Background Checks - NFIB · I. Risks of Not Performing Background Checks II. Types Of Background...

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Background Checks: Best Practices and Reducing Risks

When Hiring

MANESH K. RATH

KELLER AND HECKMAN LLP

Copyright Keller and Heckman LLP © 2011

http://www.nfib.com/backgroundcheck



Meet Our Speaker

MANESH K. RATH KELLER AND HECKMAN LLP 1001 G Street, NW, Ste. 500W Washington, D.C. 20001 (202) 434-4182 [email protected]




Outline

I. Risks of Not Performing Background Checks II. Types Of Background Checks III. Disclosure and Release IV. Limitations On Utility Of Background Data V. Lawsuit Risks For Performing Background Checks VI. Bill: Equal Employment For All Act (HR 3149) VII. State Legislative Activity




Risks of Not Performing Background Checks

• History of theft

• History of violence

• History of drug, alcohol abuse

• Employee reckless driving record

• Falsification of credentials: licenses, employment, education, certifications




Risks of Not Performing Background Checks (Cont’d)

• Risk of suit for negligent hiring

• What is the duty of care in hiring?

• Robinson Worldwide – negligent hiring might even apply to engagement of independent contractors

Written summary: http://www.nfib.com/RobinsonWorldwide


http://www.nfib.com/RobinsonWorldwide

https://www.nfib.com/RobinsonWorldwide



I. Risks of Not Performing Background Checks

II. Types Of Background Checks

III. Disclosure and Release

IV. Limitations On Utility Of Background Data

V. Lawsuit Risks For Performing Background Checks

VI. Bill: Equal Employment For All Act (HR 3149)

VII. State Legislative Activity




Types of Background Checks

• Credit check

• Criminal background

• Check references at prior jobs, education

See summary of Lakeview: http://www.nfib.com/lakeview

• Look for independent verification of jobs, education


http://www.nfib.com/lakeview

https://www.nfib.com/lakeview



Disclosure and Release

• Fair Credit Reporting Act governs employer activity, not just credit lenders

• Prior to seeking criminal or credit background data, always: – Fully disclose, in a document

solely for this notice – obtain applicant or

employee release – Separate form, not just on

application, per FCRA




Limits on Use of Background Data

• Fair Credit Reporting Act: – Applies to small businesses too – If employer takes adverse action:

• A copy of the consumer report • Contact info for the credit reporting agency • Notify employee of his right to obtain a copy of the report, and

his “Summary of Your Rights” by the FTC • Notify applicant/employee if taking adverse action based on

negative results – and his right to dispute its accuracy

– Seek only timely information (7 years for non criminal data from credit reporting agency





• For credit background:

– Must be a job related necessity

– Bankruptcy information should be disregarded

– Employers usually may not rely upon single garnishments





• For criminal background: – No federal prohibition, but EEOC takes great interest

– Use of conviction records preferred, not arrest records

– Focus upon job relatedness (such as cash management, access to financial data, contractual requirement)

– Focus upon the seriousness of the crime and the time elapsed since it occurred




Risks in Performing Background Checks

• FTC fines for violating FCRA

• EEOC enforcement action for disparate impact

– Ex.: EEOC v. Kaplan Higher Educ. (2010), Kaplan rejected applicants with poor credit history. EEOC: not job related or a business necessity.

• Private plaintiff suits

– Ex.: Arroyo v. Accenture, Hudson v. First Transit, Inc., Mays v. Burlington Northern & Santa Fe RR.

– See summary of Pacific Bell: http://www.nfib.com/PacificBell


http://www.nfib.com/PacificBell

http://www.nfib.com/PacificBell



I. Risks of Not Performing Background Checks II. Types Of Background Checks III. Disclosure and Release IV. Limitations On Utility Of Background Data V. Lawsuit Risks For Performing Background Checks VI. Bill: Equal Employment For All Act (HR 3149) VII. State Legislative Activity




Equal Employment for All Act

• HR 3149, sponsored by Rep. S. Cohen (D – Tenn.), 56 cosponsors

• Proposes to: – Amend the FCRA – Prohibit employers from using a consumer report or

investigative consumer report for employment purposes or for taking an adverse action if:

– The info bears upon creditworthiness, credit standing, or credit capacity

– Exception for: national security, FDIC clearance, state or local government agency requirement, or in a supervisory, managerial, professional position at a financial institution

– Exception when otherwise required by law – Does not exempt other industries.









VI. EEOC Position On Background Checks





State Legislative Activity

• 18 states have either proposed or already have legislation limiting employers from performing background checks.

• California: passed and vetoed • Maryland, D.C., Va.: brought to vote,

did not pass. • Illinois & Oregon: passed




Questions and Answers

Manesh K. Rath KELLER AND HECKMAN LLP 1001 G Street, NW, Ste. 500W Washington, D.C. 20001 (202) 434-4182 [email protected]

Feel free to call with additional questions!




Additional NFIB.com Resources

• Hiring Part I: Conducting Background Checks

http://www.nfib.com/press-media/press-media-item/Default.aspx?cmsid=46925

• Pre-Screen Employees Using the Internet http://www.nfib.com/business-resources/business-resources-item?cmsid=46812

• Dos and Don't of Checking Employee References http://www.nfib.com/business-resources/business-resources-item?cmsid=49818









http://www.nfib.com/business-resources/business-resources-item?cmsid=46812
















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Background Checks - NFIB · I. Risks of Not Performing Background Checks II. Types Of Background...

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