1. PRESENTED BY: DENA H. SOKOLOW ALLEN, NORTON & BLUE, P.A. DSOKOLOW@ANBLAW.COM 850-561-3503 Hiring the Best: Background Checks, References, & More

2. Employers Should Be Curious You are entitled to learn as much information about a candidate as possible before offering them a position. Well-drafted applications ask:  Previous work history  Previous work experience  Educational background  Military background  References

3. Employers Should Be Curious You are entitled to learn as much information about a candidate as possible before offering them a position. Acknowledgments and permission  Truth and accuracy of information  Background checks  Military or school records check

4. Background Checks Over 90% of employers conduct criminal background checks for some job applicants. Over 70% of employers conduct background checks on all potential new hires.  Identify candidates who display a history of good decision making and judgment.  Reduce the risk of criminal behavior in the workplace.  Avoid negligent hiring lawsuits.

5. Developments Criminal background checks obtained for employment purposes are controversial. Under attack from:  the U.S. Equal Employment Opportunity Commission (EEOC)  Civil rights activists  President Obama 2012 Enforcement Guidance from EEOC  http://www.eeoc.gov/laws/guidance/arrest_conviction.cfm http://www.eeoc.gov/laws/guidance/arrest_conviction.cfm

6. More and More “background check” Lawsuts In 2012, Pepsi paid $3.13 million settlement with EEOC regarding hiring practice of applicants with arrest records In 2013, EEOC continued its war on background checks filing suits against  Dollar General  BMW  Kaplan Higher Learning  Freeman

7. More and More “background check” Lawsuts In 2013, the EEOC lost two high-profile federal lawsuits 1  It attempted to show that many employers use criminal and/or credit background checks to discriminate against applicants in violation of Title VII.  Courts did not find the EEOC’s statistics persuasive. Nine Attorneys General challenged EEOC’s guidance and lawsuits against BMW and Dollar General 1 EEOC v. Freeman; EEOC v. Kaplan Learning.

8. More and More “background check” Lawsuits The EEOC will continue pursuing claims that criminal and/or credit background checks violate Title VII. Employers should review their policies, ensure that screens are job-related, defensible, and based on business necessity.

9. The Free Credit Reporting Act (FCRA) The FCRA regulates the exchange of consumer information between employers that use consumer reporting agencies (CRAs) to provide screening reports with other types of information, including criminal records. Employers must comply with the FCRA when they order virtually any type of report from a CRA.

10. Compliance with the FCRA The FCRA’s requirements on employers may be divided into two categories: (1) requirements employers must follow before they obtain a consumer report (2) requirements employers must follow if they take “adverse action” based on information contained in the consumer report.

11. Obtaining a Report Employers can do a background check on any applicant. In order to obtain a report from a CRA, an employer must get the applicants consent:  make a clear and conspicuous written disclosure to the applicant, in a document that consists “solely” of the disclosure, that a consumer report may be obtained.  The applicant (or employee) must provide written consent.

12. Obtaining a Report NOTE – A properly worded authorization from an applicant will allow an employer to obtain more consumer reports during employment without the need obtain a new authorization.

13. Now you’ve received the report … What next? If the report does not contain any damaging information – GREAT! If it DOES contain damaging information, you can reject an applicant based on the poor report. This is called “adverse action” and the employer must follow certain requirements.  “adverse action” = “a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee.”

14. Fair Credit Reporting Requirements When taking an adverse action, the employer must -- 1. Disclose to the applicant that you are not selecting him/her because of the poor report. 2. Provide a copy of the consumer report and who provided it to you. 3. Provide a summary of consumer rights (a document provided by the Consumer Financial Protection Bureau).

15. Potential Liability for FCRA Non-Compliance The FCRA allows an applicant or employee to sue an employer for “negligently” or “willfully” failing to comply with any of the FCRA’s requirements. The statute of limitations for violations of the FCRA: (1) two years after the plaintiff discovers the violation; or (2) five years after the date on which the violation that is the basis of the alleged liability occurred.

16. Emergence of FCRA Class-Actions Recently, large employers have lost several class actions because they violated FCRA requirements.  Did not provide notice or  Did not properly handle documents. As more publicized settlements occur, the risk grows for “copycat” suits brought by plaintiffs’ attorneys not previously familiar with the FCRA.

17. Hiring Decisions Employers must be CONSISTENT with the treatment of applicants.  What if you hire the white applicant with poor consumer report and then use similar information as a basis for not hiring a minority applicant. LAWSUIT! Employers are allowed to have different consumer report standards for applicants v. employees. TIP: Employers cannot discriminate (refuse to hire) an applicant simply because he/she filed for bankruptcy. BUT... can refuse to hire because of bad credit.

18. Using Background Information Are You Risking a Lawsuit?: Ask Three Questions Question #1 – Is all available information equally relevant in selecting a candidate? Question #2 – Do you have valid reasons to order background checks? Question #3 – Are you making appropriately tailored assessments of unsuitability?

19. Q #1 – Is the information equally relevant? The scope of a background screen can be as narrow as reviewing driving history or as broad as reviewing all information contained in any public and educational record. As you peruse the menu of screening choices you should ask yourself, “What are we going to do with the results?”

20. Q #1 – Is the information equally relevant? Criminal History  Before hiring candidates, identify what kind of criminal background information you will look for …  Related to honesty (theft, etc.)  Including how many years back  Employers get sued when there is inconsistency in the type of background check each applicant gets

21. Q #1 – Is the information equally relevant?  Ex: Employer refuses to hire a qualified minority with a DUI conviction and then hires a qualified white male with similar DUI conviction.  Establishing a policy will: (1) help prevent lawsuits and (2) help defend against them if and when they come CONSISTENCY IS KEY

22. Q #1 – Is the information equally relevant? Credit History  Do the same financial background check for all applicants applying for the same job – not just some of them.  Use the information for positions with financial risk, i.e. such as accountant, controller, etc.  Provide an opportunity for applicants to explain their negative credit-history information. CONSISTENCY IS KEY

23. Q #1 – Is the information equally relevant? Arrest history  When a job candidate is arrested for a crime and then not convicted (or only convicted of a less serious crime):  both state and federal regulators have warned employers to either ignore this information altogether, or  use it merely as a basis to ask an applicant for more detail about the events surrounding the arrest. CONSISTENCY IS KEY

24. Q #2 – Valid reasons for the report? Should you complete a background check for the position? Consider this information :  the nature of job duties;  the environment where the work is performed; or  the exposure to the public Do these factors make it important to be able to evaluate a candidate’s criminal history or current financial position as part of your assessment?

25. Q #2 – Appropriate assessments? Consistency is a critical litmus test of whether there is discrimination in the workplace The greater the consistency, the less likely that discrimination is present.

26. Q #2 – Appropriate assessments? To err on the safe side -- you should place greater emphasis on criminal (or credit) history that makes a candidate unsuitable for a particular job position by considering factors such as:  The nature of the job sought;  The number, nature and gravity of offense(s), as well as surrounding facts such as age at the time of conviction;  Amount of time since the offense and/or completion of the sentence, and any evidence of rehabilitation efforts, employment history, or compelling references.

27. Other Types of Background Checks What if you do not use a consumer reporting agency, such as a Sheriff’s office or the FDLE?  Background checks done by non-CRAs are not regulated by the FCRA and its “notice” requirements.  Still obtain the applicant’s consent.  A well-drafted authorization form will allow you to run background checks on that employee in the future.

28. Reference Checks Ask all you want!  Job references  Performance/Attitude, etc  Previous employment  Gaps in employment  “Job hoppers”  Reasons for leaving the job.  “He didn’t get along with the supervisor.”

29. False or Misleading Information What if you unknowingly receive false or misleading information from the applicant and you use it as a reason for non-selection?  Entirely permissible. You still must be consistent in what weight you give certain facts.  Important to document reference information What if – after you hired the applicant – you discover he provided you false/misleading info?  You can terminate the employee. Just be consistent.  Warning on application.

30. A Few Tips TIP: written consent is required to obtain school transcripts or detailed information on an applicant’s military service record. TIP: Do not place a candidate who does not meet minimum qualifications into the pool of candidates who do meet qualifications. TIP: Carefully review information given on application/resume.  Compare  Look for gaps

31. A Few Tips TIP: Proofread your own forms! Employment Applications, Contracts and Orientation Materials

32. Hiring Decision on an Impermissible / Illegal Reason Race  Title VII and FCHR  Pretty self-explanatory – you cannot non-select because of someone’s race Sex  Title VII and FCHR  Gender is one component  Pregnancy – what happens if an applicant says she is pregnant – can you use that as a basis for non-selection?  No! Its the same as if they were current employee.

33. ANY QUESTIONS, CONTACT ME AT: 906 NORTH MONROE STREET TALLAHASSEE, FL 32303 (850) 561-3503 DSOKOLOW@ANBLAW.COM THIS PRESENTATION IS NOT INTENDED AS A SUBSTITUTE FOR INDEPENDENT LEGAL ADVICE. Thank You