achievement talk

New EEOC Guidance on Use of Criminal Records in Employment Screening

On April 25^th, the EEOC issued new guidance concerning the use of criminal records in the employment screening process.  Mostly, the EEOC simply revised and clarified the existing guidance; however, they also now require employers to take some additional steps when evaluating arrest and conviction records. 

The reason for the new guidance stems from the EEOC’s position that many employers’ evaluation policies could be considered discriminatory under Title VII by virtue of disparate impact”.  Unlike “disparate treatment”, which is intentional discrimination of a protected class, disparate impact occurs when an employer’s seemingly neutral policy not only has no business necessity, but also adversely affects a protected class. 

One of the most prevalent examples occurs when an employer has a policy of not hiring any applicants with felony convictions.  Because certain minority groups are arrested and convicted at rates disproportionate to their numbers in the general population, this type of policy can be seen as having a disparate impact, unless the employer can prove that the policy is job-related and justified by business necessity.

The existing guidance required employers to consider the following factors (called the three Green factors) when evaluating criminal records:

• Nature of the offense
• Time elapsed since the offense occurred
• Nature of the job (level of supervision, interaction with co-workers or the public, whether working with vulnerable populations, etc.)

In addition, the employer was to consider the reasonable likelihood that the individual actually engaged in the conduct alleged.  The EEOC has explicitly stated that “the fact of an arrest does not establish that criminal conduct has occurred.  However, an employer may make an employment decision based on the conduct underlying the arrest if the conduct makes the individual unfit for the position in question.  The conduct, not the arrest, is relevant for employment purposes.”

As for convictions, the EEOC does grant that “a conviction will usually serve as sufficient evidence that a person engaged in particular conduct.”  However, they recommend that employers ask about convictions not on the job application, but rather further along in the hiring process and that the inquiry be limited to those convictions for which exclusions would be job-related and consistent with business necessity.

Whether an individual’s conduct is job-related and consistent with business necessity brings us to the new guidance that was just issued.  The EEOC now requires employers to prove those factors in one of two ways.  The first is basically for the employer to complete a validation study, which would likely be very time-consuming and expensive.  The other option, which most employers will have to adhere to, is to develop a “targeted screen” (decision matrix) that not only includes the three Green factors and the likelihood that the individual actually engaged in the conduct alleged, but also an “individualized assessment” which would allow the individual an opportunity to demonstrate that the exclusion should not be applied to them (by providing details regarding the conduct in question); and consideration by the employer as to whether the additional information warrants an exception. 

The EEOC suggests that an individualized assessment might include employer consideration of the following types of information:

• Whether the criminal record information is accurate [this is already covered
  under the pre-adverse notice requirements of the FCRA];
• The facts or circumstances surrounding the offense or conduct;
• The number of offenses for which the individual was convicted;
• Older age at the time of conviction, or release from prison;
• Evidence that the individual performed the same type of work, post conviction, with the same or a different employer, with no known incidents of criminal conduct;
• The length and consistency of employment history before and after the offense or conduct;
• Rehabilitation efforts, e.g., education/training;
• Employment or character references and any other information regarding fitness for the particular position; and
• Whether the individual is bonded under a federal, state, or local bonding program.

The EEOC does allow that an individual assessment may not be necessary in all situations (one can assume that an individual who has been convicted of a sex crime will not be eligible for a position working with children), but, if used, it will help employers avoid Title VII liability.  They caution that a screen based on the Green factors only “would need to be narrowly tailored to identify criminal conduct with a demonstrably tight nexus to the position in question.”

The EEOC doesn’t specify how the individual assessment must be conducted, but one possible method of implementation is to include the request for additional information in the pre-adverse action notice that is required under the federal Fair Credit Rreporting Act (FCRA).  Employers may want to solicit additional details regarding the conduct in question, and allow the individual the opportunity to explain how the conduct should not exclude him from the position in question. 

As always, you should consult with in-counsel or an outside employment attorney to create or revise your screening policies.  The EEOC has provided the following best practices for employers who are considering criminal record information when making employment decisions:

 

General

• Eliminate policies or practices that exclude people from employment based on any criminal record.
• Train managers, hiring officials, and decision makers about Title VII and its prohibition on employment discrimination.

 

Developing a Policy

• Develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct.

* Identify essential job requirements and the actual circumstances under which the jobs are performed.

* Determine the specific offenses that may demonstrate unfitness for performing such jobs.

- Identify the criminal offenses based on all available evidence.

* Determine the duration of exclusions for criminal conduct based on all available evidence.

- Include an individualized assessment.

* Record the justification for the policy and procedures.

* Note and keep a record of consultations and research considered in crafting the policy and procedures.

• Train managers, hiring officials, and decision makers on how to implement the policy and procedures consistent with Title VII.

 

Questions about Criminal Records

• When asking questions about criminal records, limit inquiries to records for which exclusion would be job related for the position in question and consistent with business necessity.

 

Confidentiality

• Keep information about applicants’ and employees’ criminal records confidential. Only use it for the purpose for which it was intended.

 

Read the new guidance here.

Read Q&A about the new guidance here.

As always, please contact us if you have any questions about the new guidance.

CA Limits Use of Credit in Employment Screening

Over the weekend, California Governor Jerry Brown signed Assembly Bill 22 which limits the use of credit reports in the pre-employment screening process. The new law takes effect on Jan 1, 2012. California joins six other states that have passed similar legislation, although all of these laws do contain specific exceptions depending on the type of position or industry.

The new law amends both the CA Labor Code as well as CA Civil Code. An brief summary of the changes are below.

Labor Code Section 1024.5

This new section of the Labor Code limits when private and public sector employers, except for financial institutions, can use consumer credit reports in connection with hiring and personnel decisions. However, employers may still consider credit reports if the individual is applying for (or works in) the following positions:

• a managerial position (defined below);
• employees of the State Department of Justice;
• peace/law enforcement officers;
• a position for which credit history information is required by law;
• a position that affords regular access to bank or credit card account information, Social Security numbers, or dates of birth, provided, however, that the access to this information does not merely involve routine solicitation and processing of credit card applications in a retail establishment;
• a position where the individual is or will be a named signatory on the bank or credit card account of the employer and/or authorized to transfer money or authorized to enter into financial contracts on the employer's behalf;
• a position that allows access to confidential or proprietary information; or
• a position that allows regular access during the workday to the employer's, a customer's or a client's cash totaling at least $10,000.

As defined by CA law, a management position is defined as one with all of the following characteristics:

1. duties involve managing the business or department thereof;
2. directing the work of at least two people;
3. having authority to hire/fire or has real input on these decisions;
4. uses discretion and independent judgment in performing the job;
5. primarily performs exempt work under the Fair Labor Standards Act;
6. earns twice the California minimum wage for full time employees which would equate, at this time, to $2,733.33 per month or $33,278.00 per year to be a management employee.

Amended Civil Code Section 1785.20.5

This amended Civil Code section requires employers to notify the individual in writing the permissible purpose under Labor Code section 1024.5 that a credit report is being ordered.

Recommended Actions

Employers that hire in California, as well as Hawaii, Washington, Oregon, Illinois, Maryland and Connecticut, should review their policies to ensure they are in compliance with the new laws regarding credit reports.  In addition, CA employers should make sure that their disclosure forms address the new requirement regarding written notification of permissible purpose for ordering credit reports.  If you use Achievement Tec forms for employment screening, we will provide an updated form before the new law goes into effect on January 1, 2012.

The full text of bill AB22 is located here.

Social Security Administration Goes Random

Effective June 25, 2011, the Social Security Administration is radically changing the way it assigns social security numbers.  Until now, the first 3 digits of an SSN, called the area number, signified the geographical location where the number was assigned.  In addition, the middle two numbers could be used to determine when the number was issued, using the SSA’s High Group List. 

After this Saturday, the SSA will assign new SSNs completely at random.  There will be absolutely no significance at all to the first 5 digits of the SSN.  The High Group List will be "frozen in time" and will only apply to those SSNs issued before 6/25/2011.

In addition, the new process will introduce previously unassigned area numbers (excluding area numbers 000, 666 and 900-999).

The SSA believes this will help "protect the integrity of the SSN" (read: will hopefully cut down on identity theft and misuse of SSNs) as well as extend the longevity of the 9 digit SSN by expanding the available pool of numbers in every state.

For more information about the new randomization, visit the SSA randomization page.

Although the High Group List method of validating SSNs is a valuable tool for employers, there are still other options for those that want to make sure that applicants and employees have a legitimate SSN.  The SSN outlines these options in their FAQ on this page.  The options are:

• The Social Security Number Verification Service (SSNVS) is available to employers, but it can only be used to verify current or former employees and only for wage reporting (Form W-2) purposes - this method is not allowed for employment screening purposes.
• The eVerify service from Dept of Homeland Security will query both DHS and SSA databases to make sure that newly hired employees are eligible to work in the U.S.  Be aware that this is a post-hire search only.  (For employers who are interested in this service, it is available from DHS or we offer it here at Achievement Tec as part of your screening process.)
• The last option is called Consent Based Social Security Number Verification Service (CBSV).  This service can be used pre-hire to verify an applicant's SSN, but the SSA charges a hefty $5,000 enrollment fee, plus a per-search fee for each SSN verified.

Don't hesitate to contact us if you have any questions about the new SSN Randomization program.

Family Sues Bus Company for Negligent Hiring

The family of a 26-year old woman fatally struck by a tour bus has filed suit In Cook County, IL, against the bus company for negligent hiring.  The family of Justyna Palka claims that Pontarelli Group Charters negligently hired and retained driver David Soto, despite the fact that Soto is a convicted felon who had 20 citations for traffic violations and whose Commercial Drivers License was temporarily suspended in 2008.  In addition, the suit claims that a proper background check would have revealed that Soto has also been charged with predatory criminal sexual assault of a child and aggravated criminal sexual abuse of a victim under 13.

The family’s attorney, Thomas Demetrio, said in a written statement: “Pontarelli’s utter failure to ensure that its professional drivers were appropriately qualified resulted in a truly unnecessary loss of life.  This lawsuit will expose the flaws in Pontarelli’s hiring and retention practices.”

Read the full article here.

MD 5th State to Limit Credit Reports in Screening

Joining Hawaii, Illinois, Oregon, and Washington, Maryland has become the fifth state to substantially limit the use of credit reports as a pre-employment screening tool.  The legislation, called the Job Applicant Fairness Act, was signed in April, and will take effect on October 1, 2011.

In general, it states that an employer may not use credit history in determining whether to (1) deny employment, (2) discharge an employee, or (3) determine compensation or the terms, conditions or privileges of employment. 

However, there are always exceptions to every rule.  Employers may use credit if the reason for doing so is “substantially job-related”, such as:

• Certain managerial positions
• Positions that involve access to confidential personal or business information
• Positions that involve a fiduciary responsibility to the employer
• Positions that have an expense account or company credit or debit card

In addition, the Act also doesn’t apply to some employers, including those that are mandated by state or federal law to check credit history, as well as certain financial institutions.

For additional information, read the full text of the Act here.

Credit Reports & Pre-Employment Screening: Avoid the Legal Traps

There has been much discussion lately about the use of credit reports as an employment screening tool. The practice has come under fire from the EEOC, as well as U.S. and state legislators.

During the 2010 legislative session, 18 states introduced bills regarding the use of credit reports for employment purposes.  In addition, 39 bills in 20 states are pending in the 2011 legislative session.  This issue has clearly become a very hot topic.  To date, four states have successfully passed legislation restricting the use of credit information: Washington (2007), Hawaii (2009), Illinois (2010), and Oregon (2010). 

Individual states aren't the only ones targeting employment credit reports - the EEOC has become a vocal critic on the issue as part of their eRace initiative, which stands for "Eradicating Racism And Colorism from Employment".  One of the eRace goals identified by the EEOC is to "develop new and updated materials on issues relating to race and color discrimination such as credit-based discrimination".  The EEOC strongly believes that employers’ use of credit history is discriminatory because it has a “disparate impact” on African Americans, Hispanics, and the disabled. 

In 2009, the EEOC filed its first lawsuit related to the use of credit in employment decisions (EEOC v. Freeman Cos.).  Most recently, the EEOC held a hearing in October 2010, called "Employer Use of Credit History as a Screening Tool", to explore the issue further. 

U.S. legislators have also introduced a bill in January to amend the Fair Credit Reporting Act (FCRA), the federal law that governs the use of credit information in employment decisions.  Called the Equal Employment for All Act, this nationwide bill proposes to amend the FCRA to "prohibit the use of consumer credit checks against prospective and current employees for the purposes of making adverse employment decisions."  So far, the bill is in committee, which is the first step in the process.

So, what should employers do?

Avoid having a blanket policy of running credit reports for all positions.  Employers should carefully select which positions truly require credit information in the screening process.  In addition, be able to justify your reasoning by showing that the credit report is a business necessity that is directly related to the functions of the job.  For example, an employer may be justified in ordering a pre-employment credit report when hiring an individual for a position who has access to large amounts of cash or negotiables, or for a position that allows access to personal, confidential and financial information.  Pulling an employment credit report for a potential CFO candidate makes sense, while pulling one for a receptionist candidate most likely does not.

In addition, employers in Washington, Hawaii, Illinois and Oregon are strongly advised to review the laws in their state to make sure their employment screening policies are compliant.