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.

Last week, the Connecticut House approved House Bill 5521 (H.B. 5521), which would bar Connecticut employers from using credit reports in their employment decisions such as hiring and firing. 

You can download the bill’s text here

The bill’s main provisions would prohibit employers from asking employees or prospective employee to consent to the creation of a credit report that contains information about that person’s  credit score, credit account balances, payment history, savings or checking account balances or savings or checking account numbers as a condition of employment.

There are three exceptions, however. The employer can seek a report if (1) it is substantially related to the employee’s current or potential job, (2) it is required by law, or (3) the employer reasonably believes that the employee has engaged in specific activity that constitutes a violation of the law.

Of course, the meaning of what "substantially related" is must also be looked at. The statute defines that fphrase to mean information contained in the credit report is related to the position for which the employee or prospective employee who is the subject of the report is being evaluated because the position (A) is a managerial position which involves setting the direction or control of the business, (B) involves access to customers’, employees’ or employer’s personal or financial information other than information customarily provided in a retail transaction, (C) involves a fiduciary responsibility to the employer, including, but not limited to, the authority to issue payments, transfer money or enter into contracts, or (D) provides an expense account.

Under the bill’s provisions, employees could complain to the Connecticut Department of Labor if they suspected a violation of the law.

The bill has had several amendments proposed to it and it was not on today’s "go list", so it’s unknown yet whether the measure will actually get voted on in the state senate before the term expires in a few weeks.  Until then, employers that use credit reports in their hiring process should continue to play close attention to this and speak out to their state senators about their views of the bill.