W
When conducting crimi-
nal background checks,
employers must weigh two
sometimes-conflicting factors. First,
the formerly incarcerated may be a
source of much-needed talent-
second-chance initiatives benefit em-
ployers as well as employees. Second,
some convictions could mean taking
on unacceptable safety or other risks
in hiring a candidate into a particu-
lar position.
These business issues correspond
with legal risks: On the one hand, to
avoid a claim of unlawful refusal to
hire, employers need to understand
the protections that the formerly in-
carcerated have. On the other hand,
employers need to consider whether
hiring a candidate would expose
them to a negligent-hiring claim in
light of a prospective hire's criminal
record and the job for which he or
she has applied.
Employers must consider a plethora
of federal, state and local laws in bal-
ancing these competing considerations.
How does an employer weave the
laws into a practical protocol? Let's
enter the legal maze.
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SCOPE OF THE
BACKGROUND CHECK
In most cases, the background check
will be conducted by a third party
rather than by the employer itself.
The third party is considered a
"consumer reporting agency" (CRA)
for purposes of the primary federal
law in this area, the Fair Credit and
Reporting Act (FCRA).
As part of contracting with a CRA,
the employer should make clear
what the CRA should and should not
disclose to it. As a general rule, an
employer should not receive informa-
tion that it lawfully cannot consider.
For example, many states, such
as California and Massachusetts,
restrict an employer's consideration
of certain misdemeanors. So the CRA
should be instructed not to report
such misdemeanor convictions.
'BAN-THE-BOX' LAWS
After an employer contracts with a
CRA, it should decide when to con-
duct background checks and whether
to limit them to certain positions.
Requiring them of only certain indi-
viduals is inadvisable; if an employer
checks backgrounds based on people
rather than positions, it invites claims
of explicit or implicit bias, which very
well may exist.
Then there's a question of timing.
An increasing number of state and
local laws prevent employers from
asking about criminal history-or
conducting a background check-
until after a conditional offer is
made. Even if an employer is not sub-
ject to "ban-the-box" laws (referring
to a check box on an application that
asks about criminal records), →
ILLUSTRATION BY ADAM NIKLEWICZ FO
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it ordinarily makes sense not to con-
duct a background check until after a
conditional offer is extended.
By waiting until then, an employ-
er is less likely to have a viscerally
negative reaction to the existence of
any conviction, because the employer
has already decided that it wants to
hire the applicant. The formerly in-
carcerated are a source of talent that
employers should not categorically
ignore, independent of the law.
THE PROCESS
The background-check process that
an employer will follow is set forth in
the FCRA. In general, there are three
main steps:
1. Authorization by the applicant.
2. Pre-adverse action notice.
3. Adverse action notice.
Each of these elements is ad-
dressed below.
AUTHORIZATION
All applicants must sign a back-
ground-check authorization that's
compliant with federal law. The
authorization would not be com-
pliant, for example, if the applicant
waives any claims that he or she may
have with regard to the background
check.
Some states, such as California,
require a separate authorization. Any
form required by a state should be a
separate form and not combined with
the FCRA authorization, or it may
not comply with the FCRA.
After the employer receives in-
formation from the CRA about an
applicant, HR will need to deter-
mine preliminarily whether any
conviction disqualifies the applicant
from employment.
In 2012, the Equal Employment
• The nature and gravity of the
offense or conduct.
• The time that has passed since the
offense, conduct and/or completion
of any sentence.
• The nature of the job the candidate
is seeking.
While the EEOC guidance is
subject to challenge, its principles
minimize an employer's exposure to
adverse impact claims. Moreover,
an increasing number of state and
local jurisdictions are requiring
a holistic approach to conducting
background checks.
For example, New York state
requires that an employer consid-
er eight enumerated factors. New
York City goes further and requires
that the employer provide rejected
applicants with its analysis of how it
applied the eight factors.
Of course, there are exceptions
to individualized assessments. For
example, securities laws bar appli-
cants with certain convictions from
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LEGAL TRENDS
performing certain jobs. Also, most,
if not all, states have laws to protect
children from sexual and other forms
of abuse. These laws generally prevent
employers from hiring applicants with
certain convictions to perform jobs
in which they may have unsupervised
interaction with children.
PRE-ADVERSE ACTION NOTICE
If the employer has concluded that a
conviction disqualifies an applicant
from a particular job, that decision
must be preliminary and not final.
The next step under the FCRA is to
provide the applicant with a pre-
adverse action notice.
Under the FCRA, the applicant
must be given the opportunity to dis-
pute the veracity of any report used
to disqualify him or her. Employers
are well-advised to go one step fur-
ther and ask the applicant if there's
any other information that he or she
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thinks the employer should consider,
even if the report is accurate.
This helps demonstrate that an
individualized assessment was
conducted as set forth in the EEOC
guidance. It's also consistent with the
individualized assessment process re-
quired by many state and local laws.
Employers must attach to the
pre-adverse action notice a sum-
mary of the applicant's rights under
federal law. Some states, such as
New Jersey, have an additional no-
tice, and there are special rules that
apply in California.
Just as the employer should
document its
preliminary de-
termination, the
employer should
document the reasoning underlying
its decision with regard to any infor-
mation that the applicant provides.
ADVERSE ACTION
The final step is to issue an adverse
action letter under the FCRA, which
generally requires the employer to
do the following:
• State that the decision to reject
was based on a report by the CRA.
• Make clear that the CRA did not
make the employment decision.
• Provide the applicant with infor-
mation about contacting the CRA.
Don't forget to check state or lo-
cal laws, because they may require
additional language-such as telling
applicants that they can appeal to the
state-in the adverse action letter. R
Jonathan A. Segal is a partner at Duane Morris in
Philadelphia and a SHRM columnist. Follow him on Twitter
@Jonathan_HR_Law.
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