This presentation was made to a Texas Association of Licensed Investigators meeting in May 2011.

1. A Brief Overview
of Laws Affecting
Employment
Background
Investigations
Mike Coffey, SPHR
President
Imperative Information Group

2. Why Employers Run
Background Checks

3. Why Employers Run
Background Checks
Jeffrey Hefling

4. Why Employers Run
Background Checks
Michael Gilbert

5. Why Employers Run
Background Checks

6. Why Employers Run
Background Checks

7. Why Employers Run
Background Checks
Stephen Robertson

8. Why Employers Run
Background Checks
2009 National Retail Security Survey

9. Why Employers Run
Background Checks

10. The federal Fair Credit Reporting Act
governs consumer reports.

11. FCRA applies to info collected by a third
party to be used for certain purposes.
Insurance
Underwriting
Extension of Credit
Employment

12. FCRA applies to reports about
“consumers.”
Consumer def: “An individual”

13. Report providers (investigators) are
Consumer Reporting Agencies.
Consumer Reporting Agency def:
Anyone who, “for monetary fees, dues, or on a
cooperative nonprofit basis, regularly engages in
whole or part in the practice of assembling or
evaluating… information on consumers to third
parties, and uses any means or facility of interstate
commerce for the purpose of preparing or
furnishing consumer reports.”

14. Report providers (investigators) are
Consumer Reporting Agencies.
 Consumer Report def:
“Any written, oral, or other communication…by a
consumer reporting agency bearing on a consumer’s
credit worthiness, credit standing, or credit capacity,
character, general reputation, personal
characteristics, or mode of living …which is used or
expected to be used or collected in whole or in part
for the purpose of serving as a factor in establishing
the consumer’s eligibility for… employment
purposes”

15. FCRA applies to background checks
provided to employers.
Driving
Credit Reports Histories
Criminal
Records
Verifications

16. Disclosure must be made and written
authorization received by employer.

17. Disclosure must be made and written
authorization received by employer.

18. The FCRA has two standards for
accuracy of reported information.
Accuracy of Information (all information)
“Whenever a consumer reporting
agency prepares a consumer
report it shall follow reasonable
procedures to assure maximum
possible accuracy of the
information concerning the
individual about whom the report
relates.”

19. Disclosure must be made and written
authorization received by employer.
Accuracy of Public Record Information
The CRA must ensure that the
information reported “matches the
status of the item at the time the report
is requested,” (this is the best practice)
or
“notify the consumer that the negative public record
information is being reported, along with the name and
address of the employer to whom the report is being
provided.” (Commonly called “contemporaneous
notification.”)

20. The FCRA limits what can be reported in
background checks.

21. The FCRA limits what can be reported in
background checks.
Reportability of Negative Information
Age < 7years Age > 7 years, Age > 7 years,
wages < $70K wages > $70K
Non-conviction criminal Reportable Not reportable Reportable
cases under federal under federal under federal
(dismissals, acquittals, law law law
cases not prosecuted –
includes cases
dismissed upon
completion of deferred
adjudication)
Civil cases, liens, Reportable Not reportable Reportable
judgments, credit items under federal under federal under federal
law law law

22. The FCRA limits what can be reported in
background checks.
Reportability of Negative Information
Age < 7years Age > 7 years, Age > 7 years,
wages < $70K wages > $70K
Criminal cases ending Reportable Not reportable Reportable
in conviction (guilty) under federal under federal under federal
law law law
Age < 10 years Age > 10 years, Age > 10 years,
wages < $70K wages > $70K
Bankruptcy Reportable Not reportable Reportable
under federal under federal under federal
law law law

23. The employer must provide information
prior to making an adverse decision.

24. The employer must provide additional
notice after taking the adverse decision.

25. The CRA has 30 days to reinvestigate
any disputed information.
MY LAWYER SAID THAT
WOULDN’T SHOW UP
ON MY RECORD!!!!

26. Sample State Consumer Reporting Laws
Texas’ only restriction (limiting all
information to seven years) was
invalidated by the Fair and Accurate
Credit Transactions Act (FACTA),
though it is still widely quoted by
attorneys and screening firms
unfamiliar with the interplay of the
state and federal laws.

27. Sample State Consumer Reporting Laws
 The authorization and consent must
contain a “box” for the consumer to
check to receive a copy of the report.
 Employers may not inquire about
sealed records and applicants may
state that they have no conviction

29. Sample State Consumer Reporting Laws
 Employers may not consider non-
conviction criminal information.
 Convictions can only be reported for
seven years (including murder, rape,
arson, etc.)
 Special protections for marijuana
convictions and sex offenders.
 Special notices to applicants when
obtaining consent to procure
background check.

30. Sample State Consumer Reporting Laws
 Employers may not inquire
about criminal records on
the initial written
application.
 Time limits effective 2012:
 Felonies: 10 years
 Misdemeanors: 5 years
 Murders, manslaughter and certain sexual
offenses: no limit

31. Sample State Consumer Reporting Laws
Many states have
passed or are
considering laws to
limit employers’ use of
credit reports.

32. Title VII of Title VII of the of 1964
the Civil Rights Act
Civil Rights Act of 1964

33. Title VII of the Civil Rights Act of 1964
 Prohibits both intentional discrimination
(“disparate treatment”) and seemingly neutral
policies without business necessity that have
adverse impacts on protected classes (“disparate
impact” - see Griggs v. Duke Power)
 Policies must have a manifest relationship to
employment role with no viable alternatives to
qualify as a business necessity
 Heavily impacts employment qualifications,
tests, and background checks

34. Title VII of the Civil Rights Act of 1964
Criminal Records Brightline Rule:
Have you ever been arrested?
 No
 Yes (please deposit your application in the
trashcan on your way out)

35. Title VII of the Civil Rights Act of 1964
When reviewing criminal records, an employer must consider:
– The relevance of the offense to the position, including
severity and time passed since the offense
– The reasonable likelihood that the person committed the
offense
Disposition (final judicial outcome) is not the issue!
See EEOC Policy Statement on the Issue of Conviction Records under
Title VII of the Civil Rights Act of 1964 and Policy Guidance on the
Consideration of Arrest Records in Employment Decisions under Title VII of the
Civil Rights Act of 1964

36. Protected Classes under Federal Law
• Age
• Race
• Sex
• National origin
• Religion
• Marital status
• Disability

37. EEOC Activity
 99,922 charges filed in 2010 (20% increase
since 2005)
 E-RACE (Eradicating Racism and Colorism
from Employment) initiative looks for
systemic discrimination (disparate impact
claims)
 Expects 110K charges in 2011

38. EEOC Activity
 Anticipates an $18M budget increase allocated
to:
 improve enforcement initiatives,
 reduce the backlog,
 target systemic litigation, and
 reinvigorate Federal Sector enforcement.

39. EEOC v. Freeman Companies

40. EEOC v. Kaplan Higher Education Corp.

41. EEOC v. PeopleMark

42. State EEO Laws
Many states have their own equal employment
opportunity or human rights laws.
 Washington state will not allow employers to
consider any criminal records older than ten
years.
 6 states have “job-relatedness” requirements
for the consideration of criminal records.
 Texas has no such limitations.

43. Ban The Box Initiatives

44. Ban The Box Initiatives
 Massachusetts: Employers may not inquire about criminal
records on the initial written application.
 Minnesota, Connecticut & New Mexico: Public employers
may not inquire about criminal records on the initial
written application.
 Hawaii: Employer may inquire only after an offer of
employment is made
 More than 2 dozen cities have passed similar ordinances
including Philadelphia (04/2011), Baltimore, Memphis,
and San Francisco

45. Ban The Box Initiatives
 Similar legislation is pending in Nebraska, New Jersey,
and Rhode Island.
 Minnesota considering extending the ban to private
employers.
 Nationwide, community groups are pushing for new
legislation at all levels

46. Questions?