As we rapidly approach the end of 2021 it is important for employers to have a solid grasp of the legal landscape across the country that continues to drive their need for legal compliance with laws impacting their background screening practices.
Here is a look at some of the key areas where compliance requirements exist.
Fair Credit Reporting Act (FCRA)
Alonzo Martinez said in his article, How The Pandemic Affected Background Screening In 2020, “The FCRA requires that “If the employer takes any adverse action towards the candidate based wholly or partly on the background screening report to minimize the risk of litigation, so-called adverse actions must be pursued according to a demanding series of requirements.
To be clear: these requirements should be met before denying employment or promotion based on the results of a background check.
- The candidate must be provided a copy of the background report, a summary of his or her rights, and a formal notice of the intended action and the reason for it.
- Next, the employer must give the candidate a reasonable period of time to respond to refute any of the data on the record, explain mitigating circumstances, and/or argue why the issue in question is not relevant to the job. The Federal Trade Commission has opined that a five-day period should be provided, though local jurisdictions differ, with New York City allowing only three days from the date the candidate receives the notice San Francisco allowing seven days. Note, too: mail delivery times vary.
- Last, the employer must formally advise the candidate of the final decision (for example, withdrawal of a job offer or termination.) Additionally, the candidate must be provided contact information for any relevant consumer reporting agency, along with the employer’s avowal that the agency is not the decision-maker and cannot explain the reason for the decision. It is best to do this in writing to ensure that all the requirements have been satisfied—and to be able to prove it if necessary.”
Although this chain of notifications is not highly complicated, it is nevertheless an exacting process,” said Pamela Q. Devata, leader of the Background Screening Compliance and Litigation Defense team at the law firm Seyfarth Shaw. “It would be HR malpractice not to meet these obligations.”
Apparently, there are still employers and HR practitioner that are not getting it because according to the October WebRecon Report FCRA lawsuits are up +20.2% over the September numbers and putative class actions represented 3.6% of FCRA lawsuits filed last month. In total, there were 471 FCRA lawsuits filed in October of which 9 were Class Action. Year to Date there have 4537 FCRA lawsuits filed.
As we approach 2022 an increase in diligence is required by employers especially with regards to ensuring the authorization and disclosure forms and adverse action processes fully comply with FCRA requirements.
According to the National Employment Law Project (NELP) nationwide, as of October 1, 2021, 37 states and over 150 cities and counties have adopted what is widely known as ‘ban-the-box’ so that employers consider a job candidate’s qualifications first—without the stigma of a conviction or arrest record. These policies provide applicants a fair chance at employment by removing conviction and arrest history questions from job applications and delaying background checks until later in the hiring process.
The specifics of ban-the-box vary from location and jurisdiction. They range from laws that:
- delay inquiries into a candidate’s criminal history,
- to those that require an individualized assessment of a candidate’s criminal record against the job sought,
- to those that require identification of potentially disqualifying criminal history,
- to those that require special notices or forms as prescribed by law.
Fifteen states have mandated the removal of conviction history questions from job applications for private employers—California, Colorado, Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, and Washington.
- The District of Columbia and 37 cities and counties extend their fair-chance hiring policies to government contractors (as will the federal government in 2021).
- Twenty-two of those localities also extend their local fair-chance hiring laws to the private employers within their jurisdictions—Austin, Baltimore, Buffalo, Chicago, Columbia (MO), DeSoto (TX), the District of Columbia, Kansas City (MO), Los Angeles, Montgomery County (MD), New York City, Philadelphia, Portland (OR), Prince George’s County (MD), Rochester, San Francisco, Seattle, Spokane (WA), St. Louis, Suffolk County (NY), Waterloo (IA), and Westchester County (NY).
Pay Equity and Salary History Bans
In their March 2021 report Smith Hanley, LLC shared that “the states with state-wide salary history bans: Alabama, California, Colorado, Connecticut, Delaware, DC, Hawaii, Illinois, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Oregon, Pennsylvania (state agencies only), Vermont, Virginia and Washington. Puerto Rico continues to be the only territory on the list.
Most of the cities that have been added to the list focus only on salary history bans for city government hiring. Joining New York City, Albany and Philadelphia are San Francisco, Atlanta, Chicago, Louisville, New Orleans, Montgomery County, MD, Jackson, Kansas City, St. Louis, Westchester County, NY, Suffolk County, NY, Cincinnati, Toledo, Pittsburgh, Columbia, SC, Richland County, SC and Salt Lake City.
The March of Marijuana Laws Continues
Movement towards legalizing use of marijuana for medical and/or recreational purposes and decriminalizing the use of cannabis has taken hold in the United States.
To date, 36 states and four territories allow for the medical use of cannabis products.
In November 2020, voters in Mississippi passed a ballot initiative to allow for medical use, but it was overturned by the state supreme court on May 14, 2021, and is not counted in this state totals.
As of October 14th, the recreational use of cannabis is legalized in 19 states, the District of Columbia, the Northern Mariana Islands, and Guam. Another 13 states and the U.S. Virgin Islands have decriminalized its use.
Some states have gone even further. As an example, New York State prohibits employers from drug testing employees for cannabis unless federal or state law requires drug testing as a condition of the position. New York employers are similarly unable to prohibit marijuana use outside the workplace. Policies banning marijuana use as a condition of employment—unless mandated on a state or federal level—are not permitted, even if they were in place before cannabis use was legalized in New York.
On the federal level the Marijuana Opportunity Reinvestment and Expungement (MORE) Act (H.R. 3884) passed the U.S. House of Representatives on December 4, 2020 and proposes the legalization of cannabis use. The act has gone nowhere in the U.S. Senate.
Data Protection & Privacy
If you are a global company I am sure you are aware that the U.S. Privacy Shield agreement between the United States and European Union which allowed the transatlantic transfer of personal data was invalidated by the Court of Justice of the European Union (CJEU). The court ruled that international data flows under the European Union’s comprehensive data protection regime, the GDPR, can continue to be based on EU Standard Contractual Clauses if properly monitored.
In 2008, Illinois became the first state to enact a Biometric Information Privacy Act (BIPA). BIPA regulates “the collection, use, safeguarding, handling, storage, retention, and destruction of biometric identifiers and information” (i.e., fingerprints, iris scans, voiceprints). It prohibits private parties from collecting biometric identifiers and generating individual “profile” information derived from biometric identifiers without first notifying the individuals whose information is being collected, obtaining their consent, and making specific disclosures to them. The statute also requires private parties to publish detailed information regarding their data retention and destruction policies, and prohibits them from selling collected biometric identifiers.
Since Illinois enacted BIPA, four other states have adopted legislation modeled on BIPA—Arkansas, California, Texas, and Washington. Twenty-seven other states have BIPA-modeled legislation pending.
2020 was clearly defined by the pandemic and the economy. In 2021, with the advent of vaccinations the focus significantly moved to the economy. The good news is that many jobs are returning as restrictions are being eased on businesses and, in fact, we are seeing a record number of jobs open. The bad news is that with the distraction of the pandemic substantial diminished legislatures are likely to return their attention to passing laws that impact the hiring process, in general, and specifically background screening.
We believe we will likely see increasing activity in the areas of legalizing the use of marijuana, privacy laws, and the pace of ban-the-box and bans on use of salary history in setting starting pay. Stay tuned and stay focused on compliance with laws impacting the background screening process as the legal landscape continues to evolve in 2022.