May 2020 Newsletter

Financial audit team is checking the numerical graph to present., May 2020 Newsletter

Message from the Editor:
Welcome to another edition of ‘Inside Background Screening’ our new newsletter. Our goal is to bring to you cutting edge news and information about what is happening in the background screening world to help keep you informed and to position you to make the best possible hiring decisions.

We hope you enjoy ‘Inside Background Screening’ and that you will share your interest and thoughts with us.

Lorenzo Pugliano


Background Check Disclosures: What’s Extra But Not Extraneous?
The Ninth Circuit issued a decision in March that provides employers with actionable direction for the purposes of drafting and assessing the compliance of their background check disclosures and adverse action processes. Plaintiff Daniel Walker filed a class action against a grocery chain, alleging that he was unable to understand the nature of the background report that the grocery store requested. The District Court dismissed the complaint in June 2018, finding that nothing in the disclosure was extraneous, and that it was clear and conspicuous. The case was sent to the Ninth Circuit on appeal, where the term “extraneous” was assessed. Applying Syed v. M-I, LLC, and Gilberg v. California Check Cashing Stores, the Ninth Circuit held that a brief explanation of what it means to obtain a background check for employment purposes is not extraneous and satisfies the Fair Credit Reporting Act’s (FCRA) standalone disclosure requirement, but that disclosure of related processes is extraneous.
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Taking Into Account Salary History in Setting Pay
The Equal Pay Act (EPA) prohibits pay discrimination on the basis of sex and does not require proof of discriminatory intent. As such, the Ninth Circuit recently held for the second time in Rizo v. Yovino that, under the EPA, prior salary history cannot be used by employers to justify sex-based pay differentials. Although there is a circuit split at the federal level as to whether prior salary can justify sex-based pay gaps under the EPA, companies should be aware of “salary history bans” at the state and local level, including in New York, New York City, California, San Francisco, Colorado, Illinois, Massachusetts, Oregon and Washington. In most of these jurisdictions, an employer’s ability to rely on an applicant’s salary history in reaching a compensation decision is limited. Employers should, instead, consider position-related factors, such as duties and responsibilities of the position, and person-related factors, such as past experience and education levels.
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Employee Must Dispute Background Check Finding With Credit Agency, Not Employer
The plaintiff in Walker v. Fred Moyer, Inc., sued his employer under the Fair Credit Reporting Act (FCRA), claiming that the defendant’s FCRA disclosures contained extraneous information and therefore violated the law’s requirement that such disclosures be clear and concise. He also alleged that the defendant violated the FCRA by refusing to discuss the search results with him before his job offer was revoked. On appeal, the Ninth Circuit held that the FCRA notice should be limited to basic information about the search and its purposes, however, the employer may add additional information that is directly related to these required disclosures.
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9th Circuit: Employees Failed to Show Background Check Info Was Confusing
Employees in a putative class action lawsuit against Shamrock Foods alleged that the employer violated the Fair Credit Reporting Act (FCRA) by failing to obtain authorization for their background checks and properly disclose its intent to obtain consumer reports. In addition, the employees allege the information was included in a “lengthy” employment application. The 9th U.S. Circuit Court of Appeals concluded that the employees failed to show they were confused by background information in Ruiz v. Shamrock Foods Co., No. 18-56209 (9th Cir., March 20, 2020).
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Using Artificial Intelligence and Algorithms
Although the use of AI technology to make predictions, recommendations, or decisions has enormous potential to improve welfare and productivity, risks also are presented, such as the potential for unfair or discriminatory outcomes or the perpetuation of existing socioeconomic disparities. Both the Fair Credit Reporting Act (FCRA) and the Equal Credit Opportunity Act (ECOA) address automated decision-making. The Federal Trade Commission (FTC) Act authority can be used to prohibit unfair and deceptive practices to address consumer injury by emphasizing through law enforcement actions, studies and guidance that AI tools be transparent, explainable, fair and sound, while fostering accountability.
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Ninth Circuit Reinforces Prohibition Against “Extraneous” Information in Background Check Disclosures
In March, the Ninth Circuit issued its third opinion on the question of when an employer’s background check disclosure satisfies the so-called “standalone” disclosure requirement in the Fair Credit Reporting Act (FCRA), specifically providing practical guidance for drafting such disclosures. Employers may order background reports for employment purposes, but must first disclose their intention to do so and obtain authorization. The disclosure must be “clear,” “conspicuous,” and presented in a “document” that consists “solely” of the disclosure. The Ninth Circuit’s opinion discussed each paragraph of the employer’s disclosure and ruled that most, but not all, of the text was part of the disclosure rather than impermissible “extraneous” material.
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NJ Supreme Court Recognizes Medical Marijuana Discrimination
The New Jersey Supreme Court ruled that a funeral director may pursue discrimination claims against his former employer. Justin Wild’s anti-discrimination claims against Carriage Funeral Holdings, Inc., stem from his termination following a car-accident-related injury. Wild claims he was terminated because of his use of medical marijuana to manage cancer-related pain. A change to the Compassionate Use Medical Marijuana Act (CUMMA) provides employment protections for medical marijuana users, including prohibiting employers from taking any adverse employment action “based solely on the employee’s status” as a medical marijuana patient. In addition, where an employer does have a drug testing policy, any employee or applicant who tests positive for marijuana must be provided an opportunity to present a legitimate medical explanation for the positive result or to request a retest.
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AB 2355 Aims to Make Medical Cannabis Users A Protected Class in California
Assembly Bill 2355 (AB 2355) was introduced in California, which would make medical marijuana cannabis users a protected class in California. Sixteen states, including Nevada, New York and Pennsylvania, already have similar laws that protect marijuana users against employment discrimination. AB 2355 does not, however:

  • Prevent an employer from refusing to hire an individual, or from discharging or reasonably accommodating an employee who is within the medical cannabis protected class.
  • Apply where an employer requires all employees and job applicants to be drug and alcohol-free for legitimate safety reasons as required by federal or state laws, and who is required to conduct applicant and ongoing testing of employees by those laws and regulations.
  • Diminish an employer’s ability to terminate an employee, refuse an accommodation, suspend an employee, or take any other lawful action against the employee if the employer discovers that the employee is using or is impaired by medical cannabis on the property or premises of the place of employment or during the hours of employment.

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New York City Commission on Human Rights Proposes Rules Addressing Exceptions to Prohibition on Pre-Employment Marijuana Screening
The New York City Commission on Human Rights (the “Commission”) proposed rules in March addressing exceptions recognized under the city’s ordinance generally prohibiting pre-employment testing for marijuana and tetrahydrocannabinols (THC). Effective May 10, 2020, the ban on pre-employment testing for marijuana and THC will identify positions “with the potential to significantly impact the health or safety of employees or members of the public,” as permitted by the law. The proposed rules would permit testing of candidates for positions that require an employee to regularly, or within one week of beginning employment, work on an active construction site; regularly operate heavy machinery; regularly work on power or gas utility lines; operate a motor vehicle on an approximately daily basis; or where impairment would interfere with the employee’s ability to take adequate care in the carrying out of their job duties and would pose an immediate risk of death or serious physical harm to the employee or to other people.
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II-9 and E-Verify Compliance Blog: Form I-9 Conundrum: Is Your Business Operating Remotely During COVID-19?
A new “flexible” Form I-9 option, announced by the Department of Homeland Security in early April, enables employers to conduct a remote verification of a new hire’s identity and work authorization documents, followed by an in-person
verification at a later time. The relaxation of rules was a surprise to many businesses and employers with hiring needs are finding themselves trying to make sense of the option. First, if employees are physically present at a work location,
the exception will not be allowed, however for those employers with closed locations, virtual verifications for new hires will be permitted. There are exceptions for new hires or existing employees that are subject to COVID-19 quarantine or
lockdown protocols. Those who fail to comply could be charged with a so-called timeliness violation, which could potentially add up quickly.
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Two Years of GDPR: What We Have Learned and What You Need to Know
Marcel Duhamel, a partner in the Vorys, Sater, Seymour and Pease, LLC authored a white paper titled “Two Years of GDPR: What We Have Learned and What You Need to Know.” The white paper provides an in-depth overview of GDPR (General Data Protection Regulation), and it also offers some insights into what has been
learned about the law over the past two years.
The extraterritorial scope of GDPR – including to U.S. businesses with no physical presence within the E.U.
• How a U.S.-based business can determine whether or not GDPR applies to them and, if it does, what compliance entails.
• The many rights of data subjects granted under the GDPR.
• The principles in GDPR that govern the processing of personal data and the obligations on businesses to comply with these principles.
• An overview of the potential damages and penalties.
Download white paper

State Consumer Privacy Law Round Up February 2020
The National Conference of State Legislatures has reported that more than 150 new consumer privacy bills were introduced in 25 states and Puerto Rico in 2019, as well as several federal privacy law proposals. A few of these include the Washington Privacy Act, which is modeled after the General Data Protection Regulation (GDPR); New Hampshire’s HB 1680-FN, a copycat of the California Consumer Privacy Act (CCPA); and New Jersey’s draft bill A2188, which would regulate owners/operators of websites and online services in their use of “personally identifiable information.”
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Disclaimer: All information presented is for information purposes only and is not intended to provide professional or legal advice regarding actions to take in any situation. Nationwide Screening Services makes no representations for any products or services that are mentioned and accepts no responsibility for any actions or consequences taken without the guidance of a licensed attorney or professional consultant.

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