New Laws for Offshore Background Checks

Through the efforts of concerned politicians and legitimate employment screening companies, the following bill has been introduced to the California Legislature: SB 909 was filed on Wednesday, January 27, 2010.

Basically, this law would require employers who use CRAs that use offshore consumer information to disclose that and get authorization from the consumer that the use of offshore information may be used in the background check process.

CRAs would have to disclose to what countries their info is being offshored, truncate SSNs, have a privacy policy related to offshored data, and be liable for consumer harm that occurs from offshored data.

The full bill is at http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0901-0950/sb_909_bill_20100127_introduced.html

Hold tight in the New Year

Well, the new year is here and the first-of-the-year sales blitzes on everything from deodorant, to eye liner to background checks are again underway!

With the ever renewing crop of salespeople out there, we’ve been hearing some pretty tall tales about competitors’ services, and we’re here to tell you, it’s a new spin on the same old, tired sales pitch.

New! Exciting! Cutting Edge! Exclusive! Look who joined us!

And the verdict?

Stay put, don’t move, unless you legitimately need a change. Companies are struggling to stay alive and when they cut costs (usually an acronym for “New and Improved”) they are giving you the shaft, even though it is being served up on a fake velvet paper platter.

The sales mantra for 2010 is “cut prices.”

The same is true for any business. To cut price, you have to cut costs, and cutting costs means inferior products and services, many times hidden in slick marketing campaigns. Has anyone noticed that prices are still firm on the best stuff, and in many cases, going up? That’s because in order to maintain a standard, companies must constantly seek out quality providers who are shrinking in numbers with each passing day, opting, instead for automation , reduced labor, and a quick product pass-through, all the while, trying to convince you that they are the market cornered on “smart” and you are one of the lucky ones that they have chosen to sell to!

What a bunch of Horsepuckey!

Here’s the real tragedy. More and more companies are implementing a “litigation policy” which simply put means that those firms are willing to gamble your money and your life to try to get something past you, and many times, if the profits are big enough to more than cover the calculated percentage of potential lawsuits, the program is approved, and you are put at risk.

If ever there was a time to sit tight, this is it.

There is no free lunch, and the money you think you save is directly proportional to institutional risk and risk of litigation.

Supreme Court Issues Ruling In "Reverse" Discrimination Case

Havenfirefighters "reverse" discrimination case. The case is significant because it establishes that an employer may not manipulate the results of legitimate, job-related promotional examinations to obtain a more diverse workforce absent a showing that there is a strong basis in evidence to believe the employer will be subject to disparate impact liability if it fails to take the race conscious discriminatory action. The case breaks new ground by resolving potential conflicts between disparate treatment and disparate impact claims, and presents new challenges for employers faced with potential litigation arising from testing requirements or other facially-neutral employment practices.

Read more

Can HR ask for Date of Birth on an Employment Application?

QUESTION: I thought that an employer could not ask for date of birth on an employment application. Our background screening authorization is a separate page from our app and this does ask for the DOB and SSN.

Our company asks for the employment application and background/credit check authorization to be completed at the same time. I also explain that we do not perform any screenings unless we are interested in extending an offer.

ANSWER: Actually, that is the sticky wicket.

The only time a DOB for example would be omitted would be for Title VII concerns, and that is justified. That said, there is no law per se prohibiting it, only that you may not use age to determine candidacy, and especially you would need the identifiers if a background check is conducted. There are companies out there that incorporate background check consents into the employment application which is a rather large faux pas, basically because Title VII issues become almost ‘resident’ in that type of document.

The question tendered does not take into account the better strategy of separating the background check consent form (Notice to Consumer) as a separate document, and which should be obtained from ALL candidates whether or not a background is to be conducted in that job classification, and you do that in case of advancement, retention or promotion, where a background may be required for the new position.

Even in those cases where companies don’t do background checks, an insider secret is to always advise your candidates that a background MAY be conducted, which prima facia, many times will get an applicant to turn on his heels and walk out the door for fear of discovery of prior bad acts. Some companies rely on that, and God bless them, but most of those don’t realize the brazen manner that many applicants purvey in thinking that “they’ll never find my conviction” and apply anyway. For those, not doing a background check can be troublesome.

Further, all eyes in the boardroom MUST be cognizant of acquisition, so if the employee is not easily transferrable to the merging or acquiring entity, big problems can occur during transition, and I have actually seen cases in my 30 years where mergers die because the employees are not easily transferrable to the new enterprise and/or culture.

In the end, and here’s the money shot – do a generic Employment App, and a separate Notice to Consumer so as to ensure privacy protection of the applicant much under the same strategy as separated insurance and pension forms, and limit the volatile identity components to the Notice to Consumer, not the Employment App.

Must Employment Applications Contain a SS# and Driver's License?

QUESTION: As part of the application process many companies don't require social security numbers or drivers licenses information until the need for a background check. I believe this is a requirement of the Fair Credit and Reporting Act. Typically employment applications questions asked are ... if hired, can you provide proof that you can legally work in the U.S. or have drivers license(if BOFQ).

My questions are:
1. Am I correct in my recollection?
2. Are there exceptions for certain industries?

My reason for the question was I recently learned of a well known National company (not defense) that would not accept an online application (prior to interview) that did not include the SSAN and drivers license information.

ANSWER: There is no reason that an application must omit the personal information such as DOB/SSN, because the law looks at that information as secure since the employer assumes the liability and responsibility for maintaining it and securing it.

The FCRA has no provision for the exclusion you tender, it would actually be the Gramm-Leach-Bliley Act (The Financial Privacy Modernization Act of 1999) that might cover it if it did specifically, but what you refer to are the general security guidelines for financial institutions under the G-L-B.

In essence, the reason an application should be as thorough as possible from the outset is to ensure consistency in the screening process, and, we have always advised our clients that getting as thorough an application as possible upfront, eliminates the need to revisit consent in the event of retention, advancement, promotion or transfer.

California Court Holds that Personnel Management Conduct can Constitute Harassment

California Labor & Employment Law Blog by Cal Labor Law
By Robin E. Weideman

The California Supreme Court issued its decision today in Roby v. McKesson Corp., addressing two important issues—(1) whether personnel management conduct can constitute “harassment” within the meaning of FEHA, and (2) the constitutional limits on awards of punitive damages. With respect to the first issue, the Court held that personnel management conduct, including reprimanding an employee in front of coworkers, belittling an employee’s job, and shunning an employee during staff meetings, is conduct that can support a finding of hostile work environment harassment. The Court further held that evidence supporting discrimination claims and harassment claims often overlaps and is not necessarily exclusive. Such evidence does not need to be separately allocated between the two claims. This ruling blurs the distinction between conduct traditionally thought to support a “discrimination” claim on the one hand (e.g. written warnings, termination, etc.), and conduct traditionally thought to support a harassment claim on the other (e.g. discriminatory slurs, inappropriate physical contact, etc.). This decision will likely make it more difficult for employers (and individual supervisors) defending claims of harassment under FEHA to obtain summary judgment.

With respect to the second issue on the size of the punitive damages award, the Court reiterated the standards articulated by the United States Supreme Court in State Farm v. Campbell, 538 U.S. 408 (2003), for reviewing the appropriateness of a punitive damages award: (1) the degree of reprehensibility of the defendant’s misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases. The decision contains a detailed explanation of how each of these factors is properly analyzed and applied. In this particular case, the Court held that the jury’s $15 million punitive damage award was constitutionally excessive and that on the facts of the case, punitive damages could not properly exceed the amount of compensatory damages awarded to the plaintiff. The punitive damages were, therefore, reduced from $15 million to $1.9 million.

The Roby decision is here.

Negligent Hiring and Retention Causes Lawsuits

A recent article in the Connecticut Law Tribune re-enforces what ESR has been advising employers for some time; that lawsuits for negligent hiring and negligent retention are among the most common claims against employers.

Per the article, "The difference between the hiring and retention claims is when the employer became aware of a threatening employee; often, the arguments are that employers inadequately screened job applicants or failed to act on complaints about an employee who later committed a violent act."

The story concerns workplace violence and employee behavior that can be hostile, threatening or violent. This can lead to lawsuits seeking damages for emotional distress, a hostile workplace, all the way to damages stemming form violence where a person is the victim of a workplace crime. The article noted that, "In a bad economy, stress increases and people's fuses get shorter."
The article cites a study in the 1990s, where "liability expert Norman D. Bates conducted a study that found workplace violence tort cases averaged $500,000 per settlement and a $3 million per jury verdict."

According to the article: "The potential for litigation seems to be high, based on U.S. Department of Labor statistics. On average, more than 2 million acts of violence occur in the workplace every year. When it comes to assaults, women are targeted at a much higher rate than men, both in Connecticut and nationally. From 2005-07, the U.S. Department of Labor tracked 1,250 non-fatal workplace assaults in Connecticut, and women were the targets in 77 percent of those cases. On the national level during the same period, women were targeted in 63 percent of the more than 47,000 non-fatal assaults."

The article discussed that while many employers are focused on preventing workplace homicides, there are many lesser acts of hostility, such as workplace intimidation, bullying, sexual harassment and psychological abuse that can be red flags for future violence that also need to be addressed. See: Taking Aim At Workplace Disputes at http://www.ctlawtribune.com/getarticle.aspx?ID=35073

Employers have a substantial incentive to ensure that they are hiring qualified workers. One bad hire can create a legal and financial nightmare. Without conducting due diligence in hiring, an employer risks hiring someone with an unsuitable criminal record, false credentials, workplace violence, business interruption, embezzlement and a host of other issues.

If an employer hires someone that they either knew or should have known, in the exercise of reasonable care, was dangerous, unfit, unqualified or dishonest, then that employer can face a lawsuit for negligent hiring if that hire caused damages or commits a crime. Negligent hiring is the opposite of due diligence. Of course, employers do not intentionally go out of their way to hire a bad employee. If an employer makes a bad hiring decision, and someone is harmed, then the jury is usually faced with the issue of whether the employer reasonably "should have known" that the applicant represented a risk.

Many employers feel they are at a disadvantage when sued for negligent hiring or retention. Cases will normally have some sort of serious harm (death, assault, rape, sodomy, child molestation, theft, embezzlement, identity theft). That is because the lawyer for the plaintiff (the injured party that is suing) often is working on a contingency fee, and will normally only invest time and money in serious cases. Jurors are often employees themselves and may not feel overly sympathetic to an employer that had the ability, duty and resources to prevent harm through due diligence. As a rule of thumb, unless an employer has a compelling reason why an injury is not its fault, the employer has a tough job defending these suits. Even if the employer wins, it is at the expense of negative publicity and a great deal of time, money and effort spent involved in the litigation. (For potential employer defenses that can effective, see the next article)

As every human resource professional knows, the major source of employee problems are problem employees. Efforts at minimizing the hiring of problem employees go a long ways towards creating a safe and profitable workplace.

Written and reported by www.ESRCheck.com 11/25/09