Two recent developments related to litigation and background screening. First, a major fast food restaurant chain became the subject of a class action complaint recently, and second, a major business technology and services provider settled a class action complaint, the terms of which are sealed. In both cases, plaintiffs alleged willful violations of the Fair Credit Reporting Act (FCRA) for:
- Failure to provide individuals with a pre-adverse action disclosure containing a copy of their consumer report and a description of their rights under the FCRA as well as the opportunity to dispute the accuracy of the information contained in the consumer report (15 U.S.C. § 1681b(b)(3)); and
- Failure to make the proper disclosure regarding a background check in a stand-alone document, separate from the employment application, and obtain the proper authorization (15 U.S.C. § 1681(b)(2)(A)(i)).
This is not the first suit alleging these violations and it won’t be the last. Employers need to be aware of the requirements under the FCRA to provide job applicants with a disclosure and authorization requesting a background report in a separate document which isn’t muddied by other terms related to employment or releases of liability. Second, job applicants must be afforded the opportunity to review the background report if an employer will use information contained therein adversely in case the information is incorrect. This is part of the pre-adverse action process and it affords the job applicant the right to correct inaccurate or incomplete information with the background screening company that provided the information. It also provides the employer with the opportunity to be made aware of such. Companies who need advice in this area can contact us here at Arnall Golden Gregory LLP.
To read the complaints in their entirety, see: Anya McPherson v. Cannon Business Solutions, Inc., 1:12-cv-07761 (D.N.J., Sep. 16, 2014) and Sheryl Hornsby v. McDonald’s USA, LLC et al, 8:14-cv-02288 (M.D. Fla., Sep. 12, 2014).
Plaintiffs’ counsel have targeted a wide range of employment and tenant screening firms’ operations practices in recent litigation, alleging violations of state and federal requirements for user onboarding, report accuracy, file disclosures, data obsolescence, and data privacy requirements. Meanwhile, Federal Trade Commission enforcement actions and amicus briefs reveal important clues to agency thinking on obsolescence, privacy, and other requirements.
To stay ahead of the curve, how do smart CRAs and Resellers learn from these developments in reviewing their operations practices?
Join me and Jay Harris, Senior Director, National Background Data, for a complimentary webinar to learn more this Wednesday, September 10th at 1 p.m. EST. Click here and then click on Webinars to register.
The Federal Trade Commission (FTC) will host a public workshop entitled “Big Data: A Tool for Inclusion or Exclusion?” in Washington, D.C. on September 15, 2014, to further explore the use of “big data” and its impact on American consumers, including low income and underserved consumers. This is one in a series of workshops the FTC has held this year.
I will be a speaker on Panel 3: Surveying the Legal Landscape. Our panel will review various antidiscrimination and consumer protection laws and discuss how they may apply to the use of big data, and whether there may be gaps in the law. Other panels will consider the current environment and uses of big data and how these uses impact consumers, benefits and harms of the uses of big data on particular populations of consumers, and best practices for the use of big data to protect consumers. The FTC’s goal with this workshop is to address the following issues:
- “How are organizations using big data to categorize consumers?
- What benefits do consumers gain from these practices? Do these practices raise consumer protection concerns?
- What benefits do organizations gain from these practices? What are the social and economic impacts, both positive and negative, from the use of big data to categorize consumers?
- How do existing laws apply to such practices? Are there gaps in the legal framework?
- Are companies appropriately assessing the impact of big data practices on low income and underserved populations? Should additional measures be considered?”
The workshop is free and the day is filled with interesting panels. Chick here to view the agenda.
If you prepare Forms I-9 for your company, note that U.S. Citizenship and Immigration Services (USCIS) has switched the color of ink it uses to stamp certain documents that could be used for I-9 purposes from red to blue ink. This would be relevant, for instance, in a scenario where you have a high population of new hires that are refugees and they provide you with a refugee document. Just because the color of the ink has changed, doesn’t necessarily mean that the document is not valid. Therefore, moving forward you may see government documents with stamps in blue, red and black.
See below from a Customs and Border Protection post:
“As of July 1, 2014, U. S. Citizenship and Immigration Services (USCIS) began using a new secure blue ink for many of its secure stamps. The older secure red ink will be retired and no longer used by USCIS on the effective date.
USCIS stamps with secure blue ink:
- Department of Homeland Security (DHS) Parole Stamp
- Temporary I-551 Alien Documentary Identification and Telecommunication (ADIT) Stamp
- Refugee Stamp (Section 207)
- Asylum Stamp (Section 208)
- Initial / Replacement I-94 Stamp
USCIS will continue to use regular black ink on the following stamps:
- Approval Stamp (Applications Received)
- Denial Stamp (Applications Received)
- Director’s Signature Stamp (Certificates of Naturalization, Certificates of Citizenship)
- Other USCIS similar documents”
Roy Maurer from the Society for Human Resources (SHRM) has written a good article entitled Ban-the-Box Movement Goes Viral which describes Ban the Box measures nationwide. These measures impact private and public employers during the recruitment and hiring process and therefore must be considered as a part of a company’s overall hiring policies and procedures. Read the article by clicking here.
New Jersey is the latest state to enact a ban the box measure applicable to employers. Meaning, employers cannot ask about a job applicant’s criminal history on the initial job application.
Governor Chris Christie signed The Opportunity to Compete Act (A1999) on August 11, 2014. This brings to 13 the numbers of states with a statewide ban the box measure in effect which in some way limits employers ability to ask a job applicant about their criminal history on the initial employment application.
Key provisions of the new law are:
- The law applies to an employer with 15 or more employees and prohibits that employer from requiring a job applicant to complete any employment application that inquires about the applicant’s criminal record during the initial employment application process. “Criminal record” includes arrests, detentions, indictments or other formal criminal charges, and any disposition arising from those. (Section 3)
- With certain exceptions for law enforcement or where required by law, an employer cannot publish any advertisement which explicitly provides that the employer will not consider any applicant who has been arrested or convicted of one or more crimes or offenses (Section 5)
- Violations of the law carry civil penalties ranging from $1,000 to $10,000. (Section 9)
- The law is effective March 1, 2015.
The newly enacted law preempts the Newark ordinance on ban the box, effective March 1, 2015. Note that this version of the law is not as onerous to employers as prior versions — click here for a prior posting on this issue.
The trend on passage of ban the box measures will continue at the state level and should therefore be considered holistically by companies as they consider their overall hiring and retention practices with respect to the use of criminal history records. Employers need to consider not only state and local ban the box measures, but also potential applicability of the federal Fair Credit Reporting Act, Title VII of the Civil Rights Act and state consumer protection laws which may limit the use of criminal history records. Also, note that some states and localities, while not specifically calling it a ban the box measure, for all intents and purposes have a ban the box measure spelled out in state guidance. One example is Arizona, where the Office of Arizona Attorney General, Civil Rights Division, provides examples of acceptable pre-employment inquiries on an application form, and while not prohibiting inquiring about prior convictions, states that they must be accompanied by a statement that a conviction will not be an absolute bar to employment. State guidance in Maine, Missouri and Nevada state that inquiries about arrests are unacceptable as they may lead to discrimination.
From a best practice perspective, employers should consider moving the “question” regarding criminal history to further in the hiring process. Remove it from the job application unless there is an absolute need to know about someone’s criminal history such as a situation where an employer wishes to avail themselves of the Work Opportunity Tax Credit, a Federal tax credit available to employers for hiring individuals from certain target groups including certain ex-felons hired within one year after their conviction or release from prison.
On July 29th, U.S. District Judge Andrea Wood ruled that Dollar General must give the Equal Employment Opportunity Commission (EEOC) hiring records from 2004-2008, and explain to the EEOC the “purported business necessity” for performing criminal background checks on job applicants. Dollar General had challenged the EEOC’s requests, arguing that the post-2008 data it had provided to the EEOC was enough, and that any information about the potential business necessity of background checks was an affirmative defense that it should not be forced to disclose. Judge Wood also declined to shift the cost of Dollar General’s production to the EEOC stating, “the general presumption in discovery is that responding parties must bear the expense of complying with discovery requests.” Dollar General claimed that production of pre-2008 information would require it to expend approximately 160 man-hours and $16,000.
The ruling comes as part of ongoing EEOC litigation against Dollar General which started in June 2013. The initial Complaint alleges that Dollar General’s criminal background checks have led to a disparate impact on African-American job applicants during the time period from 2004 to present (previously reported).
EEOC v. Dolgencorp, LLC d/b/a Dollar General, No. 2013-cv-04307 (N.D. Ill. July 29, 2014).
If you are an employer, keep an eye out for executive action by the Obama Administration this summer which will impact your onboarding process and completion of the Form I-9, Employment Eligiblity Verification Form, as well as require you to address how you handle existing employees who may present a valid work authorization document.
With the U.S. Congress in recess for the month of August coupled with the limited congressional calendar, at this time it’s fair to say that comprehensive immigration reform “ain’t happening” this year. By limited congressional calendar I’m referring to the number of actual days in which Congress is in session and during which time they could take up a major legislative effort such as immigration reform. However, Congress’ inaction in this area is leading President Obama to move forward on administrative measures. What does that mean for employers? Look for some type of executive action by President Obama’s administration which would provide some form of legalization for those currently present in the United States unlawfully. Something along the lines of what he did for young immigrants in 2012 who were brought to this country as children and who were unlawfully present. Those individuals were/are eligible for a work permit. That program — Deferred Action for Childhood Arrivals — may be replicated on a larger scale. That means more individuals who are not authorized to work in the United States (at least not lawfully) may see their immigration status legalized.
All of this could mean two things for employers. First, you will have a larger pool of indivudals showing a valid work permit (Employment Authorization Document) when completing the Form I-9. Second, existing employees could come forward seeking to “update” their employment status by presenting a valid work permit. In the latter situation, this means employers will need to reassess how they handle such in light of their policies and procedures and also in light of the company’s honesty policy.
If you are involved in Human Resources at your company, now is a good time to consider how you would handle the latter situation and whether you need a company policy with respect to a situation where an employee presents him/herself to you with possibly a new name and at the very least a valid work authorization document. Bear in mind that perhaps, when they completed the Form I-9, they showed a permanent resident card (List A document) or a driver’s license and Social Security card (List B and List C documents). Now they are presenting a valid work permit issued by U.S. Citizenship and Immigration Services. What would you do? I would recommend you have such a conversation with an attorney and we can assist with such at Arnall Golden Gregory LLP.
Illinois Governor Pat Quinn signed into law the Job Opportunities for Qualified Applicants Act (Public Act 098-0774) on July 21, 2014, which will go into effect January 1, 2015. The law bans criminal history checks in the private sector until after an applicant is deemed qualified for the job or a condition offer of employment is made.
Below are some details about the approved Act:
- An employer is defined as any person or private entity that has 15 or more employees.
- The Act states that “an employer or employment agency may not inquire about or into, consider, or require disclosure of the criminal record or criminal history of an applicant until the applicant has been determined qualified for the position and notified that the applicant has been selected for an interview by the employer or employment agency or, if there is not an interview, until after a conditional offer of employment is made to the applicant by the employer or employment agency”. (Section 15(a))
- The Act does not apply to positions where employers are required to exclude applicants with certain criminal convictions due to federal or State law, a standard fidelity bond or equivalent is required and an applicant’s criminal history would be relevant, or employers employ individuals licensed under the Emergency Medical Services System Act.
- Interestingly, the Act does not prohibit an employer from notifying applicants in writing of the specific offenses that will disqualify an applicant from employment in a particular position due to federal or State law or the employer’s policy. (Section 15(c))
The Department of Justice, Office of the Chief Administrative Hearing Officer (OCAHO) assessed an I-9 related penalty of over $228,000 to a Georgia construction company. This is one of the larger fines I’ve seen issued by Immigration and Customs Enforcement (ICE) for such violations, and it was even below what they originally assessed, which was a fine of nearly $332,000. All this over paperwork violations (i.e., failure to present and/or failure to properly complete) related to the Form I-9, the Employment Eligibility Verification form which all new hires must complete.
- The issuance of the Notice of Inspection (NOI) by ICE was fueled by a damaging media story by the Atlanta Journal Constitution in 2010 in which a group secretly taped a foreman making statements about hiring undocumented workers. ICE issued an NOI requesting Forms I-9 for a three year period as well as employment records, payroll data, wage and hour reports and other information.
- ICE alleged two counts. First that the company failed to ensure that 277 named employees properly completed Section 1 of the Form I-9 and/or failed to ensure that the company properly compelted section 2 of the Form I-9. Second, that the company failed to prepared and/or present Forms I-9 for 87 employees. ICE initially requested a penalty of $332,813.25 with penalties of $981.75 per I-9 violation. OCAHO Administrative Law Judge Thomas issued a final decision and order, finding the company liable for 338 of the violations alleged, but mitigating the total penalty to $650 for each violation in Count I and $750 for each violation in Count II, for a total civil money penality of $228,300. See, United States of America v. M&D Masonry, OCAHO Case No. 13A00023.
- In Judge Thomas’ decision there was a discussion regarding determining the appropriate size of the company for purposes of assessing a civil penalty. But what I found interesting is the fact that the company pre-signed over 100 Forms I-9, which could constitute a false attestation. In her decision, Judge Thomas states, “review of the company’s I-9 forms reflects what appears to be a wholesale execution by means of a rubber stamped signature in section 2 on February 20, 2008 of a large number of what must have been at the time otherwise blank I-9s.” It furthermore appears that many of these forms listed no documents in Section 2 and no start dates. Judge Thomas goes on to say, “It is difficult to avoid the inference that the forms were prepared in bulk in advance and used as needed for subjsequent hiring.” See United States v M&D Masonry, 10 OCHAO no. 1211, p. 12.
As a practitioner in the field, I know that company’s often struggle with issues related to Form I-9 compliance stemming from a variety of reasons. But employers can learn a few lessons from this case.
- Know what those in the field or on-site are doing (specifically those with hiring authority) because their actions can hurt the company. Also, no one other than principals or a designated spokesperson should be authorized to speak with the media. This case was a little different since the individual allegedly secretly taped the foreman, but have a media plan in place so that all media requests are funneled to the appropriate individuals within the company.
- Often times, especially where there is high turnover or high volume hiring, employers try to streamline the I-9 process in different ways. One way may be to pre-populate the employer information section in section 2 of the Form I-9. That can be acceptable depending on how it is done, but it is never acceptable to pre-sign section 2 of the Form I-9.
- Have a Form I-9, properly completed, for each current employee. Civil paperwork penalties for the Form I-9, which range from $110 to $1,000, can quickly add up due to aggravating factors and therefore they are never really $110 per violation.