA rights before taking such action.
The Consumer Financial Protection Bureau (CFBP) just released a new standard form “Summary of Your Rights Under the Fair Credit Reporting Act” that must be used starting September 21, 2018. This revised form includes new language to notify consumers of their rights regarding security freezes, as mandated by the Economic Growth, Regulatory Relief, and Consumer Protection Act, passed in May 2018. Specifically, where a consumer initiates a security freeze, a consumer reporting agency may not release information in a credit report without the consumer’s express authorization. The security freeze is further designed to prevent potential lenders from providing access the consumer’s credit report or opening accounts in the consumer’s name. A copy of the updated form is available here, and employers should incorporate this form into practice immediately.
Recent Guidance on FRCA “Stand Alone” Disclosure Requirement
FCRA continues to spawn a number of class action complaints against employers for allegedly failing to comply with the law’s hyper-technical disclosure and consent requirements before conducting background checks or proceeding with “adverse actions.”
Just recently, the Central District of California issued summary judgment in an employer’s favor on the issue of how conspicuous the FCRA notice must be in order to obtain proper consent. In Luna v. Hansen & Adkins Auto Transp., Inc., 313 F. Supp. 3d 1151 (C.D. Cal. 2018), a job applicant brought a putative FCRA class action on behalf of 3,0000 applicants, alleging that the employer failed to provide a “clear and conspicuous” disclosure to satisfy FCRA’s requirement that notice be provided as a stand-alone document. Specifically, the plaintiff argued that the employer violated FCRA (1) by providing the disclosure as part of an application package containing six other documents, and (2) because the consent form was “buried” at the back of the application packet. The Court disagreed on both arguments, concluding that while the disclosure must be provided separately, nothing in the statute requires it be provided “separate in time from any other documents” and there are no specific “requirements about the form in which the authorization must be presented[.]”
Although appeal to the Ninth Circuit is likely, this ruling provides useful guidance for employers that conduct background checks or otherwise rely on consumer reports in making employment decisions.