Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
A PIZZA PARLOR hired a delivery driver. A few weeks later the police were called into a situation involving the assault of a 22-year old babysitter who had ordered out for pizza after putting the children to bed. She was beaten and nearly raped before screaming loud enough to scare away her attacker.
The victim named the pizza delivery guy as her assailant. The pizza parlor ended up paying more than a million dollars in damages because it had failed to do a background check on the driver. If they had, they would have learned that the driver had been jailed twice for sexual assault.
Today’s employers are faced with a genuine hiring dilemma. On the one hand, they take a huge risk if they simply rely upon information given to them in applications without taking further steps to verify the applicant’s qualifications and background. Conversely, federal and state laws limit when and how employers can obtain such background information.
Faced with potential claims for “negligent hiring,” it is vital that employers use background checks as part of their hiring process. However, employers must do so in a manner that navigates the maze of state and federal laws aimed at protecting the privacy rights of applicants and employees.
Many employers recognize the importance of background checks when hiring, but not all are aware of the legal limitations on doing so. Employers need to know that federal and state laws regulate how you can obtain and use criminal history checks and other types of background investigations. The federal Fair Credit Reporting Act (FCRA) imposes numerous obligations on employers that obtain reports to assist in making personnel choices.
Generally, FCRA applies whenever an outside entity provides information to an employer for use in making employment decisions about the in this case applicants and employees) by prohibiting employers from obtaining background reports without an individual’s consent. The law is also designed to ensure that individuals are aware of the information that is being provided about them so that they can dispute any inaccuracies.
Even after obtaining authorization to do a background check, employers still need to make certain that the information being collected is lawful for them to obtain. FCRA prohibits certain information from being disclosed to employers. While there are no limits on the disclosure of criminal conviction information, there are limits on other types of information that can be disclosed.
Even when FCRA permits disclosure, employers should not seek information through a consumer report that would be unlawful for them to use in making employment decisions. For example, although FCRA permits disclosure of arrest records, relying upon such information could subject an employer to discrimination claims.
So, how does an employer protect itself against the dangers of negligent hiring and meet the legal protections for investigating prospective employees? There are basically two choices: Develop expertise in-house or use the services of a FCRA-compliant background research firm. A typical fee for this type of outside service would be about $100 per applicant investigated.
When retaining a consumer-reporting agency to provide information on an applicant’s criminal history, an employer should be sure to limit the scope of the report exclusively to past convictions, and should explicitly state that information on past arrests, indictments and acquittals should not be included in the consumer report.
Consumer reporting agencies should also be directed not to provide any information regarding an applicant’s protected class status (including race, age, religion, gender or disability status), medical information or information regarding past employment-related claims such as workers compensation, unemployment compensation and discrimination claims. Once a report is obtained, employers are required to jump through certain procedural hoops before they may take any adverse action (such as refusing to hire the applicant, or terminating an employee) based in whole or in part upon information they learned from a consumer report.
First, the employer must provide the applicant with a “pre-adverse action notification.” This notice should include a copy of the consumer report and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act,” a publication of the Federal Trade Commission. The purpose of sending this notification is to provide the applicant or employee an opportunity to dispute any errors in the report before a final personnel decision is made.
When the employee or applicant is notified of the employer’s final decision FCRA requires yet another notice to be sent that provides the contact information for the consumer-reporting agency. The notice must state that the agency did not make the employment decision and cannot provide the individual with any reasons why the adverse employment action was taken.
Finally, the notice must inform the individual of the right to obtain a free copy of the consumer report within 60 days, and to dispute with the consumerreporting agency the accuracy or completeness of any information contained in the consumer report.
Having a clear idea of relevant aspects of a prospective employee’s background helps businesses avoid problems and demonstrate that they took reasonable steps to protect employees and customers.
