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When Background Screens Turn Up Criminal Records
 

By Roy Maurer  5/5/2014

Nine out of 10 employers run criminal background screens on applicants as part of the hiring process, according to research from the Society for Human Resource Management. And the number of Americans who have a criminal history on file—about 30 percent, or 92 million people, according to the Bureau of Justice Statistics—has increased exponentially in recent years.

So what happens when a job candidate’s background check reveals a criminal record?    

Experts advise employers to stay current with the state and federal regulations that govern the use of criminal records in background screening; use a hiring matrix to make consistent decisions; assess applicants individually; and stay in legal compliance by understanding the adverse action and record dispute processes.

“If your candidate has a criminal background, the first step is to educate yourself on the top legal issues,” said Angela Preston, vice president of compliance and general counsel at background screening firm EmployeeScreenIQ. Your focus should be on compliance with the Fair Credit Reporting Act (FCRA) and anti-discrimination laws, she said.

“It is imperative that employers are familiar with their obligations under the FCRA,” said Seyfarth Shaw attorney and nationally recognized background screening expert Pamela Q. Devata. Employers that obtain an applicant’s criminal history information from consumer reporting agencies must follow the FCRA. “The majority of FCRA lawsuits allege either a violation of the consent requirement that an employer uses to procure the report; or when the two-step adverse action procedures are not adhered to,” she said.

And, although federal law does not explicitly protect applicants from discrimination based on their criminal records, it does protect against discrimination based on race and ethnicity. The Equal Employment Opportunity Commission (EEOC) published updated guidance on employers’ use of criminal background checks in April 2012 to address its concern that criminal background checks have an unintended discriminatory impact on particular minority groups. “When a background check reveals that a candidate has a record, employers should review the EEOC guidance to ensure that the nature and gravity of the offense are taken into account along with the time that has passed since the conviction and the nature of the job held or sought,” Preston said.

In addition, some 11 states and 60 municipalities have enacted ban-the-box ordinances prohibiting employers from asking about arrest records at the time of application, according to the National Employment Law Project. These measures mostly apply to public employers, however, four states (Hawaii, Massachusetts, Minnesota and Rhode Island) and a growing number of local governments have passed ban-the-box laws that apply to private employers also.

While none of these measures prohibits checking for criminal records entirely, the laws vary as to when employers can ask about criminal history. The range includes employers being permitted to ask about criminal history any time after the initial application (Massachusetts), after the applicant has been selected for an interview (Minnesota), or only after a conditional offer of employment has been made (Hawaii).

Furthermore, what employers can ask applicants varies by state. Some laws explicitly prevent employers from asking about nonconviction arrests or expunged records at any time during the hiring process. In some states, certain industries or positions are exempt (such as positions in child care, health care, and financial institutions).

Using a Hiring Matrix

Employers have the option of creating a hiring matrix specific to their workplace, which can help determine which criminal convictions the company considers relevant. The guidelines are applied consistently and create a clear standard against which every applicant is measured.

“There is no set formula for creating a hiring matrix,” said Preston.  “As a rule of thumb, qualifications based on criminal history should be position-specific, and should not include blanket policies,” she said. For example, positions involving driving might take applicants’ DUI convictions into account. Theft convictions may be considered for jobs involving access to money, and violent crimes for jobs involving access to vulnerable populations.

“Whatever the format, the hiring matrix can be a useful tool to avoid any unintended bias, ensure that hiring managers are held to a consistent standard, and to document that a criminal background screening policy is job-related and being applied in a nondiscriminatory way,” Preston said.

Individualized Assessments

The 2012 EEOC guidance on the use of criminal records created a de facto new requirement, according to experts: the individualized assessment.

“Their [the EEOC] position is that the guidance is not new, but rather intended to be a more-useful iteration of what’s always existed. But that phrase did not exist,” remarked Melissa Sorenson, executive director of the National Association of Professional Background Screeners. In order to prevent the potentially discriminatory impact of criminal records on the hiring process, employers are instructed to inform applicants through writing, by telephone, or in person that they may be excluded because of past criminal conduct, and provide them with an opportunity to demonstrate that the exclusion does not properly apply to them. Some employers have been doing something which looks like the EEOC’s individualized assessment for years, but now it is guidance, Sorenson said.

According to the agency, some factors to consider when conducting an individualized assessment include:

  • Additional facts or circumstances surrounding the offense.
  • Age at the time of the offense or the time of release.
  • Evidence that the individual performed the same type of work post-conviction with no known incidents of criminal conduct.
  • Employment history before and after the offense.
  • Rehabilitation efforts.
  • Employment or character references along with any other information regarding fitness for the particular position.

There appears to be some room for interpretation on what employers’ policies and processes look like for individualized assessments, said Sorenson. “Many employers have noted that they have had to either tweak existing processes, or create whole new processes that met what we’re all now calling individualized assessments,” she said.

Employers would be wise to include in their background screening policies consideration of the Green factors, said Devata, referring to the three components identified by the Eighth Circuit in the 1975 Green v. Missouri Pacific Railroad decision that were relevant to assessing whether a criminal record exclusion is job related for the position in question and consistent with business necessity. The three factors to consider are:

  • The nature and gravity of the offense.
  • The time that has passed since the offense and/or completion of the sentence.
  • The nature of the job held or sought.

Another challenge for employers is when the EEOC’s guidance conflicts with state law, placing businesses and background screeners in the difficult position of inviting an EEOC investigation simply by complying with state laws that limit who can be hired for certain positions.

“For example, when an employer is prohibited from hiring or licensing someone for a certain conviction, but feel that they have to conduct an individualized assessment, with the knowledge that they can’t hire that person,” said Sorenson. The EEOC is aware of the issue, she added, “but have not directly responded to it.” Complying with state law is certainly something an employer should present as part of their defense if it finds itself in an EEOC investigation, she said.  

The EEOC has recently stepped up enforcement against employers that use criminal background-screening procedures, though with mixed success. In June 2013, the EEOC brought suit against Dollar General and BMW, alleging that the employers’ use of criminal-background checks in the hiring process without individualized assessments violated Title VII of the Civil Rights Act of 1964. “These two pending class-action lawsuits demonstrate that the EEOC is aggressively pursuing enforcement of the individualized assessment requirement. For employers, cases like these are all the more reason to stay on top of this issue,” said Preston.

“NAPBS recommends both its members and their clients review their entire screening program on a periodic basis to ensure polices and processes are in place and consistent with current statutory law, case law, guidance and best practices,” said Sorenson.

Understanding the Adverse Action Process

Before rejecting a job applicant based on information obtained in a background screen, companies are obligated under the FCRA to follow a two-step adverse action process. First, employers have to give applicants notice before a hiring decision is made informing them that they might be rejected based on the results of a background check. Companies must provide to the applicant the following in advance of a decision, either in writing, in person or electronically:
1. A copy of the consumer report that was obtained and relied upon to make the decision.
2. A copy of the FCRA’s A Summary of Your Rights Under the Fair Credit Reporting Act.
3. The name, address and phone number of the background screening company that provided the screening report.
 
“Using this process, the applicant has an opportunity to see the background report, challenge any inaccuracies in the report, and clear any negative information that is disqualifying him or her from the job,” said Preston.

The FCRA also requires a second notice be given an applicant if an adverse action—the decision not to hire—is taken based on information in the background report.

This notice tells people about their rights to see information being reported about them and to correct inaccurate information. The notice must include:

  • The name, address, and phone number of the consumer reporting company that supplied the report.
  • A statement that the company that supplied the report did not make the decision to take the unfavorable action and can’t give specific reasons for it.
  • A notice of the person’s right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get an additional free report from the company if the person asks for it within 60 days.

There is no specific period of time an employer must wait after providing a pre-adverse action notice and before taking adverse action against the candidate. “Some reasonable period of time must elapse, but the minimum length will vary depending on the particular circumstances involved,” the statute reads. In a 1997 Federal Trade Commission (FTC) opinion letter, the agency stated that five days “appears reasonable.” The majority of FCRA lawsuits allege either a violation of the consent that an employer uses to procure the report, or when the two-step adverse action procedures are not adhered to, said Devata. “Employers should ensure that employees responsible for compliance with the adverse action process are knowledgeable about the timing of the letters as well as any state law notices,” she said. The two-step process is a continued source of confusion for many employers, said Preston. “If you miss one step of the process, you could be forced to learn your lesson in court, defending a class-action lawsuit like other companies, including CVS, Disney and Domino’s Pizza, to name a few.”

The Dispute Process

While background screening companies have a responsibility to provide accurate and up-to-date information, there are instances when a criminal record may be reported incorrectly. “Public records are not completely free from error, and it is not unheard of that court records might contain mistakes,” said Preston. “Sometimes parole records are not updated or a court may not show the final disposition of a deferred decision in a criminal matter,” she said.

Candidates have the right to contact the background screening company directly to dispute the accuracy of a background report. If that happens, the background screening company will notify the candidate that a dispute is pending. The FTC requires all disputes be reinvestigated.

Employers are not required to keep positions open during the dispute process. That said, “understanding the intent of the adverse action process is to allow the applicant an opportunity to dispute, and keeping the position open enables the intent to be seen through,” said Sorenson.

On the other hand, many companies don’t have the luxury of keeping positions open for an extended time period, said Preston.

“Treat all disputed records seriously, investigate them, and process them as efficiently as possible,” said Sorenson. “The ultimate goal for the employer and the background screening provider is to prepare an accurate report. It’s in the best interest of all parties.”

Roy Maurer is an online editor/manager for SHRM.

Follow him @SHRMRoy

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