Module 2 - Case - HIRING PRACTICES AND LEGAL COMPLIANCE

bandrade1981

TheIncreasingRisksofBackgroundChecks.pdf

Home >Business & Finance homework help >Management homework help >Module 2 - Case - HIRING PRACTICES AND LEGAL COMPLIANCE

The Increasing Risks of Background Checks Scott, Kelly O; Fraioli, Patrick A . HRNews ; Alexandria (Nov 27, 2016).

ProQuest document link

ABSTRACT (ENGLISH) [...]a growing number of states, including California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada,

Oregon, Vermont and Washington, restrict companies from making employment decisions based on an applicant’s

credit report. [...]even when companies are permitted to use such information in hiring decisions, the Fair Credit

Reporting Act (FCRA) requires employers to provide applicants with a copy of their credit report, as well as a

written description of their rights under the FCRA. Federal law, specifically the Fair and Accurate Credit

Transactions Act (FACTA) Disposal Rule, requires “any person who maintains or otherwise possesses consumer

information for a business purpose” to properly dispose of this data. (Consumer reports can include information

from a variety of sources, including credit reports and criminal records.) That means that anyone who uses such

reports is subject to a slew of requirements, including getting applicants’ written permission before gathering data

and informing job seekers that hiring decisions may be made based on what is found. A Checklist for Employers *

Are credit checks relevant to the job for which you’re hiring? * Have you provided all applicants with a copy of their

credit report and a written description of their rights, as required by the Fair Credit... FULL TEXT Illustration by Dale Glasgow for HR Magazine

In the wake of new legislation, background checks that used to take place as a matter of course may now be worth

reconsidering. At a minimum, HR should be prepared to navigate more carefully the intersection between privacy

laws and employment practices to comply with multiple state and federal requirements.

Credit Checks

Roughly half of all employers use credit checks in the job application process, according to Society for Human

Resource Management research. But at a time when many people are struggling to make ends meet, some

legislators and employment experts argue that using credit reports in this manner is unfair-and not particularly

useful, since these screens are irrelevant to many positions and may be more likely to reflect economic hardship

than a lack of judgment.

Indeed, a growing number of states, including California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada,

Oregon, Vermont and Washington, restrict companies from making employment decisions based on an applicant’s

credit report.

Moreover, even when companies are permitted to use such information in hiring decisions, the Fair Credit

Reporting Act (FCRA) requires employers to provide applicants with a copy of their credit report, as well as a

written description of their rights under the FCRA. This gives job seekers the opportunity to correct inaccuracies

before the prospective employer makes any decisions based on the information.

Criminal Checks

Over the past several years, the Equal Employment Opportunity Commission has sought to limit employers from

asking applicants about their criminal records based on a growing concern that such policies disproportionately

affect black and Hispanic individuals from job opportunities. National data show that people in these groups are

arrested and incarcerated at rates disproportionate to their numbers in the general population.

Meanwhile, at the state and local levels, a movement to “ban the box”-that is, to refrain from asking job seekers to

check a box on an employment application if they have a criminal history-has caught fire. At least 24 states and

PDF GENERATED BY PROQUEST.COM Page 1 of 4

150 cities and counties have passed laws that require companies to wait to ask about a job seeker’s criminal

background until after he or she has been found to have met the initial qualifications for a position.

When HR professionals do ask applicants about their criminal histories, they must be careful not to seek too much

information or to improperly use what they learn. The FCRA permits consumer reporting agencies to report on

convictions for only up to seven years.

Additionally, many states have legislation with specific restrictions on the types of inquiries employers are allowed

to make. These states include California, Colorado, Kansas, Maryland, Massachusetts, Montana, Nevada, New

Hampshire, New Mexico, New York and Washington.

Such state laws also typically disallow companies from asking about sealed or expunged convictions or about

juvenile crimes. California and several other states prohibit the use of sex-offender information obtained from their

respective Megan’s Law websites. For all the states that have this restriction, improper use can result in the

company being held liable for actual and punitive damages, attorney fees, and civil penalties.

Safeguarding Information

It’s important for HR to properly safeguard and dispose of any information collected during the hiring process.

Federal law, specifically the Fair and Accurate Credit Transactions Act (FACTA) Disposal Rule, requires “any person

who maintains or otherwise possesses consumer information for a business purpose” to properly dispose of this

data.

If employers must retain these records-for example, to comply with a law requiring them to keep information used

in employment decisions-both FACTA and state privacy laws mandate that the data be protected from

unauthorized access or use.

California, for example, requires that “a business that owns, licenses or maintains personal information about a

California resident shall implement and maintain reasonable security procedures and practices appropriate to the

nature of the information, to protect that information from unauthorized access, destruction, use, modification or

disclosure.”

New Technologies

Some employers use vendors to provide background information in the pre-employment screening process. But

regardless of how the data is collected, the Federal Trade Commission has made it clear that the information

constitutes “consumer reports” under the FCRA. (Consumer reports can include information from a variety of

sources, including credit reports and criminal records.) That means that anyone who uses such reports is subject

to a slew of requirements, including getting applicants’ written permission before gathering data and informing job

seekers that hiring decisions may be made based on what is found. This is true even when companies use mobile

apps to collect or process information.

Seeking insight about candidates by having them log in to their social media accounts also warrants caution.

About half of states, including California, prohibit employers from requiring applicants to disclose passwords for

social networks such as Twitter or Facebook.

Public Sites

Even viewing job seekers’ public profiles or blog posts can be tricky. Companies must take care not to allow the

person making the hiring decision to become aware of a candidate’s political or religious views-or any other

information that could lead to a claim of hiring discrimination. For this reason, some employers opt to use third-

party services for scanning social media sites or otherwise separate any social media scanning from any hiring

manager’s duties.

Technology has both improved and complicated the pre-employment screening process. But there is one thing

that hasn’t changed: the need for HR professionals to ensure that any information they gather is relevant to the job

at hand and used with fairness and discretion.

Kelly O. Scott and Patrick A. Fraioli Jr. are attorneys at Ervin Cohen &Jessup LLP in Beverly Hills, Calif. Scott is

head of the firm’s Employment Law Department. Fraioli is a firm partner.

PDF GENERATED BY PROQUEST.COM Page 2 of 4

DETAILS

A Checklist for Employers

* Are credit checks relevant to the job for which you’re hiring?

* Have you provided all applicants with a copy of their credit report and a written description of their rights, as

required by the Fair Credit Reporting Act?

* Are criminal background checks aligned with Equal Employment Opportunity Commission guidance asking

employers to consider the nature and gravity of an offense, the time that has passed since conviction, and the

nature of the job sought?

* Have you protected data collected during the hiring process against unauthorized use?

* Have you made an effort to prevent the person making the hiring decision from learning information collected

through social media about a candidate’s political or religious views?

* Has information gathered about applicants who are not hired been properly disposed of, in accordance with the

Fair and Accurate Credit Transactions Act?

* Have you met state and local legal requirements regarding all background screening?

Subject: Privacy; Fair &Accurate Credit Transactions Act 2003-US; Hiring; Fair Credit

Reporting Act 1970-US; Employment; Social networks; Labor law; Employers; Credit

reports

Business indexing term: Subject: Fair &Accurate Credit Transactions Act 2003-US Hiring Fair Credit Reporting

Act 1970-US Employment Social networks Labor law Employers Credit reports;

Industry: 56145 : Credit Bureaus

Location: Oregon Vermont Colorado Illinois Connecticut Hawaii California Maryland Nevada

Company / organization: Name: Equal Employment Opportunity Commission--EEOC; NAICS: 921190

Classification: 56145: Credit Bureaus

Publication title: HRNews; Alexandria

Publication year: 2016

Publication date: Nov 27, 2016

Section: December 2016 / January 2017

Publisher: Society for Human Resource Management

PDF GENERATED BY PROQUEST.COM Page 3 of 4

LINKS Linking Service

Place of publication: Alexandria

Country of publication: United States, Alexandria

Publication subject: Business And Economics--Personnel Management

ISSN: 10473157

Source type: Trade Journals

Language of publication: English

Document type: News

ProQuest document ID: 1844348685

Document URL: https://search.proquest.com/trade-journals/increasing-risks-background-

checks/docview/1844348685/se-2?accountid=28844

Last updated: 2020-11-18

Database: ProQuest One Academic

PDF GENERATED BY PROQUEST.COM Page 4 of 4