Employment Screening Resources Novato CA Colorado SHRM 2013 State Conference Presented by Attorney Lester S. Rosen Founder & CEO of.

Employment Screening Resources Novato CA www.esrcheck.com

The Top 10 Trends for Background Checks in 2013 – What Every Employer Needs to Know

Colorado SHRM 2013 State Conference

Presented by Attorney Lester S. RosenFounder & CEO of Employment Screening Resources® (ESR)

Phone: 888.999.4474 / Email: [email protected]

Employment Screening Resources Novato CA

Attorney Lester S. Rosen is Founder & CEO of Employment Screening Resources® (ESR), a nationwide background check firm accredited the National Association of Professional Background Screeners (NAPBS®).

He is the author of “The Safe Hiring Manual,” the first comprehensive book on background screening, and is a frequent nationwide speaker on due diligence issues.

He has qualified and testified as an expert in court cases relating to background checks.

He was the chair of the steering committee that founded the NAPBS and served as first co-chair.

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About the Speaker Lester Rosen


Employees are typically a company’s greatest investment and largest cost.

Each new hire also represents a large potential risk. Every employer has the obligation to exercise “due diligence”

in hiring. An employer that hires someone it either knew – or should

have known – was dangerous, unfit, or unqualified for the work can be sued for “negligent hiring.”

Employers have been getting hit BIG recently for negligent hiring.

Why “Due Diligence” is Mission Critical

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Negligent hiring / retention lawsuits. Hiring workers with unsuitable criminal record Workplace

violence. Fraudulent credentials: Up to 40% of resumes contain

material lies or omissions about education, past jobs, or qualifications.

Termination exposure. Turnover costs – 2 to 3 times their salary. Brand destruction / Lost customers and workplace disruption. Time wasted in recruiting, hiring, and training.

“The Parade of Horribles”

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1. “Ban the Box” Movement Spreads 2. EEOC Updates Guidance on Criminal Records to Prevent Employment

Discrimination during Background Checks3. Accuracy of Background Check Reports Subject to Scrutiny4. Databases No Substitution for Real Background Checks5. Class Action Lawsuits for Violations of FCRA Becoming More Common6. Government Increases Action Against Consumer Reporting Agencies7. New Privacy Laws for Collection and Use of Personal Data of

Consumers Focus on Background Checks 8. Offshoring Personal Data of Americans to Foreign Countries 9. Background Checks Becoming Integrated with ATS and HRIS to Create

One Stop Shop for Screening and Hiring10. New E-Verify State Laws for 2013 Will Add to Already Confusing

Patchwork of Regulations for Employers

Top Ten Background Check Trends of 20135


“Ban the Box” refers to the question on an application about past criminal record and a box for “Yes” or “No.”

Application will typically include EEOC disclaimers about no automatic disqualifications.

Idea: Do not “Chill” or “Deter” applicants from applying in the first place before there is even an opportunity to determine if they qualify for the job.

Public employers under this approach wait until after the applicant's qualifications for the position have been determined to meet the requirements for the position.

Do appropriate criminal checks later in process. Per NELP, some 50 cities and counties now have such laws.

NELP updates the map. Some states considering extension to Private employers (Hawaii and Minnesota currently).

1. “Ban the Box”6


2011 study by National Employment Law Project (NELP) found nearly 65 million people in the U.S. – more than one in four adults – are estimated to have criminal records.

However, this can include every misdemeanor such as DUI. People who have made mistakes, but have repaid society,

need jobs in order to be law-abiding & tax-paying citizens. Can costs over $40,000 a year to keep a person in custody –

society does not want to create a permanent criminal class of the unemployable.

Cannot spend more on prisons/jails then schools and hospitals.

However, due diligence requires right person in the right job.

“Ban the Box” Movement Spreads7


2. EEOC Updates Guidance on Criminal Records

New EEOC Guidelines issued April 25, 2012. Expanded on previous guidance documents. Not a law or regulation but can become law if courts endorse. Central thrust: Unlimited use of criminal records can result in a

“disparate impact.” Restated previous limits to Arrest Only records. Drivers:

◦ EEOC previously announced Strategic Plan focused on “systemic” discrimination

◦ Settlement with national beverage firm for 3.13 million

◦ SEPTA case in Philadelphia

◦ Renewed interest in giving ex-offenders a second chance

◦ Concern over accuracy of criminal records

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Background checks are absolutely lawful. EEOC gave more clarity to the three part “Green” test:

◦ Nature of the Crime – harm caused, legal elements of crime, level of offense.

◦ Time since the offense – Includes evaluation of recidivism.◦ Nature of the job – Job title, job duties, essential functions

of the job, circumstances (degree of supervision) and environment (e.g. private home vs. factory).

EEOC Guidance: The Good

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EEOC suggested a “ban the box” approach for private employers:◦ The “Ban the Box” movement in states/cities seeks to remove

the criminal history question from job applications and give offenders a second chance.

◦ Wait until late in process to ask about criminal recodes (at interview or after offer) to ask about criminal records

◦ Limit the question so employer does not obtain data that is old or irrelevant to job

Utilize “Individualized Assessment” process if applicant fails the three part test – opportunity for rejected applicants to make their case.

EEOC Guidance: The Probably Good10


Suggested that employers only ask criminal questions relevant to job.◦ 100’s of crimes and millions of jobs.◦ Applicants who do not understand the question can be

perceived as lying.◦ Will need to look at using a “RELAVANCY MATRIX.”

Use studies to determine recidivism and relevance of older crimes.◦ Insufficient science.

Not a defense following state or local laws.

EEOC Guidance: The Challenging

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Have policy that employer maintains a safe workplace and will conduct strict review of any applicant with a criminal record, but no automatic disqualification.

Have attorney review your processes and policy. Ensure proper training. Use the enhanced Green factors. Consider not asking about past criminal convictions up front. Use “Individualized Assessment” process as a final safety

valve.

Criminal Continued

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A group of national civil and workers’ rights organizations has released a new report titled ‘Best Practice Standards: The Proper Use of Criminal Records in Hiring’ that addresses the use of criminal records of job applicants by employers during employment background checks.

See more at: http://www.scribd.com/doc/142787063/Best-Practices-Standards-The-Proper-Use-of-Criminal-Records-in-Hiring

New Resource

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1. CONSIDER ONLY CONVICTIONS AND PENDING PROSECUTIONS

2. CONSIDER ONLY CONVICTIONS THAT ARE RELEVANT TO THE JOB IN QUESTION

3. CONSIDER ONLY CONVICTIONS RECENT ENOUGH TO INDICATE SIGNIFICANT RISK

4. DO NOT ASK ABOUT CRIMINAL RECORDS ON APPLICATION FORMS

5. USE A QUALIFIED CONSUMER REPORTING AGENCY (CRA) TO CONDUCT RECORD CHECKS

6. THE CRA SHOULD REPORT ONLY CONVICTIONS THAT ARE RELEVANT AND RECENT

7. REPORT CONVICTIONS ONLY WHEN FULL NAME AND ONE OTHER IDENTIFIER MATCH

8. CONFIRM ALL INFORMATION FROM ONLINE DATABASES WITH ORIGINAL SOURCE

9. GET CURRENT DISPOSITION OF ALL RELEVANT INFORMATION

10. PROVIDE APPLICANT THE OPPORTUNITY TO CHALLENGE THE CRA’S REPORT

11. ALL CHARGES RELATED TO A SINGLE INCIDENT SHOULD BE REPORTED AS A SINGLE ENTRY

12. CONSIDER EVIDENCE OF REHABILITATION

13. MINIMIZE CONFLICT OF INTEREST BY DECISION MAKERS

14. TRAIN HUMAN RESOURCES STAFF 15. HAVE A DIVERSITY PROGRAM

Sample Recommendations 14


EEOC has just filed two lawsuits against employers for the use of criminal records:◦ Case One: Car manufacturer required a contractor to have a

policy of a blanket exclusion on workers regardless of the Green factors.

◦ Case Two: Employer had blanket exclusion of certain types of drug offense for 10 years AND in another case refused to hire an applicant with an inaccurate criminal report.

◦ Bottom Line: EEOC is very serious about enforcement of Title VII in employment.

Hot Off the Press!15


Consider use of “neutral” party in-house who reviews criminal matters and conducts “Individualized Assessment” and only reports final outcome to decision maker.

Can be an alternative to tailored criminal questions. Use a “Criminal Record Advisement” instead of a criminal

question. However, cannot be asked in a way that deters or chills ex-

offenders. At some point, most employers want an answer to ensure

applicant did not lie for a “falsification” defense.

Additional Information

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Represents some additional processes.

Change always a burden.

However, no reason employers cannot continue to use background checks to hire the best possible workforce.

May well result in some offenders getting into the door that can do job that otherwise may have been eliminated automatically with an early knock-out punch.

The Bottom Line

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3. Accuracy of Reports Subject to Scrutiny

Part of the EEOC concern were allegations of inaccurate reports.

Claims of inaccuracy by screening firms based upon a few anecdotes, many being old.

Given the millions of reports performed, the accuracy rate is remarkable.

Per screening industry statistics, incidents of inaccurate reports are very low, especially given the fact that criminal record keeping is far form perfect.

The FCRA provides an escape valve to remedy issues. The biggest sources of inaccurate data are commercial

DATABASES where information not re-verified before going to an employer.

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Contrary to popular belief, there is no national database available to private employers to check criminal records or false credentials.

Cheap private databases are NOT a substitute for due diligence, and are NOT official government databases.

Databases can have both “false positives” and “false negatives.” No mechanism to update commercial database with subsequent

history, such as an expungement or deferred adjudication. Fingerprint checks from FBI only available when mandated by law

(e.g. teachers/child care workers/banks, etc.). Primary method for obtaining criminal records is to physically

look at each relevant courthouse. Over 10,000 courthouses in America with court records in over 3,200 jurisdictions!

4. Databases No Substitute for Real Background Checks


Consumers and attorneys are filing more lawsuits against employers.

“Catch-22” situation for employers:◦ On one hand, employers are being sued by victims that allege the employer

failed to exercise due diligence.◦ Conversely, employers and background screening firms face lawsuits from

job applicants complaining about the accuracy of background reports or failure to meet FCRA guidelines.

Class actions for basic violations of FCRA:◦ Failure to use FCRA forms.◦ Failure to give proper notices (Criminal “Hit” or Adverse Action). ◦ Failure to give timely notices.◦ Failure to ensure accuracy.

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5. Lawsuits for Violations of FCRA More Common


Class Actions on the Rise

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U.S. Supreme Court case, Safeco Ins. Co. v. Burr, 2007, substantially increased the risk of punitive damages under the FCRA by ruling that a reckless disregard of the FCRA by behavior that is objectively unreasonable could be sufficient to show “willful” non-compliance.

Net effect – Easier to sue employer or a screening firm for punitive damages.

Critical for large employers to audit their program for legal compliance and EEOC risk.


U.S. Government has become more proactive in enforcing the FCRA and increasing action against Consumer Reporting Agencies (CRAs) – another name for background screening companies.

The new Consumer Financial Protection Bureau (CFPB) now has some jurisdiction over FCRA for rule making nod enforcement, while Federal Trade Commission (FTC) still supervises CRAs.

FTC very active in issue of databases. $800,00 settlement with online data firm that failed to made

it clear that FCRA applies to data used for employment.

6. Government Increases Action Against CRAs

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Historic Settlement againstLarge Screening Firm

Historic $2.6 million dollar settlement against large background screening firm on allegations of failure to:

Take reasonable steps to ensure that the information in the reports was current and reflected updates, such as the expungement of criminal records.

Prevent reporting the same criminal offense multiple times. Conduct re-investigations of a consumer dispute in a

reasonable way. Provide consumers with written notification that it had

reported public record information about them to employers when it was being reported.

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In 2010, the National Association of Professional Background Screeners (NAPBS®) instituted an intensive Background Screening Agency Accreditation Program (BSAAP).

Rigorous third party audit related to six critical areas:◦ Consumer Protection◦ Legal Compliance◦ Client Education◦ Product Standards◦ Service Standards◦ General Business Practices

NAPBS accreditation becoming only practical means of third party verification of professionalism and competency of a background screening firm.

NAPBS Accreditation Program24


Social Media: ◦ States such as Maryland, Illinois, and California have laws

that prohibit requiring applicants to reveal social media user names and passwords or shoulder surfing. (Nevada just passed new law.)

Increasing body of law protecting current employees as well. Some 28 states have legislation that has been introduced or is

pending in 2013 to prevent employers from requesting usernames and passwords to various social media and personal Internet.

7. New Privacy Laws for Collection of Data25


Employers use credit reports to determine if applicant trustworthy and responsible for handling cash and assets.

Embezzlement is crime of motive, opportunity and means. Employers look to debt-to-income ratio. Society for Human Resource Management (SHRM) survey –

60 percent of employers check credit of some or all job applicants (47 percent check some & 13 percent check all).

Catch-22” situation for job seekers – They cannot pay bills and get bad credit without a job BUT cannot get job because of bad credit since they cannot pay bills.

Credit Checks by Employers Increasingly Regulated

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Credit reports ran on finalists – not all applicants.

Credit report used to decide who not to hire, not a tool to keep people from the workforce.

Urban myth – Employment credit reports DO NOT contain credit scores, only credit history.

Also does not have age, and does not impact credit score.

Credit Details, Urban Myths & Accuracy

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Credit report can appear to invade privacy and potentially be discriminatory unless measures taken to ensure their use is fair, accurate, and relevant.

Potential discrimination: EEOC held meeting on topic, and expected to produce new guidance.

Can have errors or not tell the whole story:◦ Refinance situation.◦ Confused with someone else.◦ Credit card used for child’s health care.

Credit Report Concerns

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Ten states have laws limiting credit reports for employment:1. California2. Colorado (NEW)3. Connecticut4. Hawaii5. Illinois6. Maryland7. Nevada8. Oregon9. Vermont10. Washington

Best Practice: Approach with caution and use only for positions where there is a business justification based upon the job.

States that Limit Credit Report Checks29


In 2010, California passed first in nation law to regulate “offshoring” of Personally Identifiable Information (PII) collected during employment background checks and sent out of U.S. States beyond protection of U.S. privacy laws.

California requires screening disclosure to contain screening firm’s privacy policy.

Screening firms in California must have statement in privacy policy about offshoring.

Employers also need to be aware of risks of using offshore or home based workers.

8. Offshoring PII Increases Privacy & ID Theft Concerns

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In today’s technology driven business world, background checks becoming integrated with Applicant Tracking System (ATS) and Human Resources Information System (HRIS) to create a virtual “One-Stop Shop” for recruiting, screening, and hiring.

In the “old days” screening, employers used to fax applicant’s consent form and order form to screening firm. Then online programs allowed employers to do their own data entry. The next evolution was ability for employers to have applicants perform data entry with electronic signature (“e-signature”).

Best practice today has become seamless integration with ATS or HRIS systems that allow employers to initiate background check with click of a mouse and send email to applicant to start process. Added to that is ability for built-in legal compliance.

9. Background Checks Becoming Integrated with ATS and HRIS

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10. New E-Verify Laws Create Web of Rules

While federal law mandates federal contractors & subcontractors in all states must use electronic employment eligibility verification system E-Verify, several U.S. states have enacted regulations mandating the use of E-verify, creating a complex web of Federal and State rules.

A small town in Nebraska of 26,000 enacted their own law. U.S. Supreme Court ruled in May 2011 that states can

punish employers who violate mandatory E-Verify laws by upholding a 2007 Arizona law that required employers to enroll in E-Verify.

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Other Background Check Trends

International background checks of people who have lived, worked, or studied outside the US.

Ongoing checks of current employees (“re-screening”). Checks for temporary workers (“temps”), vendors, and

independent contractors. Fake employment verification web sites. Explosion of diploma mills. Social media searches pre-employment.

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“Diploma Mills” Offering Fake Degrees Increasing

2011 study found a 48 percent increase worldwide of known diploma mills.

U.S.is the world’s fake degree capital. Diploma mills are “largely online entities whose degrees are

worthless due to the lack of valid accreditation and recognition.”

Some diploma mills have created fake accreditation agencies. Exercise: Run diploma mill on LinkedIn! Applicants also creating fictional employment histories.

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Social Media Checks of Job Applicants Controversial

Pre-industrial society: employers only hired people they knew, or apprentices: ◦ No lawsuits for discrimination, negligent hiring, wrongful

termination, or invasion of privacy. Modern world: Recruiters and employers need to match

millions of applicants to millions of jobs. Social network sites are a new tool that gives a treasure trove

of applicant information. Employer can go beyond traditional tools and “look under the

hood” at candidates. Find Passive candidates. Current employees are separate issue – Critical to have a social

media policy for current employees.

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2012 CareerBuilder Survey 37% of employers report using internet, and another 11% plan to

start. Favorite: Facebook (65%) LinkedIn (63%) and Twitter (16%). Of users, 35% of the time located something that caused person

not to be hired. BUT, social media helped some get hired. Reasons why social media used to screen:

◦ 65% – does candidate present professionally◦ 51% – see if good fit for company culture◦ 45 % – look for candidate’s qualifications◦ 35% – see if candidate well-rounded◦ 12% – find reasons not to hire candidate

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Reasons Why Candidates Eliminated Nearly three in ten survey respondents – 29 percent – said

social media screening caused them to not hire a candidate and cited the following examples: ◦ 49% – posted provocative/inappropriate

photos/information◦ 45% – information about the candidate drinking or using

drugs◦ 35% – poor communication skills◦ 33% – bad mouthed previous employer◦ 28% – discriminatory comments about race, gender, or

religion◦ 22% – lied about qualifications

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Caveats – The Fine Print Additional considerations for post-employment social media

policy. Situation can change without notice – e.g., Facebook can

change terms of use any time. Relevant Federal laws date back to 1986 — not written for the

internet age. When in doubt, check with your attorney. No legal cases on point – takes time for cases to develop. Outcomes may vary in each state. Situations are very fact-specific – reviewing general issues and

trends only. At this point, can only apply existing legal principles.

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Issues for Employers and Recruiters The TMI Problem – Too Much Information? The Use of Private Behavior for Employment Decisions. Privacy in the Brave New Online World – Is Everything on the

Web Fair Game? Pre-texting or Fake IDs. Third Parties (FCRA). What Is Real? Issues Concerning Identity and Authenticity. Some employers asked for social media passwords.

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Approaches for Employers and Recruiters Must weigh the benefit of obtaining information early against

the legal risks. Can impact your “employment brand.” For legal protection, employers can obtain consent so that

applicants are on notice that their web persona is fair game. Should NOT use pre-text or false alias names to gain an “in”! Most conservative approach: Perform search AFTER there is

consent and a job offer is made, contingent upon completion of a background check that is satisfactory to the employer.

See ESR Whitepaper on topic at http://www.ESRcheck.com/Download.

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In-House or Use a Screening Firm? Issue: A Consumer Reporting Agency (CRA) has legal

responsibility to use “reasonable procedures for maximum possible accuracy” relating to BOTH the information and the identity of the applicant

However, how can a CRA know what or who is for real? Issue: If applicant requests a re-investigation, a background

screening firm has 30 to 45 days and must remove items if cannot show it applies to the consumer

Can a background screening firm include items it cannot defend?

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In-House Processes Have job description with the essential functions of the job

and the knowledge, skills an abilities needed. Have documented training in discrimination. Establish standard practice to show decision made on

objective basis without use of illegal criteria. Perform through an employee behind an “Ethics wall,” that

does not make hiring decisions, that filters out material using standardized procedures, and only provides job related data to the decision maker after there has been a offer.

Do not let decision maker view unfiltered internet/social media data.

Consider showing negative material to applicant first.

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For more information on safe hiring issues please visit:◦ ESR website: http://www.ESRcheck.com◦ ESR News blog: http://www.ESRcheck.com/wordpress/◦ ‘The Safe Hiring Manual—The Complete Guide to

Employment Screening Background Checks for Employers, Recruiters, and Jobseekers’ by Attorney Lester Rosen: http://www.esrcheck.com/SafeHiringManual.php

◦ See National Association of Professional Background Screeners (NAPBS) website at: http://www.napbs.com

Email Les Rosen, ESR CEO & Founder at [email protected]. The ESR Top Ten Background Checks Trends for 2013:

http://www.esrcheck.com/Top-Ten-Background-Check-Trends-for-2013.php

Thank You!43

Employment Screening Resources Novato CA Colorado SHRM 2013 State Conference Presented by Attorney Lester S. Rosen Founder & CEO of.

Documents

background screening

real background checks

employment discrimination

appropriate criminal

safe hiring manual

past criminal record

criminal records

state laws