I’ll confess. I’m excited about today’s post.  It’s hard to find something new to do after nearly 10 years of blogging, but I think today’s post is pretty innovative. Unless you read The New York Times “The Conversation” which we’ve tried to copy emulate here.  Except this post (and hopefully others) will be called “The Dialogue”.  Somehow different, right? 

Today’s post tackles some of the legal issues regarding hiring but does so in a back-and-forth format between a management-side attorney (myself) and an employee-side attorney (Nina Pirrotti).  I’d insert a reference to the letters of Alexander Hamilton and Aaron Burr discussing the issues of the day, but then I remembered that ended in a duel, and it’s not exactly what I was foreseeing here.  I think Nina and I can exchange some thoughts without trying to kill one another. 

Anyways, Nina and I have tried something new below.  Nina is a partner at the law firm of Garrison, Levin-Epstein, Fitzgerald and Pirrotti, where she represents employees in all types of matters.  She’s a past-President of the Connecticut Employment Lawyers Association and a frequent presenter on employment law topics.   My thanks to her for being brave enough to try this with me.  Let me know what you think. 

The Dialogue Begins

Dan Schwartz: Welcome to the blog and thanks for engaging in this discussion on employment law. I promise that we here at the blog don’t bite and we pay all of our workers (me) minimum wage. (Ok, that’s a lie. I get nothing for writing the blog, but moving on….)

I know we were planning on talking about some developments in the world of hiring and employment law, but I can’t pass up the opportunity to ask you something about the new Trump Administration.  From the perspective of an attorney who typically represents employees, what are one or two things you’re keeping an eye out for?

nina_t_pirrotti1-150x150Nina Pirrotti: Thank you, Dan, for your warm welcome.  We plaintiffs’ employment lawyers have been feeling mighty chilly since November 8th and have been bracing ourselves ever since for even more frigid temps ahead.  Ironically, I felt the impact of Trump’s election virtually immediately.  On November 9th, I flew to Chicago and spoke at the ABA’s annual Labor & Employment conference.   

The topic of the panel on which I spoke revolved around laws which prohibit employer retaliation against employees for discussing their wages.  The laws are designed to protect female employees who are trying to figure out whether they are being paid less than their male counterparts.  

I was all set to talk about the Paycheck Fairness Act which would have expanded the protection provided by those laws and was expected to be one of the first pieces of legislation signed by Hillary Clinton.  As you can imagine, my plane ride there was consumed with a furious re-write of my outline! The next day I flew to Dallas to participate in the semi-annual Executive Board meeting for the National Employment Lawyers’ Association where we also had to nimbly adjust our focus to reflect the new (surreal) reality.  

I did not thaw out after learning that Trump nominated Andy Puzder, CEO of chain restaurants, including Hardees (which, sadly, is the maker of my all -time favorite breakfast biscuit) to head the Department of Labor.  Puzder’s employee track record, which includes opposing overtime and minimum wage laws and underpaying his own workers is abysmal.   

I can only hope that the rumors that he might back out of consideration prove to be true.  I did feel  a glimmer of hope after I learned this week that Trump has tapped EEOC Commissioner Victoria A. Lipnic as Acting Chair of EEOC.  Lipnic, who was nominated by President Obama, has served as EEOC Commissioner since 2010.

I was also mildly heartened by Trump’s expression of (granted, lukewarm) support in his campaign for pay equity laws and paid FMLA leave, both championed by Hillary Clinton and I can only hope that the person who might most positively influence him in that regard (Ivanka) is able to carry the day.

Unfortunately, the Trump administration does seem poised to reverse or suspend the changes to Fair Labor Standards Act’s overtime rules which went into effect on December 1, 2016.  

Of course, the most important event that we plaintiffs’ employment lawyers are waiting for is the announcement of Trump’s Supreme Court nominee who would replace the very conservative Justice Antonin Scalia.  That person may likely cast the deciding vote on cases that impact the rights of workers in a myriad of ways.  Unfortunately for us, the three oldest justices – Ruth Bader Ginsburg Kennedy  and Breyer  – are liberal or moderate and Trump may have more than one bite at that proverbial apple during his (hopefully only) four-year stint. 

Since your excellent blog has national appeal and one or more of these justices might actually read it, I hereby urge all three of them to eat well, exercise moderately and avoid all high risk activities! Continue Reading The Dialogue: Hiring Employees the Right Way (From Different Sides)

starrMy colleague Gary Starr returns today with a story worth reading about the need for employers to secure confidential information.  Although it is based on Massachusetts, the concepts it covers may have some carryover to employers elsewhere as well.  

Employers that maintain records of their employees and customers and allow employees have access to confidential information have long needed policies that not only secure the information, but ensure that employees who have been granted access to such information are complying with the corporate policies and are trustworthy.

An insurance agency in Massachusetts thought it had done everything right, but was sued for negligence in its retention of an employee that it thought was trustworthy, but was not.

An employee used her computer to access confidential information that she then gave to her boyfriend about the identity of a witness to a car accident in which the boyfriend had been involved with her car.  The boyfriend used that information to contact and threaten the witness.  The witness reported the threat to the police and ultimately the boyfriend and the employee pleaded guilty to witness intimidation and conspiracy.  After the police visited the employer to obtain information about the threat, which was traced back to the employee, the employer fired the employee.

That, however, did not end the tale.

The witness then sued the employer for failing to safeguard personal information, and for negligent retention and negligent supervision.  While the trial court dismissed the case, the appellate court has determined that the facts alleged are sufficient to go to trial.

Where did the employer go wrong?  The company had adopted a data security plan and policy that prohibited employees from accessing or using personal information for personal purposes.  The computer software even required employees, who wished to access the data base with confidential information, to agree to use the information for one of four limited purposes, all of which were business related.

Those were positive steps.

The problem arose because the unrestricted access did not stop the employee from reviewing information that had an impact on her personally.  The second failure had to do with an inadequate investigation of the employee’s background and simply taking the employees word about a weapons arrest that occurred during her employment in another state.

The employee told her boss that the arrest was a misunderstanding, that she was clearing it up, and subsequently said it was resolved.  The employer simply took her word for it.

What he would have discovered with a very simple inquiry was that there were serious issues with her honesty and fitness for accessing other people’s personal information.  The company could have learned that she was traveling with her boyfriend when they were stopped for speeding and that she was arrested for having two semi-automatic guns concealed in her purse, one had the serial numbers filed off and the other was stolen.  She also had a half-mask and police scanner.  After her arrest, she told the company that there had been a misunderstanding as the weapons belonged to her boyfriend, that she didn’t know anything about them and that she was exonerated.

Her story was not true, but her account itself should have raised questions about her having access to personal information.

The court said that the company had a duty to protect the confidential information and that it was foreseeable that the employee could access information and use it for personal gain.  The company had an obligation to investigate the employee’s continuing fitness after the arrest.  The court said that a jury could decide that the failure to take action under these circumstances was unreasonable as the company knew about the weapons charge and could have learned of her lies and her willingness to commit a crime with her boyfriend.  The company did not take sufficient steps to limit the risk of harm to those whose personal information its employees could access.

There are steps to take to avoid this problem.  After an employee is hired, that does not end the need to be vigilant about their fitness for the job.  When information comes to light that may raise questions about the actions of an employee, an employer cannot simply take his/her word for what occurred.  It must take affirmative steps to explore what the underlying issue is, analyze the employee’s story, and assess the risk the employee poses if access to confidential information is abused or if other employees and the public may be put at risk.

 

So this week, I’ll be speaking at our firm’s semi-annual Labor & Employment Law seminar.  Amazingly, we have reached capacity for this event and are now taking names for a waiting list! Many thanks to all who have signed up.  It should be a lot of fun.

Frequent blog contributor (and, well, a colleague) Chris Engler and I will be talking about the nuts and bolts of the hiring process.  Hiring is, after all, the engine that runs companies.  And making good hiring decisions can yield a ton of benefits in the long run.  Moreover, hiring good employees can help avoid lawsuits from arising too.

So what are we going to talk about? Well, we’re going to look at some of the new laws on hiring.  “Ban the Box” is the latest law to arise — limiting the ability of employers to ask about criminal histories on job applications.  Limits on the use of credit reports is another relatively recent law in the last few years.

After I put together the presentation, though, I came across a really interesting article in the Wall Street Journal about how some companies are using quirky interviews in their hiring process.    In doing so, the companies are striving for “culture fit”.

At Zappos, an online retailer famed for its offbeat office culture and corporate values, veteran employees size up candidates’ ability to blend in—and have veto power over those who miss the mark. The culture experts ask candidates questions that seemingly have little to do with the job, such as “If you were to write your biography, what would the title be?”

Rick Jordan, who leads talent acquisition for the nearly 1,500-person company, says longtime employees sometimes have a “gut feeling” about who is likely to succeed. About 1 in 8 don’t make the cut, he notes. “People who are true fits to the culture and believe what we believe—they’ll do anything for the business.”

But as the article notes, “culture-fit interviews raise concerns among employment experts, who warn that such screenings may be rife with potential for bias. Though these screenings haven’t been at the center of a major employment lawsuit, legal experts are concerned that they could put companies at risk.”

Indeed, there’s already a backlash against such interviews. Facebook, the article notes, “discourages its managers from using culture fit as a criteria in hiring, and calls the term ‘a bias trap,’ according to a spokeswoman.”

Where to from here? Well, employers should continually look at their hiring processes to ensure that the message of fair, non-discriminatory hiring is getting across to those who are making the decisions.

We’ll discuss this and more at the upcoming seminar. If you’re coming, please feel free to introduce yourself to me (during a break!).  See you then.

(P.S. Many thanks to Jon Hyman who alerted me to the hilarious video of President Obama’s “job interview” with Stephen Colbert. Worth a watch.)

rockRemember “Ban the Box” and the fair chance employment bill from earlier in the session?

Well, it passed last night. Sort of.

An amendment to the original bill essentially wiped the prior version clean.  Thus, whatever you think you knew about the measure you can put that aside.

What passed last night (House Bill 5237) was a very watered-down version of the measure.   It moves on the Governor’s office for signature and will become effective January 1, 2017.

The key provision is as follows:

No employer shall inquire about a prospective employee’s prior arrests, criminal charges or convictions on an initial employment application, unless (1) the employer is required to do so by an applicable state or federal law, or (2) a security or fidelity bond or an equivalent bond is required for the position for which the prospective employee is seeking employment.

Any violation of this rule is subject to a complaint filed with the Labor Commissioner, but not a lawsuit.

I don’t expect that this will be the end of the issue however. The measure also creates a “fair chance employment task force to study issues” related to employment for individuals with a criminal history.

For now, employers need only amend their employment application to remove the box that asks about “prior arrests, criminal charges, or convictions.”  But nothing prevents a followup form from being requested or prevents these issues from being discussed in the job interview itself.

As the CBIA noted, the revised version that passed is a “wise reworking” that also affirms that businesses may run background checks on candidates if state or federal law prohibits people with criminal backgrounds being hired for a job.

Employers ought to review their existing applications and update them to comply with this new state law by January 1, 2017 (assuming the Governor’s signature, as noted.)

My colleague Peter Murphy and I have been talking a lot about background checks lately.  It’s easier than ever to run a basic Internet search on someone, but what information do you find? And are there any limts?

Today, Peter talks about two recent settlements of background check claims against employers. Both cost the employers big dollars. Here’s what you can learn from them.

Peter Murphy

 

Back in March, Dan noted that plaintiffs’ lawyers were brining an increasing number of lawsuits under the Fair Credit Reporting Act (“FCRA”).

This seems to be occurring for two reasons. First, the FCRA contains very specific steps an employer must follow when obtaining and then using a background check for employment related purposes, including the following:

  1. Make a clear and conspicuous written disclosure to the job applicant that a consumer report may be obtained for employment purposes;
  2. Have the applicant authorize in writing the procurement of the report;
  3. And, before taking any adverse action based in whole or in part on the report, provide the applicant with:
    1. a copy of the report; and
    2. a description in writing of the employee’s rights under the FCRA.

If one of these steps is being systematically violated by an employer, then there is the potential for a lawsuit involving multiple plaintiffs or even a class of plaintiffs across the employer’s operations.

The second reason for the increasing number of FCRA lawsuits is that they expose employers to damages for each FCRA violation, as well as punitive damages, costs, and significant attorney’s fees.

Thus, unless employers review their hiring practices and ensure FCRA complaint, they could be exposed to costly lawsuits, as Dan and others warned back then.

Their warnings were prescient, as demonstrated by two recent settlements in FCRA cases.

In the first case, the employer accepted online job applications–just like almost all employers. The applicants alleged that the employer’s online application system did not comply with the FCRA’s procedural provisions addressing authorizations for a background check, or provide FCRA mandated disclosures to the applicants.

These procedural violations could have been enough to expose the employer to liability under the FCRA.

According to the applicants, however, the employer also was taking adverse employment actions based on information in the background checks without providing them a copy of the report or the required opportunity to correct or explain any discrepancies.

Although the employer denied any wrongdoing, it ultimately agreed to a $5.053 million settlement that recently was approved by a district court judge.

The only ones getting rich as a result of this settlement, though, were the plaintiffs’ lawyers, who received about $1.52 million in attorneys’ fees in comparison to the $50 payment to each of the eligible class members.

Plaintiffs’ attorneys were just as pleased with a district court’s preliminary approval of an FCRA settlement in a case pending in Virginia. Just like the prior case, the claims in this case stemmed from allegations that the employer violated the procedural protections of the FCRA, and then also failed to give job applications the ability to respond to adverse information in the background check.

Under the judge’s recent order, the plaintiffs’ attorneys would get 25 % of the $4,000,000 proposed settlement, and each potential class member would receive statutory damages of $53.

The numerous procedural and substantive provisions of the FCRA can be difficult to decipher, and as the above examples demonstrate small compliance mistakes can lead to costly and time consuming lawsuits.

Although we may sound like a broken record, employers should therefore consult with trusted counsel when necessary to ensure that their job application process can survive a FCRA challenge, and that their authorization forms and disclosure notices comply with FCRA’s requirements.

It’s not as easy as it first appears.

If you’re like most employers that do background checks, you probably haven’t thought twice about the documentation you use for it.

Perhaps you’ve copied some standard language you’ve found off the Internet (not that there is anything necessarily wrong with that), or maybe you’ve just used a form that has been handed down from one HR person to another.

A new lawsuit and a new strategic focus by the Federal Trade Commission and Equal Employment Opportunity Commission should give most employers pause on the forms that they use for background checks and the background check process itself.  This is true not only for the printed forms, but also the online forms that employers have started to use with regularity.

First off, Whole Foods was recently sued by an applicant who charged that the company’s online form seeking job applicants’ approval for criminal background check violates the Fair Credit Reporting Act.

As noted by Judy Greenwald from Business Insurance:

According to the lawsuit filed Friday in U.S. District Court in Oakland, Calif., in Esayas Gezahegne v. Whole Foods Market California Inc., the language in the authorization includes a waiver of claims against those who obtain a consumer reports, in violation of the FCRA. Consumer reports include criminal background checks, credit checks and other similar reports.  …

The online authorization forms all contained language releasing those who obtained the consumer reports from all liability, in violation of the FCRA’ s requirement that the authorizations be pristine documents that contain nothing other than the required disclosures and the requested authorization. In other words, defendant’s authorization forms were facially invalid,” the lawsuit states.

While it’s still early to draw conclusions from the lawsuit itself, the takeaway is that employers should consider having their disclosure contain only the disclosure.  Adding release language to it may be troubling to some courts.

I’ve discussed this in more detail in a client alert that we recently issued.

Second, this week the Federal Trade Commission and the EEOC released new guidance this week on employment background checks that again highlight the renewed focus these agencies have placed on the topic.

The press release states:

Hiring decisions are among the most important choices for any employer, but the process can be complex. For the first time, the Federal Trade Commission (FTC) and the Equal Employment Opportunity Commission (EEOC) have co-published two short guides on employment background checks that explain the rights and responsibilities of the people on both sides of the desk.

The FTC and the EEOC want employers to know that they need written permission from job applicants before getting background reports about them from a company in the business of compiling background information. Employers also should know that it’s illegal to discriminate based on a person’s race, national origin, sex, religion, disability, or age (40 or older) when requesting or using background information for employment.

At the same time, the agencies want job applicants to know that it’s not illegal for potential employers to ask someone about their background as long as the employer does not unlawfully discriminate. Job applicants also should know that if they’ve been turned down for a job or denied a promotion based on information in a background report, they have a right to review the report for accuracy.

With agencies and attorneys looking more closely at background checks, now is the right time to double check the forms you use — particularly if you haven’t looked at them in a while.

U.S. Supreme Court

With all the weather changes in Connecticut over the last few days, I’m reminded of Mark Twain’s quote: “If you don’t like the weather in New England now, just wait a few minutes.”But life still goes on in New England and I’ve got two upcoming presentations to mention.

This Wednesday, I have the privilege of speaking to the Connecticut Association of Licensed Private Investigators at their monthly meeting.  We’ll focus our discussion on pre-employment background screening laws and the trouble that both employers and private investigators can get in for not following the rules.

I’ve touched on the subject in some prior posts here, but I’ll talk about all the latest developments including some proposed bills on the subject as well.

Later in the month, on January 28th (from 8:30a-10a), I’ll be speaking to CBIA’s HR Council about the state and federal court decisions from 2013 that will influence how human resources practitioners do their jobs.

The CBIA (The Connecticut Business and Industry Association) routinely puts on good programs for human resources professionals and I’ve been fortunate to have spoken to a few over the last couple of years. The price is just $15 (for members) and it’s open to both CBIA members and non-members alike.

If you’re interested, you can sign up directly at the CBIA’s website here.

My thanks to both organizations for the invitations and I hope to see a few readers there.

At a Sentencing Commssion hearing last week, former state lawmaker Ernie Newton — who was convicted in 2006 on corruption charges — urged commission members to address hiring discrimination against ex-felons, reports CT News Junkie.  There is no indication yet that they will do so, but his comments raised some eyebrows in the press.

Newton’s comments aren’t the first time, though, that the issue of hiring discrimination against felons has surfaced as a legislative proposal.  Back in 2010, the legislature overrode Governor Rell’s veto of a bill that restricts the use of background checks for state job applicants. 

Despite that, private employers are still free to make hiring decisions based on a criminal conviction. 

The topic is not going away any time soon.  In April, the EEOC released new guidance that suggested that employers use arrest and criminal records in their decision-making process with care.  The agency suggested that under some circumstances, there may a violation of Title VII if used improperly. 

With the state budget again dominating discussions, it is unclear yet whether the General Assembly has any desire to take up legislation on this topic any time soon.  The “long’ year begins on January 9, 2013 and runs to June 5, 2013.

The Office of Legislative Research, whom I’ve praised in several posts before (here and here), recently issued a report on the consequences of a felony conviction on employment. 

Overall, it does a good job summarizing the issues when it comes to state employment.

But later on in the publication it states the following when discussing the federal restrictions on employer use of criminal background information:

Asking job applicants to indicate whether they have been convicted of a crime is permissible but Title VII of the Civil Rights Act of 1964 appears to restrict an employer’s ability to use criminal background information in the hiring process (42 USC. § 2000e, et seq.). The Equal Employment Opportunities Commission (EEOC), the federal agency that enforces Title VII, has decided that disqualifying people who have criminal records from jobs is discriminatory because the practice disproportionately affects African American and Hispanic men. (Those two groups generally have higher criminal conviction rates than do Caucasian men.)

The EEOC has ruled repeatedly that covered employers cannot simply bar felons from consideration, but must show that a conviction-based disqualification is justified by “business necessity.” The legal test requires employers to examine the (1) nature and gravity of the offense or offenses, (2) length of time since the conviction or completion of sentence, and (3) nature of the job held or sought. Under this test, employers must consider the job-relatedness of a conviction, the circumstances of the offense, and the number of offenses (EEOC Guidance 915.002, April 25, 2012: http://www.eeoc.gov/laws/guidance/upload/arrest_conviction.pdf).

Back in April, I discussed the EEOC’s latest guidance at length.  As a result, I think the OLR’s report has misstated the EEOC’s position and made it sound like the rules on criminal background check are set in stone at the federal level.  They are not.

Indeed, the EEOC appears to be overreaching in its latest application of Title VII.  Courts have rarely interpreted it this broadly and thus the suggestion that Title VII “appears to restrict an employer’s ability” to use convictions is an overstatement.

Moreover, the OLR report’s suggestion that the EEOC has “ruled repeatedly” on the issue is also misleading; even the EEOC’s report suggests that it differs from some prior guidance.  And, contrary to the OLR report, the EEOC has not “decided” that it is “discriminatory” for employers to disqualify people who have criminal records from jobs; it merely issued guidance on the subject.  Indeed, the EEOC recognizes that there may be instances were it is not discriminatory.

What is important to understand is that “guidance” issued by the EEOC (which is what the April EEOC report is) is not the same as a regulation.  Indeed, even the EEOC says its guidance on criminal history is only “designed to be a resource for employers, employment agencies, and unions covered by Title VII; for applicants and employees; and for EEOC enforcement staff.”  It is not, as the OLR has said, a rule per se. 

A better explanation would be that the EEOC recently issued guidance that suggested to employers the blanket and blind use of background check information could have a disparate impact against some protected classes.  Thus, employers who use such information should consider the business needs of doing so and ensure that the use of such checks is fair. 

From my perspective, employers who seek to use criminal background checks to make hiring decision would be wise to read the guidance itself and seek appropriate counsel.  There are some best practices from the EEOC on the subject, but how employers use that guidance and in what ways, remains up in the air.

UPDATED June 9, 2011 – The House approved the measure late last night, June 8th. For additional details, see this updated post.

In the closing hours of the General Assembly’s term, the Connecticut Senate has passed a bill yesterday that would ban the use of credit reports by employers in many situations.

Senate Bill 361 passed along party lines and can be viewed here. It now goes to the House for a possible vote by the end of the term.

Will Employers Be Banned From Using Credit Score Numbers?

The bill, in its present form bans employers from requiring employees or prospective employees to consent to a request for a  report that contains information about the employee’s or prospective employee’s credit score, credit account balances, payment history, savings or checking account balances or savings or checking account numbers.

There are several exceptions, however:

  • Employers that are “financial institutions” as defined by the statute;
  • The report is otherwise required by law;
  • The employer reasonably believes that the employee has engaged in specific activity that constitutes a violation of the law related to the employee’s employment,
  • The report is substantially related to the employee’s current or potential job or the employer has a bona fide purpose for requesting or using information in the credit report that is substantially job-related and is disclosed in writing to the employee or applicant.

And what does “substantially related to the job” mean? Well, the bill also contains a definition for that as well.  According to the bill, it means that the position:

  • Is a managerial position which involves setting the direction or control of a business, division, unit or an agency of a business;
  • Involves access to customers’, employees’ or the employer’s personal or financial information other than information customarily provided in a retail transaction;
  • Involves a fiduciary responsibility to the employer, including, but not limited to, the authority to issue payments, collect debts, transfer money or enter into contracts;
  • Provides an expense account or corporate debit or credit card;
  • Provides access to (i) confidential or proprietary business information, or (ii) information, including a formula, pattern, compilation, program, device, method, technique, process or trade secrets; or
  • Involves access to the employer’s nonfinancial assets valued at two thousand five dollars or more, including, but not limited to, museum and library collections and to prescription drugs and other pharmaceuticals.

As you can see, these exceptions are numerous. Of course, what is a “managerial” position in this context? The bill is silent.

And even if an employer falls within an exception, the employers still has to comply with the Fair Credit Reporting Act.

As for the scope of the bill, all employers (those that have 1 or more employees) would be covered by this bill.  If approved by the House (and signed by the Governor), it would become effective October 1, 2011.