In Some States, You Cannot Request a Credit Report for Most New Employees

In their quest to hire reliable and trustworthy employees for open positions, many employers have turned to credit reporting agencies for applicant background information. Although such information may be readily available, obtaining it could lead to possible liability if the appropriate policies and procedures are not in place.

Discrimination Claims
Under Title VII, employer practices – such as basing hiring and other employment decisions on credit history information – that weigh more heavily on individuals within protected categories could lead to discrimination claims. For instance, if an employer’s use of credit reports has the effect of excluding women or minorities from certain positions, that practice could lead to liability.

In addition, a number of states have enacted or are considering enacting laws that explicitly prohibit discrimination on the basis of credit histories. For instance, Illinois’ newly enacted Employee Credit Privacy Act, which goes into effect on January 1, 2011, prohibits employers from inquiring about an applicant’s or employee’s credit history and from ordering or otherwise obtaining an applicant’s or employee’s credit history or credit report from a consumer reporting agency. Despite the potentially broad reach of Illinois’ new Act, there are several exceptions including:

• Situations where an employer can show that a satisfactory credit history is a “bona fide occupational requirement” for a position, which is further defined in the statute;
• Employers who are banks, savings and loans, or certain other financial institutions; insurance or surety businesses; state law enforcement or investigative units; state or local government agencies that otherwise require use of the employee’s or applicant’s credit history or credit report; and entities that are defined as debt collectors under federal or state statute; and
• Background investigations that do not include a credit history or report as permitted under the Fair Credit Reporting Act.

Employers that violate the Illinois Act could face damages, injunctive relief, and liability for attorneys’ fees and costs and could also face liability for any retaliatory conduct under the Act.

Along the same lines, legislation has been introduced in, among other states, Michigan and Ohio as well. In Michigan, House Bill 4528, also known as the Job Applicant Credit Privacy Act, would prohibit an employer from failing or refusing either to hire or recruit an individual because of the individual’s credit history and from inquiring about a job applicant’s or potential job applicant’s credit history. As with the Illinois Act, certain exceptions would apply for individuals who hold positions with identified types of companies including, for instance, banks or other financial institutions.

In Ohio, House Bill 340, which was introduced on October 28, 2009, would make it an unlawful discriminatory practice for an employer to use a person’s credit rating or score or consumer credit history as a factor in making decisions regarding that person’s employment. House Bill 340would allow a person to file a charge with the Ohio Civil Rights Commission and would provide similar penalties for violations.

As these examples show, a blanket policy of requiring credit reports for all employees or applicants could lead to possible discrimination claims under state or federal law or both.

The Federal Fair Credit Reporting Act
Moreover, even when employers are permitted to obtain applicant or employee credit reports, liability can still attach if the detailed procedures set forth in the federal Fair Credit Reporting Act (FCRA) are not followed. Specifically, the FCRA requires employers to inform applicants that a credit check will be performed and to obtain the applicants’ written permission in a stand-alone document that is not part of the employment application.

In addition, if an employer decides to take an adverse employment action against an employee or applicant based on the credit check, the employer must first give that individual a “pre-adverse action disclosure” that consists of a copy of the credit report and a written summary of rights under the FCRA before taking the adverse action. Presumably, this requirement is intended to allow an employee or applicant an opportunity to attempt to correct any inaccuracies on the report. Once the adverse action has been taken, the employer must provide the applicant or employee with an “adverse action notice.” This notice must alert the recipient that the employer, not the credit reporting agency, made the adverse decision; inform the recipient that he or she has a right to a free copy of the report; and provide the name, address and phone number of the agency that provided the credit report so that the recipient can dispute any inaccurate information.

Employers that fail to comply with the FCRA may face liability for actual damages, attorneys’ fees, costs and punitive damages. Criminal penalties are also possible for any employer that obtains a credit report under false pretenses.

Minimizing The Risks
Some of the ways you can minimize the risks of obtaining employee or applicant credit reports are by:

• Determining whether state laws govern your use of applicant/employee credit reports;
• Evaluating whether the benefits of obtaining credit reports for various positions outweigh the risks of doing so;
• Developing appropriate policies and procedures to govern procurement of credit reports; and
• Ensuring compliance.

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HR Magazine Survey Companies on Back ground checks

Who Checks on What?
The December HR Magazine shared these statistics from a SHRM survey:

• Companies doing criminal background checks? 73% do them for all, 19% for some, 7% no
• Companies doing credit background checks? 13% do them for all, 47% for some, 40% no
• Companies conducting pre-employment drug testing? 55% do them for all, 17% for some 21% no

As with most SHRM surveys, most of the companies surveyed are very large.
Usually less than 15% are the size of our Member base. Nevertheless, where does your company fit in this? We’d advise you to do criminal background checks and drug tests on everybody, and credit background check on everybody you’re allowed to by law. This will eliminate exposing yourself to unnecessary risks.

 The EEOC is severely restricting credit background checks on a disparate impact basis.

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PointHR has been doing this for companies like yours for 17 years

Supreme Court- Complaints Do Not Have to be Made in Writing for FLSA Retaliation Claus to Apply

On March 22, 2011, the U.S. Supreme Court held in Kasten v. Saint-Gobain Performance Plastics Corp., that retaliation under the Fair Labor Standards Act, can be based on oral complaints, not just written ones. The Court rejected the employer’s argument that oral complaints are too indefinite to provide an employer with fair notice that an employee is engaging in protected activity.

Facts of the Case: The plaintiff employee believed that the location of the defendant employer’s time clock was illegal under the FLSA because it prevented employees from receiving fair compensation for the time they spent changing in and out of work clothes. The employer had an ethics policy that imposed on employees the obligation to report suspected violations of the law and an internal grievance resolution procedure that instructed employees to immediately contact their supervisor with “questions, complaints, and problems.” The employee claimed that he “raised concerns” with his supervisor that the location of the time clocks was “illegal” and that he also advised human resources personnel (a generalist and the HR manager) that the company would “lose in court” if a legal challenge were brought about the time clock location. He also told his lead operator that he was “thinking about starting a lawsuit about the placement of the time clocks.” The employee claimed that his subsequent discharge from employment was because of these complaints. He sued under the FLSA’s anti-retaliation provision and his claims were dismissed on summary judgment. The trial court, affirmed by the U.S. Court of Appeals for the Seventh Circuit, concluded that the FLSA, which prohibits retaliation against employees because they “file any complaint” required a written filing with a government agency.

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Supreme Court- Complaints Do Not Have to be Made in Writing for FLSA Retaliation Claus to Apply

On March 22, 2011, the U.S. Supreme Court held in Kasten v. Saint-Gobain Performance Plastics Corp., that retaliation under the Fair Labor Standards Act, can be based on oral complaints, not just written ones. The Court rejected the employer’s argument that oral complaints are too indefinite to provide an employer with fair notice that an employee is engaging in protected activity.

Facts of the Case: The plaintiff employee believed that the location of the defendant employer’s time clock was illegal under the FLSA because it prevented employees from receiving fair compensation for the time they spent changing in and out of work clothes. The employer had an ethics policy that imposed on employees the obligation to report suspected violations of the law and an internal grievance resolution procedure that instructed employees to immediately contact their supervisor with “questions, complaints, and problems.” The employee claimed that he “raised concerns” with his supervisor that the location of the time clocks was “illegal” and that he also advised human resources personnel (a generalist and the HR manager) that the company would “lose in court” if a legal challenge were brought about the time clock location. He also told his lead operator that he was “thinking about starting a lawsuit about the placement of the time clocks.” The employee claimed that his subsequent discharge from employment was because of these complaints. He sued under the FLSA’s anti-retaliation provision and his claims were dismissed on summary judgment. The trial court, affirmed by the U.S. Court of Appeals for the Seventh Circuit, concluded that the FLSA, which prohibits retaliation against employees because they “file any complaint” required a written filing with a government agency.

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I-9 Audit

 

How to Document your I-9 form for H1-B Extensions (2011 Update)

Background Checks are Essential

FORT WORTH - East Handley Elementary School in Fort Worth needs involved parents just like any other school.

Except, at East Handley, one parent volunteer turned out to be a registered sex offender.
It didn't take a thorough background check to learn Jon Coots served eight years for a 1996 sex crime with a child since it can easily be found on the state's sex offender registry, which Sean Young and his wife were shocked to discover.

"I recognized him because I'm also in the PTA," Young said. "He's a very active member at the school. He's a member of the PTA."

Young immediately printed off the registry information and took it to the school's vice principal and principal.
"She just said, 'We should have caught it before now and we apologize,'" Young said.

Young had to fill out forms for a background investigation to volunteer, which is district policy. He said he asked the principal what happened to the paperwork on Coots.

"I think she said they had sent it to his house and that he never complied," he said.

A Fort Worth Independent School District spokesman, who declined to appear on camera, said school officials should have followed up. He also added that Coots was never alone with children in classrooms and did not go on field trips.
That doesn't impress Young.
"I've seen him alone in hallways during school hours," he said. "To me that's alarming."

The district said Coots will still be allowed into the school, but only under escort and to see his own children.

There are no new criminal allegations against him and police say no laws were broken because sex offenders who complete parole are not prohibited from helping out at a school.

But Fort Worth ISD spokesman Clint Bond told News 8 that all principals are being notified about the mistake so they can double check their own procedures.

Young said he believes the district should have sent letters home to East Handley parents. Bond said that at this point, there has been no incident involving children that would require parent notification.

by JIM DOUGLAS
Posted on February 25, 2011 at 10:39 PM

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