DRIVER SCREENING: A BREAKDOWN OF TWO NEW SOURCES OF LIABILITY 1

 Scott Anderson – VP Safety, Anderson Trucking Service, Inc.  Lana Batts – Co-President, Driver iQ  David Robinson – Partner, Scopelitis, Garvin, Light, Hanson & Feary 2

 To hire quality drivers  To follow regulatory requirements 3

 No direct supervision  Cargo theft liability  Violent crimes liability  Negligent hiring claims  Protect customers  Customer requirements 4

 One of four US adults have been arrested or convicted  6.5% have a felony record  One in 15 have gone to prison  700,000 individuals are released from prison and millions are cycled through local jails each year 5

 Hard to hire drivers  Often not face-to-face  Quick turnaround needed 6

 EEOC 2012 Enforcement Guidelines  Consideration for arrests and conviction records for hiring  Bottom Line – More difficult to eliminate criminals in hiring process 7

 Class Action Cases  Recent class action lawsuit against Consumer Reporting Agency for $28 million with 700,000 plaintiffs on regarding stale criminal records  Most plaintiffs were truck drivers  Recent class action against Kmart for $3 million with 65,000 plaintiffs failure to provide most recent FCRA forms  Administration Fines  EEOC collected $354 million in fines in administrative process 8

 Recent EEOC Guidance  Recent FTC Enforcement  Recent Class Action Lawsuits  Obama Administration Predilection  Rules have not changed, but enforcement has  Looking for systemic violations  Looking for high profile violations  EEOC collected $354 million in fines in administrative process 9

 Using criminal records to screen potential employees is seen as a civil rights issue  Discrimination based on criminal record is not in the original 1964 Civil Rights Act….  But since 1969, the EEOC has investigated cases where criminal records were used in a discriminatory way, based on race or national origin 10

 Some employers are unwilling to consider recently incarcerated individuals.  Convicted felons tend to be employed at a much lower rate than non-criminals.  Current incarceration rates:  1 in 17 white men  1 in 6 Hispanic men  1 in 3 African-American men 11

 Effective April 25, 2012  Represents the EEOC’s interpretation of the law  Does not have the force or effect of regulations  Intended to provide guidance as to how the EEOC will interpret the law in its investigations and administrative proceedings  Office of Federal Contract Compliance applying EEOC guidelines to haulers of government traffic 12

 Recent class action lawsuit for $28 million with 700,000 plaintiffs on same issues  Stale records of criminal violations used to deny employment  Lack of contemporaneous notice to the applicant  Involved mostly truck drivers 13

 Job Description  Applications  Screening  Post Screening 14

 Criminals need not apply  No criminal checks unless breaks in employment  Reasonable Suspicion Criminal Checks  Full criminal checks 15

 Can you state it on the application?  EEOC forbids the automatic rejection of the person because he/she checked the box  Only disqualifying the honest ex-offender  Can you ask on application?  EEOC recommends not asking if a person has a criminal record on the application  Many states and cities have passed, or are considering “ban the box” legislation  Last year’s Congress proposed a federal ban 16

 Criminals need not apply  No criminal checks unless breaks in employment  Reasonable Suspicion Criminal Checks  Full criminal checks 17

 Federal Study 12 months ending 9/30/2009 (US DOJ BJS Federal Justice Statistics 2009)  86,975 offenders (convictions)  67,499 (or 77.6 %) sentenced to incarceration o Of those, 51,639 (or 59.4%) had prior convictions  19,482 (or 22.4% ) were not incarcerated o 9,520 (or 48.9%) probation only (including 6,676 felons) o 2,747 (or 14.1% ) fine only (including 289 felons) o 7,215 (or 37.0%) suspended terms, jail time less than 4 days, deportation, unknown disposition 18

% 16.1% 35.3% 25.0% 4.4%

 Criminals need not apply  No criminal checks unless breaks in employment  Reasonable Suspicion Criminal Checks  Full criminal checks 20

 Remember current incarceration rates:  1 in 17 white men  1 in 6 Hispanic men  1 in 3 African-American men  Since1969, the EEOC has investigated cases where criminal records were used in a discriminatory way, based on race or national origin  Must be consistent in practice with strict guidelines for recruiters – not just a feeling 21

 Criminals need not apply  No criminal checks unless breaks in employment  Reasonable Suspicion Criminal Checks  Full criminal checks 22

 Product of the internet age  Claim to have national scope  Quick and cheap  Neither accurate nor complete  Usually contain disclaimer that they should not be used for hiring purposes  Not compliant with FCRA  Not recommended by EEOC  Beware of Social Media in light of Title VII 23

 None is national  No federal information on 94 district courts  No information on 10 states  Scattered information on the remaining 3,100 counties and 30,000 incorporated towns and cities  Not considered current  Updated at different times  EEOC now questioning whether stand alone database searches are in compliance with these deficiencies 24

 Databases of criminal records that are not official government repositories must only be used as “pointers”;  Verify records found official government repositories to ensure accurate, complete and up to date information;  Consider requiring a minimum of 2 unique identifiers (such as name and date-of-birth or name and social security number) match the candidate 25

Audit your criminal background screening process 1.Application  Do not ask about arrests  If you ask about convictions, consider adding the following language: “A positive answer to this question does not necessarily eliminate you from further consideration”  State laws 26

2. Make your screening process targeted  Eliminate any reference to a blanket exclusion  Avoid permanent exclusions  Be able to show some nexus between the job and the conviction  Consider:  Job title  Essential functions  Circumstances under which job is performed  Nature and gravity of crimes  Relevance of crime to the position 27

3. Allow for an individual assessment  Notice  Opportunity to explain or clarify  Consideration of additional information  Facts surrounding offense or conduct;  Number of offenses for which individual convicted;  Age at time of conviction or release from prison;  Evidence individual performed same type of work, post conviction, with no known incidents of criminal conduct;  Length and consistency of employment history before and after offense or conduct;  Rehabilitation efforts; and  Employment references. 28

Two areas of concern for motor carriers:  1. The Disclosure and Authorization Form  2. The Adverse Action Protocol 29

 Clear and conspicuous disclosure  In writing  In a document that consists solely of the disclosure  Prior to the report be procured  Applicant authorizes in writing * Motor Carrier Exception 30

IF:  The applicant seeks a position as a driver, driver’s helper, loader, or mechanic; and  The only communication with the applicant has been by mail, telephone, computer, or similar means – a “Remote Applicant” 31

THEN:  The carrier can provide oral, written, or electronic notice to the Remote Applicant that a background check will be obtained and a summary of the applicant’s rights under the FCRA; and  The Remote Applicant can provide oral, written, or electronic consent 32

 Based in whole or in part on report  Prior to taking adverse action  Must provide (1) copy of report, and (2) description of applicant’s FCRA rights  Wait a “reasonable” period of time  Send final adverse action notice *Motor Carrier Exception 33

IF:  The applicant seeks a position as a driver, loader, or mechanic; and  The only communication with the applicant has been by mail, telephone, computer, or similar means – a “Remote Applicant” 34

THEN:  Motor carrier can send one notice to the Remote Applicant (within 3 business days) stating the following:  Adverse action taken  Contact information for Consumer Reporting Agency  Consumer reporting agency did not make the decision  Remote Applicant can obtain a copy of the report 35

Hall v. Vitran Express, Inc., Case No. 1:09- cv (N.D. Ohio)  class action  settled for $2.6 million on August 21, 2011 Hunter, et al. v. First Transit, Inc., Case No. 09-cv-6178 (N.D. Ill.)  class action  settled for $5.9 million in March,

Kelvin Daniel, et al. v. Swift Transportation Corp., Case No. 2:11-cv (D.C. Arizona 2011)  Class action Pitt v. K-Mart Corp., Case No. 3:11-cv (E.D. Virginia)  class action  settled for $3 million on January 28, 2013  60,000 class members 37

Audit your practices in this area 1.Is your authorization form valid?  Stand-alone document  Full disclosure that report will be used for employment purposes  Clear authorization  Continuing authorization  Signed by the applicant  Does the Motor Carrier Exception apply? 38

2.Are you complying with the adverse action requirements?  Train your personnel  Use a pre-adverse action letter  Implement a waiting period  Use a final adverse action letter  Does the Motor Carrier Exception apply?  Use the updated Summary of Rights under the FCRA form (1/1/13) 39

1. The game has changed -- Review all policies and procedures carefully 2. Review all employment applications 3. Identify essential job requirements 4. Identify qualifying convictions 5. Verify criminal convictions from databases 6. Use a valid FCRA Disclosure and Authorization Form 7. Allow for EEOC’s individual assessments 8. Allow for FCRA’s post adverse action notices 9. Maintain records