The Implications of Criminal & Credit Checks

Lesson Four: Employer Negligence - Part I

In the first three lessons of this course we exhaustively reviewed the dynamics of discrimination laws in

the United States, their proscriptions and their exceptions. Provided that a job applicant makes it

beyond these hurdles, and the employer in question is preparing to offer him or her a job, there are

several things that HR professionals should know in order to avoid liability in hiring.

Employer Negligence

Most liability that an employer might bear in the employment context is in the form of negligence,

either directly or vicariously. There are other potential grounds for liability in the employment

environment, including contract-related matters. However, as the vast majority of employees are not

hired subject to a contract, the following discussion will focus mainly on concerns related to

employment in the “at will” context. 1

In order to participate in an informed discussion about employment negligence, one must first

understand the definition of negligence. Negligence in the legal arena concerns unintentional harm that

results from a failure to use the care that would be expected of a reasonable person under the same

circumstances (Negligence, n.d.). Negligence is usually a civil tort (wrong), but may rise to the level of

criminal culpability if the conduct of the tortfeasor is sufficiently reckless or severe. Generally,

negligence has four key elements:

 Duty: In order for someone to be guilty of negligence, he or she must have first had a duty of

care. An example will serve to illustrate. Suppose a passerby, Steve, comes across a person in

peril, Bob. Let us say that Bob is suffering a heart attack and is in need of immediate medical

attention. Now, as heartless as it might be for Steve to decline to help Bob (even by simply

calling 911), generally no such duty exists for Steve, and thus there can be no negligence. 2 In the

employment context, employers almost always have a duty to maintain a safe and secure

environment for their employees and customers.

 Breach: In addition to the existence of a duty, the accused must have also breached his or her

duty. Let us change the facts of the above example and suppose that Steve is a server in a

restaurant and Bob is his customer. Under these circumstances, Steve probably does have a duty

to help Bob, but if he fulfills that duty, say, by calling 911, then there obviously can be no

negligence. This element of breach is the focus of many, if not most, negligence disputes.

 Damage(s): In order for someone to be found guilty of negligence, the breach of whatever duty

is in question must have resulted in damage of some kind. If Steve fails to help Bob, but Bob

recovers from his heart attack on his own with no harm of any kind, he cannot successfully sue

Steve for negligence. Harm must have been suffered. Note that damage need not be physical in

nature, though. Bodily injury is of course an intuitive example, but emotional harm and even

financial damage (loss of property, value, or earnings) will suffice for damage.

 Causation: The final element of negligence requires that the breach of duty on the part of the

accused be both the direct and proximate cause of the damage in question. Keeping with our

‘Steve and Bob’ example, suppose that Steve fails to help Bob, but someone else in the

restaurant attempts to help Bob by calling 911. Emergency services arrive and transport Bob to

the hospital by ambulance, but along the way the ambulance is in a vehicle accident that badly

injures Bob (injuries unrelated to Bob’s earlier heart attack). It is unlikely that Steve would be

found responsible for the injuries that Bob sustained as a result of the ambulance accident,

because the accident was a superseding and intervening cause of said injuries, and was not

foreseeable by Steve. 3

Establishing Employer Negligence

Now that we have a clear understanding of what negligence is (and is not), we can discuss the ways in

which employers may be found negligent for the actions of their employees. There are several ways in

which such claims can be established, but two of the most common are: (1) through proof that an

employer knew or had reason to know that an employee would behave in a negligent manner; and (2)

through vicarious liability for the actions of employees acting within the scope of their employment.

Negligence through Notice

The first means of establishing employer negligence is through proving that the employer either actually

knew, or if not, should have known (this is a legal concept known as constructive notice) that an

employee had a propensity for behaving in a negligent way. This concerns the very complicated and

controversial area of employee screening. Generally there are two types of employee screening tools:

those which look at applicant historical information, and those which look at current (at the time of

application) applicant circumstances. This lesson will focus on the two most common types of applicant

history audits that have been established as permissible for employment purposes, provided that they

are narrowly tailored to a specific purpose and do not infringe on Title VII protections. Those two types

are criminal and credit checks. 4

Criminal Checks

In 2012, the EEOC published a comprehensive set of guidelines for the propriety of criminal checks used

in employment decisions (Spoden, 2013). Generally, the guidelines preclude any use of background

checks that amount to either disparate treatment or disparate impact discrimination (see Lesson One

supra for more information on these concepts). However, this becomes a very difficult issue for many

reasons. First, criminal data may not be accurate or complete, depending on whether an employer relies

on public or private data sources. Second, criminal statistics are known to have disproportionate

correlations with traits like race, such that a blanket exclusion of any applicants with criminal records

would have the effect (à la disparate impact) of discrimination based on a protected class. To overcome

a presumption of discriminatory intent, an employer would have to establish business necessity for such

criminal checks and exclusions, and so in 2012 the EEOC suggested three factors that should inform any

such policy:

1. the nature and severity of the criminal record in question;

2. the amount of time that has passed since conviction and/or incarceration, if applicable; and

3. the nature of the job for which the applicant is applying (Equal Employment Opportunity

Commission, 2012).

Using these tools, employers are encouraged to design criminal background check efforts with the

utmost scrutiny to what is appropriate for the circumstances. If an applicant committed a crime 20 years

prior to the time of application, and has had an otherwise clean record since, then unless the former

crime was of a most severe nature (e.g. murder), such history should probably be given little weight in

employment decisions. If an applicant’s past involves criminal vehicular behavior (such as criminal DUI),

but the job in question does not involve any driving, such an applicant should not be excluded. Endless

such hypotheticals could be imagined; the key is to use careful and purposeful reasoning in making such

decisions.

Credit Checks

With respect to credit checks, these hiring tools are permitted under the Fair Credit Reporting Act

(Federal Trade Commission, 1970). However, several states have enacted legislation outlawing these

practices. The reasoning behind such checks is the assumption that if an employee is suffering from

personal financial hardship, he or she might be more inclined to do unethical or illegal things (such as

stealing) in desperation. While this might appear a harsh assumption on the part of employers, credit

checks remain fair game (Guerin, n.d.). Public policy concerns have emerged post-recession about the

notion that these tools might be a dangerous kind of self-fulfilling prophecy. One can imagine a vicious

cycle wherein a lack of income leads to financial hardship and poor credit history, and that poor credit

history in turn has the effect of limiting opportunities for future employment/income, and so on. As with

criminal background checks, if and when credit reporting is used for employment screening at all, it

should be done with great care and precision, so as to craft a substantial nexus between exclusionary

criteria and job requirements. If a job entails no access to money or other valuables that could be easily

misappropriated, then credit history alone is probably an insufficient reason to exclude an applicant.

Conclusion

In this lesson, we introduced the concept of employer negligence, and explained the two most common

tools which employers use to avoid liability based on applicant history: the criminal check and the credit

check. In next week’s lesson, we will discuss the tools that HR professionals may employ for screening

employees based upon current circumstances.

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1 "At will” employment simply refers to employ of the kind that may be terminated by either employee

or employer at any time with or without notice. Many different employment conditions may modify the

nature of “at will” employment, but such stipulations are beyond the scope of this lesson.

2 As is discussed immediately infra, however, the existence of certain circumstances---such as the

relationship of business and customer---may otherwise create a duty here.

3 The difference between direct and proximate causation is a rather complex legal concept beyond the

scope of this lesson. HR professionals should focus on causation in its generally understood meaning,

and consult legal counsel where questions arise.

4 Other types of current status applicant assessments, such as physical fitness or substance use, may

also be permissible. These shall be discussed in future lessons.

References

Equal Employment Opportunity Commission (2012). Consideration of arrest and conviction records in

employment decisions under Title VII of the Civil Rights Act of 1964. Retrieved from

http://www.eeoc.gov/laws/guidance/arrest_conviction.cfm

Federal Trade Commission (1970). Fair Credit Reporting Act 15 U.S.C. § 1681. Retrieved from

https://www.consumer.ftc.gov/sites/default/files/articles/pdf/pdf-0111-fair-credit-reporting-act.pdf

Guerin, L. (n.d.) Running credit checks on job applicants. Nolo. Retrieved from

http://www.nolo.com/legal-encyclopedia/running-credit-checks-applicants-35457.html

Negligence (n.d.) Cornell University Legal Information Institute. Retrieved from

https://www.law.cornell.edu/wex/negligence

Spoden, M. C. (2013, April 20). Walking a tightrope: EEOC guidance to avoid negligent hiring.

Construction Executive. Retrieved from

https://enewsletters.constructionexec.com/managingyourbusiness/2013/04/walking-a-tightrope-eeoc-

guidance-to-avoid-negligent-hiring/