but we only just met: the dos and don’ts of pre-employment...

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But We Only Just Met: The Dos and Don’ts of Pre-Employment Screening

• To listen to the audio portion of the webinar, please dial 1-800-536-9136, access code 7205203.

• The New York event code will be announced during the webinar.

• To submit a question during the webinar, please type it into the “Chat” window on your screen. It will be seen only by the presenters.

• Materials and the sign-in were enclosed in the program reminder email.

• A full replay of this webinar will be available on dorsey.com later today.

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But We Only Just Met: The Dos and Don’ts of Pre-Employment Screening

March 28, 2012

Sarabeth Ackerman, Esq.

Courtney J. DaCosta, Esq.

Jillian Kornblatt, Esq.

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Goals of Today’s Webinar

• Briefly review basic dos and don’ts under federal and state law with respect to credit checks, criminal history checks, drug testing, and other common screening mechanisms

• Explore recent case law, administrative guidance, and trends to bear in mind when screening applicants

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Background Checks: Pros and Cons

• Why use background checks?– Legal requirement for certain jobs (for MN, see

http://www.house.leg.state.mn.us/hrd/pubs/bkgdchck.pdf) – Safety of workforce, customers, assets, and business

partners– Reduced risk of negligent hiring claims

• Why not use background checks?– Expense– Delay – Risk of liability– State law requirements

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Credit History / Consumer Reports

• Potential for discrimination– Disparate Impact– EEOC’s position: Employers should not conduct

applicant credit checks unless doing so is essential for the employer to operate safely or efficiently

• Consider alternatives to credit checks: Are there other practices for preventing and deterring theft and fraud in the workplace?

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Credit History / Consumer Reports

• Who conducts credit background checks?– All candidates: 13 percent of employers– Selected candidates: 47 percent of employers– No candidates: 40 percent of employers

• On which candidates are credit background checks most commonly conducted?– Positions with fiduciary/financial responsibility– Senior executive positions– Positions with access to highly confidential

employee informationSource: 2010 SHRM Survey (available at www.shrm.org)

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Credit History / Consumer Reports: Statutory Requirements

Fair Credit Reporting Act– Imposes complex requirements on employers

before conducting a credit check, after receipt of the report, and in making an adverse employment decision based on the report

– Where information in a consumer report is at all a factor in an employer’s adverse action decision—even if the report information is not a major consideration or necessarily considered negative information—the employer must follow FCRA procedures

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Bankruptcy Protections

• Prohibit private employers from terminating an employee or taking other adverse employment action, including decision not to hire, based solely on an individual’s: 1. status as a debtor under the federal Bankruptcy Act;2. declaration of bankruptcy; or 3. association with a person who has been declared

bankrupt. See 11 U.S.C. § 525; see also Comeaux v. Brown & Williamson Tobacco Co., 915 F. 2d 1264, 1269 (9th Cir. 1990).

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State Laws Restricting Use of Credit Information in Hiring Process– Seven states currently place significant restrictions on

employer use of credit information such as• Requirements that credit check be “substantially

related” to the job duties of the position being considered, or

• Limitations on categories of positions for which applicant or employee credit checks are permissible

– California, Connecticut, Hawaii, Illinois, Maryland, Oregon, and Washington

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Pending Legislation

• State – Similarly restrictive laws pending in other states

• Federal – H.R. 321, Equal Employment for All Act (introduced Jan.

19, 2011)– Would amend the FCRA to prohibit employer use of

credit checks outside of specific circumstances– 34 cosponsors, referred to House Committee on

Financial Services

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Criminal History Reports

How many people are we talking about?

• 2008 DOJ report: 92 million U.S. adults have criminal records (including arrests and convictions)

• 2011 NELP report: discounts 92 million figure to 65 million to account for individuals with criminal records in multiple jurisdictions

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• Who conducts criminal history checks?– All candidates: 73 percent of employers– Selected candidates: 19 percent of employers– No candidates: 7 percent of employers

• On which candidates are criminal history checks most commonly conducted?– Positions with fiduciary/financial responsibility– Positions with access to highly confidential

employee information– Positions of financial trust/access to property

Source: 2010 SHRM Survey (available at www.shrm.org)

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• Race – 69% white– 28% black– 3% other

• Gender– 75% male– 25% female

• Age: – 14% under 18– 29% 18-24– 33% 25-39– 15% 40-49– 8% 50 and older

• Source: FBI Uniform Crime Report, 2009 (based on arrests)

Who are we talking about?

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Criminal History Reports:Discrimination Concerns

• Employers may not exclude all applicants with criminal convictions, unless1. Direct relationship between prior criminal offense(s) and

specific position sought; or2. Position implicates risk to property or to safety or welfare of

specific individuals or the general public• See Bolden v. City of New York, 2005 WL 2759843, at *2 (2d Cir.

Oct. 26, 2005) • In all other situations, employers are required to

make individual determinations• State Laws

• See, e.g., N.Y. Correct. Law § 753

• Pepsi Settlement

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Pre-Employment Background Checks:Practical Guidance

• Conduct background checks only when there is a sound business reason to do so

• Develop – and adhere to – procedures for the use of background results

• Conduct background check only after preliminary hiring decision has been made based on other considerations (experience, education, etc.)

• Ensure that background checks are conducted for all similarly situated applicants in the recruiting process

• Share background check results on a limited basis

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Pre-Employment Background Checks:Practical Guidance

• Consider the context for information revealed by the background check

• Give candidates an opportunity to respond to negative information revealed by the check

• Revisit the business purpose for excluding a candidate based on negative information

• Document the decision-making process

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Pre-Employment Background Checks: Retaliation Concerns

• Dellinger v. Science Applications Int’l Corp., 649 F.3d 226 (4th Cir. 2011)

• Anti-retaliation provision of the Fair Labor Standards Act does not apply to an unsuccessful applicant for employment

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Background Checks in Social Media: One More Thing, Give Us Your Passwords

• Employer requests for applicants’ and employees’ social media passwords – Pending state and federal legislation

– DOJ’s position

– Facebook’s position

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Background Checks In Social Media: New Technology, Same Rules

• 2011 – FTC States that FCRA applies to Consumer Reporting Agencies’ Social Media Background Checks

1) Revise FCRA notice and authorization to encompass social media searches 2) Provide applicants rejected based on information found in social media searches with the FCRA Summary of Rights and an opportunity to dispute the apparently adverse information 3) Upon rejecting the applicant, send a final adverse action notice to the applicant containing the language required by the FCRA

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Background Checks In Social Media: Guidance for In-House Checks

• Prohibit employees, other than the designated HR professional, from conducting any background checks in social media on current or prospective employees

• Determine criteria upon which employment decisions will be made before conducting social media search

• Inform the job applicant/employee that you will be doing the search

• Conduct social media check only after conditional offer is made

• Maintain documentation of what was searched and findings

• Share search results with the candidate/employee if a negative determination is made

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Pre-Employment Testing: Medical Inquiries

• ADA Basics (see 42 U.S.C. § 12112(d))– Before conditional offer: disability/medical

inquiries strictly prohibited– After conditional offer: disability/medical inquiries

OK, if conducted uniformly– During employment: disability/medical inquiries

OK, if “job related and consistent with business necessity”

• Issue: What constitutes a disability-related inquiry or medical examination?

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Pre-Employment Testing: Drug Testing

• Drug and alcohol testing under the ADA– ADA explicitly permits drug testing, even before a

conditional offer (42 U.S.C. § 12114)– Alcohol testing is considered a medical inquiry

and is subject to the three-stage framework

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Minnesota Drug and Alcohol Testing in the Workplace Act (Minn. Stat. § 181.950, et seq.)

• Drug/alcohol test permitted if contingent offer made and same test required of all conditional offerees in same position

• Employer must have a written drug and/or alcohol testing policy that contains certain minimum information– Applicant must receive and acknowledge policy

• Testing must be done by a laboratory allowed by statute

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ADA and drug testing in the courts• Manner of test may require reasonable

accommodation (EEOC v. G2 Secure Staff, LLC, No. 5:11-cv-475 (E.D.N.C. 2011))

• Test results may require individualized assessment of potential disability (EEOC v. United Insurance Co., No. 5:11-cv-430 (E.D.N.C. 2011))

• Non-disabled applicants may sue for unlawful disability-related inquiries (Harrison v. Benchmark Electrics, 593 F.3d 1206 (11th Cir. 2010)

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Psychological and Personality Testing: Screening Applicants

• ADA/MHRA concerns– Disability includes mental impairments– Psychological/personality testing potentially

subject to ADA framework for medical examinations

• EEOC 1995 Enforcement Guidance– Psychological examinations are “medical if they

provide evidence that would lead to identifying a mental disorder or impairment (for example, those listed in the American Psychiatric Association’s most recent Diagnostic and Statistical Manual of Mental Disorders (DSM))”

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Psychological and Personality Testing: Post-Offer Testing

• Restrictions on use of psychological/personality testing that constitutes a medical examination:– All entering employees subjected to examination

regardless of disability;– Results treated as confidential medical records;

and– Results used in accordance with the ADA

• Do not use test results to discriminate against persons with disabilities or persons regarded as disabled

• Ensure testing does not have disparate impact on disabled applicants (or applicants belonging to other protected groups)

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Minimum Educational Requirements

• Another potential basis for disparate-impact liability under Title VII and state analogs (see Griggs v. Duke Power Co., 471 U.S. 424 (1971))

• ADA requirements:– Job-related and consistent with business

necessity and– Case-by-case assessment of potential reasonable

accommodation

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Minimum Educational Requirements

• EEOC recently addressed legality of high-school diploma requirements under ADA:– November 2011 “informal discussion letter” from

Office of Legal Counsel (http://www.eeoc.gov/eeoc/foia/letters/2011/ada_qualification_standards.html)

– March 2011 Q&A (http://www.eeoc.gov/eeoc/newsroom/wysk/high_school_ada.cfm)

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Outsourcing Pre-Employment Background Checks

• An employer may delegate the task of conducting pre-employment background checks, and the liability for performing them negligently, to an independent contractor.

• See, e.g., Sandra M. v. St. Luke's Roosevelt Hosp. Ctr., 33 A.D.3d 875, 880 (N.Y. App. Div. 2006); Gaeke v. Primus Automotive Fin. Svcs., Inc., 2002 WL 32133028 (W.D. Tex. 2002)

• Delegation is not without limits:– An employer may still be found liable if it

negligently chose the agency that provided the worker and/or conducted background check.

• See Sandra, 33 A.D.3d at 881

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Third-Party Background Checks: Practical Guidance

• Make a well considered choice of a background check provider

• Make clear through a binding contract that the provider is obligated to conduct the background checks

• Set forth specific procedures for conducting checks and communicating their results

• Ensure contract governs what happens if negative information is uncovered

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Third-Party Background Checks: Practical Guidance

• Do not allow for discretion in information sharing

• Include an indemnification/hold-harmless provision for liability resulting from improperly conducted checks and improperly conveyed information

• Ensure that contract procedures are consistently followed

• Act on negative information revealed in a candidate’s background check

• Review training and safeguards to ensure they guard against theft of personal information

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Thank You!

• Questions?– Sarabeth Ackerman:

[email protected]– Courtney DaCosta:

[email protected] – Jillian Kornblatt:

[email protected]

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