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Authors: Philip L. Gordon Jennifer L. Mora

ABOUT THE AUTHORS Philip L. Gordon is a shareholder in the Denver office of Littler Mendelson, P.C., the largest U.S.-based law firm exclusively devoted to representing management in labor and employment law. He is also cochair of the Privacy and Background Checks Practice Group. Philip has years of experience litigating privacy-based claims and counseling clients on all aspects of workplace privacy and information security. He has provided advice to businesses of all sizes on: surveillance of employees' electronic communications; the Federal Wiretap Act; the Federal Stored Communications Act; workplace searches; location tracking and use of GPS-enabled devices; background checks, the FCRA; social media and other new technologies affecting the workplace; HIPAA; state data protection laws; responding to security breaches; the EU Data Protection Directive; global data protection laws; cross-border transfers of human resources data; outsourcing; and GINA. He also has substantial experience representing employers in disputes involving misappropriation of trade secrets, claims of unfair competition and charges of wrongful termination. In addition, he regularly counsels businesses on compliance with the Americans with Disabilities Act's Accessibility Guidelines and frequently defends businesses against claims of public accommodation discrimination. Philip writes extensively on workplace privacy issues and has given dozens of presentations on the topic. Jennifer L. Mora is a shareholder in Littler’s Los Angeles office. In her labor and employment practice, she not only has broad subject matter experience, she has also developed a special focus in background check laws. She regularly advises and defends employers and consumer reporting agencies on the intersection of federal and state background check laws, including: Title VII of the Civil Rights Act; FCRA and state law equivalents. In addition, Jennifer has extensive experience in: counseling clients on workplace privacy and information security issues, including advising clients on notification obligations in response to security breaches; advising clients on federal and state drug-free workplace and drug-testing issues, including compliance with Department of Transportation-mandated programs; advising clients on workplace safety issues and defending clients against inspections and citations arising under the Occupational Safety and Health Act and the Mine Safety and Health Act; representing and counseling employers in all aspects of traditional labor law; and defending employers in state and federal courts with a focus on litigating disability and failure to accommodate claims Jennifer writes extensively on background screening issues and has given numerous presentations on the topic.



COVERAGE Scope of Discussion. Section one provides an overview of issues to consider in the hiring process. Information about how the Fair Credit Reporting Act and other relevant laws impact hiring procedures is included. Section two looks at particular background screening procedures, such as a review of social media and the use of credit or criminal checks. The last section includes practical guidance on lawful inquiries that can be made during the hiring process and other tips on background screening procedures. Disclaimer. This publication is not a do-it-yourself guide to resolving employment disputes or handling employment litigation. Nonetheless, employers may find the information useful in understanding the issues raised and their legal context. This publication is not a substitute for experienced legal counsel and does not provide legal advice regarding any particular situation or employer or attempt to address the numerous factual issues that inevitably arise in any employment-related dispute. Although the major recent developments in federal employment and labor law are generally covered, this publication is not all-inclusive and the current status of any decision or principle of law should be verified by counsel. The focus of this publication is federal law. Although some state law distinctions may be included, the coverage is not comprehensive. To adhere to publication deadlines, developments and decisions subsequent to September 15, 2016 are generally not covered.

Š2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. All material contained within this publication is protected by copyright law and may not be reproduced without the express written consent of Littler Mendelson.



TABLE OF CONTENTS § 1 OVERVIEW OF THE LAW OF HIRING § 1.1 OVERVIEW OF ISSUES TO CONSIDER IN THE HIRING PROCESS § 1.2 HIRING PROCEDURES § 1.2(a) Job Applications § 1.2(b) Conducting Lawful Job Interviews, Reference Checks & Background Investigations § 1.2(c) Outsourcing Applicant Screening & Hiring § 1.2(d) Investigation Standards for Background Checks § 1.3 FEDERAL LAWS GOVERNING PREEMPLOYMENT INQUIRIES & BACKGROUND CHECKS § 1.3(a) Fair Credit Reporting Act § 1.3(a)(i) Overview of FCRA Procedures in Obtaining a Consumer Report § 1.3(a)(ii) Overview of FCRA Procedures in Obtaining an Investigative Consumer Report § 1.3(a)(iii) Prohibitions Against Including Medical Information § 1.3(a)(iv) Additional FCRA Provisions § 1.3(a)(v) FCRA & Workplace Investigations § 1.3(b) Americans with Disabilities Act (ADA) § 1.3(c) Genetic Information Nondiscrimination Act (GINA) § 1.3(d) Federal Bankruptcy Act § 1.3(e) Federal Driver’s Privacy Protection Act § 2 BACKGROUND SCREENING TECHNIQUES § 2.1 OVERVIEW OF BACKGROUND & REFERENCE CHECKS § 2.2 USE OF SOCIAL MEDIA IN EMPLOYEE SCREENING & EMPLOYMENT DECISIONS § 2.2(a) Social Media Content & the FCRA § 2.2(b) Social Media Content & Antidiscrimination Law § 2.2(c) Social Media Content & Privacy Rights § 2.2(d) Social Media Content & the Stored Communications Act § 2.2(e) Social Media Content & the Federal Constitution § 2.2(f) Social Media Content & the National Labor Relations Act § 2.2(g) Social Media Content & State Law § 2.2(g)(i) Variations in Prohibited Conduct § 2.2(g)(ii) Variations in Type of Online Account Protected § 2.2(g)(iii) Variations in Exceptions to Prohibited conduct § 2.2(g)(iv) Other Variations in State Law § 2.2(g)(v) Variations in Available Remedies § 2.3 USE OF CREDIT CHECKS IN EMPLOYEE SCREENING & EMPLOYMENT DECISIONS § 2.4 USE OF CRIMINAL RECORDS IN EMPLOYEE SCREENING & EMPLOYMENT DECISIONS § 2.4(a) EEOC Guidance on Consideration of Arrest & Conviction Records § 2.4(b) OFCCP Guidance on Criminal Records as a Screening Technique § 2.4(c) State & Local “Ban-the-Box” Laws on Inquiries into Applicants’ Criminal History § 2.5 OTHER BACKGROUND SCREENING TECHNIQUES UNDER STATE LAW § 2.5(a) Obtaining & Using Fingerprints or Photographs § 2.5(b) Obtaining & Using Workers’ Compensation Claims § 2.5(c) Unemployment Status § 3 PRACTICAL GUIDELINES FOR EMPLOYERS § 3.1 PERMISSIBLE INTERVIEW QUESTIONS § 3.2 RECOMMENDATIONS FOR EFFECTIVE & LAWFUL HIRING § 3.2(a) Understand Your Needs & the Evolving American Workforce § 3.2(b) Understand the Law of Preemployment Screening § 3.2(c) Adopt Lawful & Reasonable Standards for Obtaining & Using Consumer Reports § 3.3 FCRA COMPLIANCE § 3.3(a) Step One: Disclosure & Written Consent § 3.3(a)(i) Common Questions Concerning Disclosure & Written Consent § 3.3(b) Certification to the Consumer Reporting Agency § 3.3(b)(i) Common Questions Concerning Certification § 3.3(c) Providing Documents Before “Adverse Action” § 3.3(c)(i) Common Questions Concerning Pre-Adverse Action Requirements § 3.3(d) Notice After Adverse Action § 3.3(d)(i) Common Questions Concerning Post-Adverse Action § 3.3(e) Policy, Procedure & Training © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED.


§ 1 OVERVIEW OF THE LAW OF HIRING § 1.1 OVERVIEW OF ISSUES TO CONSIDER IN THE HIRING PROCESS Hiring may well be the most important step in the employment relationship. Not only is the employer selecting a representative to clients and customers and creating a workforce capable of achieving the organization’s goals, but the hiring process itself has also become a central focus of employment litigation. Establishing legally complaint hiring procedures, and methodically following them, is key. Without such procedures—or following them only intermittently—employers may become vulnerable to an inefficient workforce and at heightened risk of litigation. Issues for employers to consider regarding their hiring process include: 

Background screening: Employers use a variety of tools when comparing candidates before making a hiring decision. The background screening process begins with the information requested through the job application and continues through the job interview. Checking references, the Internet and other, more formal, strategies such as a credit or criminal record check may all be helpful steps in comparing and selecting candidates. These steps must also comply with a myriad of federal and state laws.

Background checks and compliance with various laws: The federal Fair Credit Reporting Act (FCRA),1 and similar state laws, regulate an employer’s ability to conduct thorough background checks. Background check policies must also comply with the Americans with Disabilities Act (ADA),2 the Genetic Information Nondiscrimination Act (GINA)3 and the Federal Bankruptcy Act.

Criminal record checks and risk of discrimination: The U.S. Equal Employment Opportunity Commission (EEOC) and other governmental agencies have increasingly scrutinized the use of criminal record checks as part of a pre-employment screening process. In 2012, in its guidance on criminal background checks in employment, the EEOC noted that incarceration rates in the United States continue to rise, with African American and Hispanic males making up a disproportionate percentage of the population with criminal records.4 The EEOC’s guidance instructs that consideration of criminal records can result in either disparate treatment discrimination (in which an employer declines to hire an individual of a protected group because of a criminal record but overlooks the criminal record of a comparable, nonprotected applicant) or disparate impact discrimination (in which an employer’s practice of relying on criminal background checks disproportionately results in screening out Title VII protected applicants). Following the EEOC’s release of this guidance, the EEOC received requests for clarification from employers and state attorneys general, who charged the new restrictions were an example of federal overreach. In response to such comments, the EEOC clarified it does not consider it unlawful for employers to consider criminal history in making employment decisions or to screen applicants on the basis of criminal history, provided it is consistent with a business necessity.5 The federal government is not the only group to target the use of criminal records in hiring. The


15 U.S.C. §§ 1681 et seq. 42 U.S.C. § 12101. 3 42 U.S.C. § 2000ff. 4 EEOC, Enforcement Guidance, Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII (Apr. 25, 2012), available at 5 EEOC, Letter from Jacqueline A. Berrien, EEOC Chair, What You Should Know: EEOC’s Response to Letter from State Attorneys General on Use of Criminal Background Checks in Employment (Aug. 29, 2013), available at © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 5 2

U.S. Department of Labor’s Office of Contract Compliance Programs (OFCCP) and several states and localities have passed “ban-the-box” legislation or guidance limiting the lawful consideration of an applicant’s or employee’s criminal history in making employment decisions. 

Risk of invasion of privacy regarding social media: State legislatures have been active in protecting the privacy of social media by passing laws prohibiting employers’ ability to require that applicants provide information, such as user names and passwords, to allow the employer to access applicants’ social media accounts.

Risk of claims of common law claims arising from the hiring process: Employers face common law claims arising from the hiring process including those for negligent hiring, invasion of privacy and discrimination (both disparate treatment and disparate impact).6 Each of these claims raises different and potentially conflicting obligations. Employees and third parties can sue for negligent hiring if an employer fails to adequately screen applicants, and applicants can bring claims that the employer used an improper screening process.

§ 1.2 HIRING PROCEDURES § 1.2(a) Job Applications Effective job applications must be drafted so applicants’ objective qualifications for the job can be garnered from the information provided. To acquire this information, applications should seek: • applicant’s full name and any other named used in the past, and all addresses for the past ten years (to accomplish the appropriate background check, if applicable); • emergency contact information; • detailed employment history, educational information (however, the application should not request dates of high school graduation to avoid age-related claims) and references (both personal and employment-related); • position for which the applicant is applying (it is most appropriate to require designation of one position per application to avoid increased risk of class action claims and claims of “continuing” violations); • availability to work (schedule, attendance issues) and ability to perform the necessary functions of the job (“with or without a reasonable accommodation”); • if permitted by the laws and ordinances where an employer operates, a criminal conviction inquiry (although the inquiry should, according to the EEOC, be job-related and consistent with business necessity; in addition, the request for information should be accompanied by a statement indicating convictions will not necessarily preclude employment); and • a driving record, if appropriate for the job. Applications should not be processed unless they are fully completed. All gaps (for example, in employment history) should be explained and all information fully provided before the applicant is interviewed or during the first interview. Further, as new applicant information is received, a written record with proper documentation should be made to render the file complete. 6


§ 1.2(b) Conducting Lawful Job Interviews, Reference Checks & Background Investigations There are limits to what an interviewer can ask prospective or current employees when making hiring, retention, promotion or other important employment decisions. Likewise, employers conducting reference checks or background investigations must be careful not to go beyond these limits. Some of these restrictions protect the applicant’s privacy, while others are meant to prevent discrimination in the hiring process. These limits apply not only to executives making the final hiring decisions, but to each person involved and at all stages of the process, from interviewing candidates to contacting references or collecting information from other sources. As a general rule, interview questions should focus on the applicant’s ability to successfully perform the job duties that are fundamental to the position being filled. For a list of areas of inquiry that employers should keep in mind when interviewing prospective employees or conducting reference checks or background investigations, see “Permissible Interview Questions” at § 3.1.

§ 1.2(c) Outsourcing Applicant Screening & Hiring Using a traditional temporary agency or staffing firm may provide benefits for employers. When a job’s requirements change frequently, hiring temporary or contingent workers ensures that the employees have the most up-to-date knowledge required for the job. There are also particular jobs, like those in the information technology (IT) industry, that significantly benefit from outsourcing. There are, however, added risks involved with using temporary agencies. An employer cannot avoid liability for discrimination simply by outsourcing its hiring.7 According to the EEOC’s Enforcement Guidance on contingent workers, an employer that uses a staffing firm may be liable for the firm’s discriminatory practices: An entity that has enough employees to qualify as an employer under the applicable EEO statute can be held liable for discriminating against an individual who is not its employee. The antidiscrimination statutes not only prohibit an employer from discriminating against its own employees, but also prohibit an employer from interfering with an individual’s employment opportunities with another employer. Thus, a staffing firm that discriminates against its client’s employee or a client that discriminates against a staffing firm’s employee is liable for unlawfully interfering in the individual’s employment opportunities.8 Therefore, any employer that considers using a staffing firm should carefully review that firm’s hiring policies and procedures. Check that the firm’s services are adequate for the employer’s specific industry (e.g., health care, child care, transportation). One size does not fit all when it comes to hiring. For more information on the contingent workforce, see LITTLER ON CLASSIFYING WORKERS. When employers want to maintain control over hiring, but still streamline the process, they may turn to software to help. Some programs and software offer to help employers conduct initial applicant screening (and save employers time and resources). Although computer-assisted interviewing is becoming more popular among employers, especially when there is a large number of applicants to screen, employers should be extremely cautious when delegating hiring functions to a computer.

§ 1.2(d) Investigation Standards for Background Checks The world in which we live and work today demands that employers design and implement available means for safeguarding their employees and their workplaces. Background-check policies and practices 7

29 C.F.R. § 1607.10. EEOC, Enforcement Guidance, Application of EEO Laws to Contingent Workers Placed By Temporary Help Agencies and Other Staffing Firms, at “Coverage Issues,” Question 3 (Dec. 3, 1997), available at © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 7 8

should no longer be viewed as a luxury. Conducting background checks can be an effective means of ensuring the safety of (and thereby limiting liability towards) other employees and members of the public, as well as protecting assets and maintaining a productive workforce. Employers are well advised to perform thorough preemployment background checks, including a requirement that applicants fully respond to all questions posed in the job application or otherwise. An employer who thoroughly investigates applicants, particularly those placed in sensitive positions or with access to vulnerable populations, should be in a better position to defend against a claim for negligent hiring. Some employers choose to hire third parties to perform background investigations, which can provide several benefits. First, there may be more legal protection to the company, as the FCRA provides limited legal immunity to employers that hire third-party investigators.9 This legal immunity is important because an inaccurate report can lead to defamation suits, invasion of privacy claims and allegations of negligence in connection with the investigation, all of which can be very expensive to defend.10 Second, in-house human resources representatives may simply not have the time to perform background checks adequately, especially when such checks require jaunts to locate old legal documents, etc. In those cases, hiring a third party to conduct the investigation may be significantly more economical. Finally, many employers find that using a third-party investigator makes an applicant more comfortable, in that the applicant views the investigator as more objective and less bound by office politics.11 Employers that outsource their background checks will be governed by the FCRA, discussed below at § 1.3(a), and its accompanying notice requirement and other procedures.

§ 1.3 FEDERAL LAWS GOVERNING PREEMPLOYMENT INQUIRIES & BACKGROUND CHECKS § 1.3(a) Fair Credit Reporting Act (FCRA) § 1.3(a)(i) Overview of FCRA Procedures in Obtaining a Consumer Report The FCRA governs an employer’s acquisition and use of virtually any type of information gathered by a “consumer reporting agency” on job applicants for use in hiring decisions or on employees for use in decisions concerning retention, promotion or termination. A consumer reporting agency is any person or entity that regularly collects credit or other information about consumers to provide “consumer reports” 12 for third persons. The FCRA requirements applicable to consumer reporting agencies are numerous and beyond the scope of this discussion. However, the FCRA applies to employment background checks and is, therefore, detailed below. Preemployment reports such as credit reports, criminal record reports and department of motor vehicle reports are subject to FCRA, as well as any other consumer report used for employment purposes. The FCRA broadly defines consumer reports as any communication by a consumer reporting agency bearing on an individual’s “creditworthiness, credit standing, character, general reputation, personal characteristics or mode of living” that is used for the employment purposes described above.13 In the employment setting, the two most important elements of this definition are: (1) the report must be for employment purposes; and (2) the report must be made by a consumer reporting agency. Any employer that wishes to use a consumer report for employment purposes is covered by the FCRA. In construing the FCRA, courts are cognizant of its broad remedial purpose; thus, even independent contractors may be considered “employees” for purposes of the Act, subjecting an employer’s use of their consumer reports 9

15 U.S.C. §§ 1681n–1681p; see also Charlotte Garvey, Outsourcing Background Checks, HR MAG., Mar. 2001. See, e.g., Dennis v. BEH-1, L.L.C., 504 F.3d 892 (9th Cir. 2007) (finding that a consumer was entitled to actual damages and attorneys’ fees when a credit reporting company had negligently presented inaccurate information on his credit report). 11 Charlotte Garvey, Outsourcing Background Checks, HR MAG., Mar. 2001. 12 15 U.S.C. § 1681a(f). 13 15 U.S.C. § 1681a(d). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 8 10

to the FCRA requirements.14 Since 2013, the U.S. Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) share responsibility for enforcing the FCRA. The FCRA establishes procedures that must be strictly followed when an employer uses a consumer report for employment purposes. Before requesting a consumer report from a consumer reporting agency, the employer must notify the applicant or employee in writing that a consumer report will be requested. The notice should not be combined with any other document, such as a job application. In addition, the employer must obtain the applicant’s or employee’s written authorization before obtaining the report. This authorization should be prospective so that it covers both the application process and the entire term of the individual’s employment. The employer may combine the authorization and the notice into a single document.15 The consumer reporting agency will not furnish a consumer report to an employer until after receiving the employer’s certification (on a form provided by the consumer reporting agency) that the employer has complied with the notice and authorization requirement and will comply with the additional steps described below before taking any adverse action against the subject of the report.16 An employer that intends to take an adverse employment action, such as refusing to hire the applicant, based in whole or in part on information contained in a consumer report must follow a two-step process. Before taking the adverse action, the employer must notify the applicant or employee that the adverse action is anticipated and provide a copy of the consumer report and a summary of rights form prepared by the CFPB.17 The employer must then wait a reasonable time before taking final adverse action.18 Upon taking adverse action, the employer must give the applicant or employee written notice of the adverse action. The notice must include: (1) the consumer reporting agency’s contact information; (2) a statement that the agency did not make the decision and cannot specify the reasons for the decision; and (3) a statement that the recipient can obtain a free copy of the consumer report from the consumer reporting agency for up to 60 days and that he or she has the right to dispute information in the report.19 Finally, if results of a background investigation uncover negative information, employers need to remember to be consistent in their hiring decisions. For example, if one applicant for a particular job is hired despite a criminal conviction, past or future applicants for similar positions could allege unlawful discrimination if their applications were rejected based on the same type of conviction. Employers should be aware that many states have enacted their own version of the FCRA, referred to as “mini-FCRAs.” While these laws often mirror the FCRA’s requirements, there may be important distinctions between federal and state requirements.

§ 1.3(a)(ii) Overview of FCRA Procedures in Obtaining an Investigative Consumer Report An employer that requests an “investigative consumer report” from a consumer reporting agency must follow additional procedures at the initial stage of the process. An investigative consumer report is a 14

Hoke v. Retail Credit Corp., 521 F.2d 1079, 1082 (4th Cir. 1975); see also Federal Trade Commission, Bureau of Consumer Protection, Advisory Opinion, Feb. 23, 1998, available at 15 15 U.S.C. § 1681b(b)(2)(A). 16 15 U.S.C. § 1681e(a). 17 15 U.S.C. § 1681b(b)(3)(A). The summary of rights is available on the CFPB’s website, 18 As a case in the Eastern District of Virginia illustrates, the “simultaneous provision” of a consumer report with a notice of adverse action fails to satisfy the reasonable time requirements of section 1681b(b)(3)(A). Beverly v. WalMart Stores, Inc., 2008 U.S. Dist. LEXIS 2266 (E.D. Va. Jan. 11, 2008) (employer’s motion for summary judgment denied, where reasonable jury could find employer violated section 1681b(b)(3)(A) when employee received letter notifying him of the employer’s adverse action at same time he received copy of his consumer report because employee did not have sufficient or reasonable period of time to dispute the inaccuracies in his consumer report before the defendant took adverse action). 19 15 U.S.C. § 1681m(a). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 9

consumer report for which information has been gathered “through personal interviews with neighbors, friends or associates” of the subject of the report or “with others with whom he is acquainted or who may have knowledge concerning” the subject.20 The notice and authorization forms executed by the applicant or employee before the employer requests an investigative consumer report must: 1. inform the applicant or employee that an investigative consumer report will be requested and that he or she has the right to request additional information about the investigation; and 2. provide the applicant or employee with the CFPB’s summary of rights under the FCRA. If the applicant or employee submits a written request for additional information within a reasonable time after receiving this notice, the employer must “make a complete and accurate disclosure of the nature and scope of the investigation requested.”21 An employer can insert into the notice and authorization for consumer reports the additional language required for investigative consumer reports when the employer intends to obtain such reports on job applicants. However, an employer should be reluctant to rely upon that language when obtaining investigative consumer reports long after receiving the initial authorization. To illustrate the point, a federal district court in Pennsylvania ruled that an employer may require its employees to sign openended “blanket authorizations” permitting the employer to obtain consumer reports at any time during the employee’s employment, as a condition of continued employment, without violating the FCRA.22 However, the court made clear that such blanket authorizations are insufficient to meet the FCRA’s notice requirements regarding investigative consumer reports, which the court found to require employees to “be informed in close proximity of their preparation.”23

§ 1.3(a)(iii) Prohibitions Against Including Medical Information The FCRA generally bars consumer reporting agencies from including medical information in a consumer report or an investigative consumer report. Such information may be included only if: (1) the information is relevant to the employment decision; and (2) the subject has signed a clear and conspicuous authorization that informs the subject of the purposes for which the medical information will be used. The employer may not disclose the medical information to others except as necessary to carry out the purpose for which the information was obtained or as otherwise permitted or required by law.24

§ 1.3(a)(iv) Additional FCRA Provisions The FCRA prohibits the reporting of obsolete information as defined by applicable provisions. Any appropriately licensed consumer reporting agency should be well informed and prepared to answer an employer’s questions concerning these restrictions, as well as all certification, notice and disclosure requirements of both federal and state laws. For instance, with few exceptions, the FCRA generally prohibits the reporting of any adverse item of information that antedates the report by more than seven years.25 This prohibition does not, however, apply where a consumer report is to be used in connection with the employment of an individual whose annual salary is reasonably expected to equal $75,000 or more.26 The FCRA also contains special notification procedures applicable to consumer reports on applicants for commercial driving purposes. In essence, these special procedures only apply if the following two conditions are met: (1) the position for which the applicant is applying is a commercial driving position 20

15 U.S.C. § 1681a(e). 18 U.S.C. § 1681d(b). 22 Kelchner v. Sycamore Manor Health Ctr., 305 F. Supp. 2d 429 (M.D. Pa. 2004), aff’d, 135 F. App’x 499 (3d Cir. 2005). 23 305 F. Supp. 2d at 431 n.2. 24 15 U.S.C. § 1681b(g)(1), (4). 25 15 U.S.C. § 1681c(a)(2). 26 15 U.S.C. § 1681c(b)(3). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 10 21

(including jobs involving the transportation of persons or the transportation of goods, or a position subject to safety regulation by a state transportation agency; and (2) the interaction between the applicant and the employer in connection with the employment application is solely by mail, telephone, computer or other similar means.27 Thus, if the employer has personal contact with the applicant at or before the time the employer requests the consumer report, these special provisions would not apply.

§ 1.3(a)(v) FCRA & Workplace Investigations The Fair and Accurate Credit Transaction (FACT) Act of 2003 effectively nullified the position taken by the FTC in an earlier opinion letter, referred to as the “Vail Letter,” that outside investigators hired by employers to investigate alleged employee misconduct may be considered “consumer reporting agencies.” This meant that an employer was obligated to notify an accused employee before conducting an investigation. However, the FACT Act amended the definition of consumer report to expressly exclude investigations of “suspected misconduct related to employment.”28 A federal court interpreting this revised definition held that the FCRA is not limited to “employment misconduct” but rather applies more broadly to include any misconduct “related to employment,” such as an alleged misrepresentation to an administrative law judge in a workers’ compensation hearing, even though the hearing occurred long after the employment relationship had been terminated.29 While the full panoply of FCRA requirements does not apply to such reports, the FACT Act did impose some restrictions. The report can be disclosed only to the employer, the employer’s agent (e.g., the employer’s attorney), government agencies or as required by law.30 In addition, after taking adverse action based upon such a report, the employer must provide the applicant or employee with a summary of the nature and substance of the report. The summary need not reveal the sources of the information contained in the report.31 The law permits an oral summary, but providing the summary in writing is strongly recommended to create a written record of compliance with this requirement.

§ 1.3(b) Americans with Disabilities Act (ADA) The ADA simultaneously requires employers to accommodate physical and mental conditions and limits the preemployment inquiries and medical examinations available to employers. As such, the ADA limits the medical information an employer can obtain from an applicant. While job applicants may be asked about their ability to perform specific job functions, employers may not ask questions about an applicant’s medical condition or the existence, nature or severity of a disability, or require the applicant to take a medical examination (with the exception of examinations to establish illegal drug use), before it makes a conditional job offer.32 Offers of employment may be conditioned upon the results of a medical examination prior to the 33 commencement of employment duties, provided all applicants for that category of jobs are required to undergo the same examination, regardless of disability, and the examinations are job-related and based on 34 a legitimate business necessity. The asserted business necessity must be vital to the business and the request for a medical examination or inquiry cannot be unduly broad or intrusive.35 Whether a medical 27

15 U.S.C. § 1681b(b)(2)(C). 15 U.S.C. § 1681a(y)(1)(B)(i). 29 See Millard v. Miller, 2005 U.S. Dist. LEXIS 16809 (W.D. Wis. Aug. 9, 2005) (finding that “any reasonable interpretation of this broader phrase includes conduct occurring in the workers’ compensation context because a workers’ compensation claim by definition relates to employment”). 30 15 U.S.C. § 1681a(y)(1)(D). 31 15 U.S.C. § 1681a(y)(2). 32 42 U.S.C. § 12112(d)(3); see also Doe v. Salvation Army, 531 F.3d 355 (6th Cir. 2008) (employer’s motion for summary judgment on plaintiff’s ADA claim denied where employer terminated job interview after learning of plaintiff’s use of prescription psychotropic drugs); EEOC, Fact Sheet: Employment Tests and Selection Procedures (Dec. 2007), available at 33 42 U.S.C. § 12112(d)(3). 34 42 U.S.C. § 12112(d)(3)(A). 35 42 U.S.C. § 12112(d)(4)(A). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 11 28

examination is consistent with a business necessity turns on the facts of each case. The timing of the medical examination in relationship to a job offer can be critical to avoid liability. For example, in Leonel v. American Airlines, Inc., the Ninth Circuit Court of Appeals held that the ADA prohibits examinations until after the employer has made a “real” job offer to an applicant.36 In Leonel, the plaintiffs applied for flight attendant positions and received offers of employment, conditioned on completion of a drug test, medical examination and satisfactory background check. After the conditional offers were made, the applicants were directed to the medical department, where they completed a medical questionnaire and had blood drawn prior to the background checks being completed. None of the applicants disclosed that they were HIV positive on the medical questionnaire. The results of the blood tests subsequently indicated signs of HIV infection and the airline rescinded the conditional offers of employment on the grounds the applicants had not disclosed their HIV status on the medical questionnaires. Both the ADA and, in this case, California state law, prohibit medical examinations until after a “real,” albeit conditional, offer of employment is made. The court held that an offer is “real” only if the employer has completed all nonmedical aspects of the application process (here, the background checks) or demonstrated that it would have been unreasonable to do so.37 The medical test must be the very last step in the hiring process. The ADA also prohibits discrimination based on “qualification standards, employment tests, or other selection criteria” that tend to screen out individuals with disabilities and are not job-related or consistent with a business necessity.38 Therefore, many nonmedical, preemployment tests may have ADA implications. For example, if a pencil and paper “personality test” asks questions about whether applicants feel happy or sad, satisfied with their life or their work, or even if they feel tired or under stress, an applicant may unwittingly disclose physical or psychological disorders. For a more complete discussion of these and other types of applicant testing, see LITTLER ON EMPLOYMENT TESTING.

§ 1.3(c) Genetic Information Nondiscrimination Act (GINA) Congress enacted the Genetic Information Nondiscrimination Act (GINA) in recognition that advances in 39 genetic science could lead to discrimination against persons based on genetic information. Title II of GINA restricts the acquisition of genetic information by employers, prohibits the use of genetic information in making employment decisions and strictly limits the disclosure of genetic information by employers. The EEOC is empowered to enforce the provisions of this title and issue regulations. GINA places a number of limitations on employers. All forms of discrimination against applicants, 40 employees and former employees based on genetic information are prohibited. GINA also prevents employers from acquiring genetic information about applicants or employees in all but a few narrow circumstances, such as inadvertently acquiring information volunteered by employees or receiving 41 information in connection with a leave request. Additionally, genetic information may not be disclosed 42 to others except in some limited situations. Suits brought by the EEOC alleging GINA violations illustrate that GINA not only prohibits employers from making adverse employment actions based on acquired genetic information, but also prohibits the acquisition of such information itself.43 36

400 F.3d 702, 709–10 (9th Cir. 2005) (emphasis in original). 400 F.3d at 708–09. 38 42 U.S.C. § 12112(b)(6). 39 42 U.S.C. § 2000ff. Genetic information is defined to include: (1) an individual’s genetic tests; (2) genetic tests of the individual’s family members; (3) the manifestation of diseases or disorders in family members; (4) an individual’s request for or receipt of genetic services; and (5) the genetic information of a fetus or any embryo legally held by an individual or family members using reproductive technology. 29 C.F.R. § 1635.3(c). 40 42 U.S.C. § 2000ff-1(a); 29 C.F.R. pt. 1635. 41 42 U.S.C. § 2000ff-1(b); 29 C.F.R. § 1635.8. 42 42 U.S.C. § 2000ff-5; 29 C.F.R. § 1635.9(a). 43 EEOC v. Fabricut Inc., No. 3:13-cv-248-cve-PJC (N.D. Okla. May 7, 2013) (alleging employer unlawfully asked © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 12 37

Employers should take a number of practical steps with respect to background screening and hiring to account for GINA’s prohibitions on genetic discrimination. These steps include: • Employers should inform recruiters and hiring managers of the prohibition against making a hiring decision based on personal knowledge of family history. (This may be an issue in smaller towns where there may exist considerable knowledge of family medical history.) • Employers should not use Internet resources, court records or publicly available databases to acquire genetic information about applicants or employees. Employers should avoid accessing applicants’ or employees’ social networking sites without permission, as this could inadvertently uncover genetic information. • If an employer requires post-offer, preemployment medical examinations, the medical examinations may not include any inquiries about family medical history. Although these types of questions are common at routine doctor visits, physicians performing preemployment medical exams should be advised to avoid these questions, and employers should take steps to review and revise any potentially outdated questionnaires that may still contain questions relating to family medical history. • Employers should make sure their equal employment opportunity policies include prohibitions against discrimination based on genetic information. • Employers should train human resources personnel and managers on the requirements of Title II of GINA and any applicable state or local laws pertaining to genetic information. For further discussion of GINA, see LITTLER ON DATA PROTECTION & RELEASE OF PERSONAL INFORMATION or LITTLER ON EMPLOYMENT TESTING.

§ 1.3(d) Federal Bankruptcy Act The federal Bankruptcy Act provides that an individual may not be discriminated against in employment because he or she has filed for bankruptcy.44 The Bankruptcy Act’s antidiscrimination provision codified the public policy of providing bankrupt individuals with a fresh start and protecting the debtor’s means of earning a livelihood. Originally, the antidiscrimination provision of the Act only applied to “governmental units” (i.e., public employers). Bankruptcy Code section 525(a) provides that such employers may not “deny employment to, terminate the employment of, or discriminate with respect to employment against” a person who sought 45 the protections of bankruptcy. The provision subsequently was amended in 1984, adding section 525(b), 46 which applied to “private employers.” However, the amendment did not include the language 47 prohibiting discrimination in hiring. Despite compelling arguments for interpreting section 525(b) to have the same breadth as section 525(a), several courts have held that the prohibition against

a job applicant for her family medical history in a post-job-offer medical examination); EEOC, Press Release, EEOC Files Class Genetic Information Discrimination Suit Against Corning Rehab Center (May 16, 2013), available at (class action suit alleging employer unlawfully requested family medical histories as part of health exams before and after workers accepted jobs). 44 11 U.S.C. § 525. 45 11 U.S.C. § 525(a) (emphasis added). 46 See 11 U.S.C. § 525(b), which was added by The Bankruptcy Amendments and Federal Judgeship Act of 1984. 47 11 U.S.C. § 525(b) (“No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title … .”). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 13

discrimination does not apply to hiring decisions by private employers.48 For example, the Third Circuit Court of Appeals found that section 525(b) of the Act does not provide a cause of action against a private employer’s refusal to hire on the basis of bankruptcy. In Rea v. Federated Investors,49 the plaintiff was not hired because he had previously filed for bankruptcy. He sued, claiming section 525 prohibited the denial of employment. The district court disagreed and dismissed the case. In affirming the dismissal, the Third Circuit found the private employer provisions less restrictive than those concerning governmental units. Although both sections 525(a) and 525(b) prohibit bankruptcy-related discrimination and termination, the Third Circuit would not “contravene congressional intent by implying statutory language that Congress omitted” in section 525(b) to create a cause of action prohibiting bankruptcy-related hiring refusals by private employers.50 Although the statute, by its terms, restricts only the actions of a “private employer,” at least one court has expansively applied the 1984 amendment to a credit union closely affiliated with an employer.51 At least one court, giving the term “employment” a somewhat liberal reading, has held that section 525(b) applies not only to employees in the strictest state-law sense, but also protects individuals who work as independent contractors.52 Other courts have refused to extend the protections of section 525(b) to independent contractors.53 The provision does not preclude all decisions that could be interpreted as discriminatory, but only prohibits discriminating against an individual “solely because” the individual sought the protections of the 54 Bankruptcy Act. Most courts agree that a “but-for” analysis should be used to determine whether the employee’s or applicant’s bankruptcy was the sole reason for the alleged adverse employment decision against him or her.55 In other words, but for the fact the applicant or employee filed for bankruptcy, he or 48

See, e.g., Burnett v. Stewart Title Inc., 635 F.3d 169 (5th Cir. 2011) (rejecting hiring bias claim against private entity under the Bankruptcy Code); Myers v. Toojay’s Mgmt. Corp., 640 F.3d 1278 (11th Cir. 2011) (holding a private employer may discriminate in hiring based on past bankruptcy filing); Rea v. Federated Investors, 627 F.3d 937 (3d Cir. 2010), cert denied, 565 U.S. 825 (2011) (declining to read the phrase “discrimination with respect to employment” in section 526(b) as broad enough to encompass discrimination in denial of employment); Stinson v. BB&T Inv. Servs. (In re Stinson), 285 B.R. 239 (Bankr. W.D. Va. 2002) (holding that section 525(b) prohibits discrimination with respect to employment, but finding that the prohibition does not include hiring decisions). But see Leary v. Warnaco Inc., 251 B.R. 656 (S.D.N.Y. 2000) (attributing the difference between the language of section 525(a) and section 525(b) to the “scrivener” being “more verbose” in writing section 525(a)). 49 627 F.3d 937 (3d Cir. 2010). 50 627 F.3d at 941. 51 See In re Callender, 99 B.R. 378 (Bankr. S.D. Ohio 1989) (holding that actions taken against a debtor in bankruptcy, who was an employee of the U.S. Postal Service, by his creditor, a credit union affiliated with the Postal Service, were subject to section 525(b)). 52 See In re McNeely, 82 B.R. 628 (Bankr. S.D. Ga. 1987) (finding that lumber company violated section 525(b), where it refused to assign a logger new quotas after he filed a plan for reorganization, even though the logger was an independent contractor). 53 These courts refused to follow McNeely, citing, amongst other reasons, the U.S. Supreme Court’s instruction to bankruptcy courts in United States v. Ron Pair Enterprises, Inc. to construe the meaning of the Bankruptcy Code in accordance with its plain language. See Kepple v. Miller, 572 S.E.2d. 687, 689 (Ga. Ct. App. 2002) (citing United States v. Ron Pair Enters., Inc. 489 U.S. 235, 241 (1989) (“[W]here the statute’s language is plain, the sole function of the courts is to enforce it according to its terms.”)); see also William v. First Tower Loan, L.L.C., 2015 U.S. Dist. LEXIS 10545 (W. D. La. Jan. 29, 2015); In re Hardy, 209 B.R. 371 (Bankr. E.D. Va. 1997). 54 11 U.S.C. § 525(a) & (b). 55 See, e.g., Majewski v. St. Rose Dominican Hosp. (In re Majewski), 310 F.3d 653 (9th Cir. 2002) (firing employee because of intent to file bankruptcy did not violate antidiscrimination provision because statute only applied to those individuals who have already filed); Simms-Wilson v. Linebarger Goggan Blair & Sampson L.L.P. (In re SimmsWilson), 434 B.R. 452 (Bankr. S.D. Tex. 2010) (plaintiff must prove the bankruptcy was the sole reason plaintiff was fired); Mayo v. Union Bank (In re Mayo), 322 B.R. 712 (Bankr. Vt. 2005) (concluding that adverse employment actions based on the threat or disclosure of bankruptcy filing may be grounds for action under the Bankruptcy Act). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 14

she would have been hired, or would not have been disciplined, demoted or terminated.56 With regard to the types of conduct by employers that the statute prohibits, courts have made clear that the statute applies only to discrimination in employment. The courts have rejected efforts to extend the anti-discriminatory goal of the statute to non-employment-related actions.57 Thus, application of the statute has been limited, for example, to changes in employee benefits and privileges, and to the involuntary transfer of an employee from one job to another.58 Accordingly, employers that obtain credit reports indicating that an individual has filed for bankruptcy should be ready and able to articulate an independent justification for any adverse employment decision.

§ 1.3(e) Federal Driver’s Privacy Protection Action The federal Driver’s Privacy Protection Act generally prohibits employers and other organizations from accessing certain information contained in motor vehicle records of employees and job applicants. The Act bars state departments of motor vehicles (DMVs) from disclosing photographs, Social Security numbers and medical information except in very limited circumstances.59 Other categories of personal information typically associated with a driving record, such as name, driver’s license number, home address (without five-digit zip code) and telephone number may be disclosed without the driver’s authorization in a greater number of, but still limited, circumstances.60 However, the Act imposes no restriction on the disclosure by DMVs of information on vehicular accidents, driving violations and driver’s status.61

§ 2 BACKGROUND SCREENING TECHNIQUES § 2.1 OVERVIEW OF BACKGROUND & REFERENCE CHECKS Despite newly enacted restrictive statutes limiting background checks, employers may well be advised to conduct basic background checks for applicants before making a hiring decision. Failing to investigate a prospective employee creates the risk that an employer will hire a dishonest, unreliable or unqualified person, or even a dangerous person who may harm other employees or customers and create legal liability for the employer. At a minimum, the work history and references of any prospective employee should be confirmed to the greatest possible extent and any gaps in the application should be explained. Given the possibility for liability, employers are advised to contact all former employers, supervisors and references of prospective employees and to fully document such contact. Well-documented efforts in this regard should generally suffice to overcome allegations of negligence, even where former employers or other references refuse to provide information. 56

In re Simms-Wilson, 434 B.R. 452 (finding termination improper where plaintiff, whose supervisor was pleased with her work and testified she performed an important task in the company, was terminated after employer discovered she owed delinquent taxes (a dischargeable debt)); McKibben v. Titus County Appraisal Dist. (In re McKibben), 233 B.R. 378 (Bankr. E.D. Tex. 1999) (finding termination improper where employee, with a history of “above average” performance reviews and no disciplinary history, was terminated shortly after employer learned of her bankruptcy filing). 57 See, e.g., In re Aleman, 2013 Bankr. LEXIS 1598 (M.D. Fla. Apr. 19, 2013) (finding the Housing Authority’s eviction process does not violate the protections of the Bankruptcy Act); In re Diamond & Gold Connection, Inc., 54 B.R. 917 (Bankr. D. Mass. 1985) (holding that court had no authority to order insurance company to renew the theft insurance policy that the company had issued to a jeweler seeking reorganization); see also In re Spaulding, 116 B.R. 567 (Bankr. S.D. Ohio 1990) (finding no violation where bank closed customer’s checking account after customer filed bankruptcy petition). 58 See, e.g., Potter v. City of Hanceville (In re Potter), 354 B.R. 301 (Bankr. N. Ala. 2006) (finding reappointment in City Council was an adverse employment action under the Bankruptcy Act); In re Hicks, 65 B.R. 980 (Bankr. W.D. Ark. 1986) (bank employee’s involuntary transfer from job as teller to a noncontact position after bankruptcy filing held discriminatory because employee’s job duties were affected by employer’s actions, even though employee suffered no adverse economic consequences). 59 18 U.S.C. §§ 2721(a)(2), 2725(4). 60 18 U.S.C. §§ 2721(a)(1), 2725(3). 61 18 U.S.C. § 2725(3). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 15

For example, in Interim Healthcare of Fort Wayne, Inc. v. Moyer, an employer was denied summary judgment on a negligent hiring claim because it failed to keep records of the background investigation it conducted.62 In that case, the defendant employer submitted an affidavit stating that the employer had, in fact, contacted all previous employers and presented positive letters of reference for the employee. However, the court held that the affidavit was insufficient evidence to show that the employer had not been negligent in its hiring of the employee. The minority opinion of the court pointed out that if the majority opinion were interpreted literally, negligent hiring claims would survive summary judgment “whenever a defendant failed to show that it spoke to an employee’s former employers.”63 In most states, employers that fail to conduct reasonable background investigations of prospective employees can be liable for their employees’ actions. In fact, nearly all states now recognize negligent hiring and retention as a viable cause of action when employees commit crimes or intentional torts against coworkers and third parties.64 To minimize and possibly prevent liability, employers now commonly screen applicants to insulate themselves from liability for their employees’ future actions. However, employee privacy concerns and recent state legislation restricting screening employees present both an obstacle and a trap for the unwary. An employer need not perform exactly the same investigation on every applicant, provided that any differentiation among applicants is based upon legitimate business interests and an investigation policy reasonably calculated to further those interests.65 For instance, an employer may wish to investigate more stringently the backgrounds of prospective employees who have applied for positions involving confidential information such as financial data, trade secrets or other sensitive material. Likewise, an employer may reasonably desire to conduct extra investigation of persons who may have access to corporate or customer funds or to other valuable property, or who will be in a special position of trust, such as health care workers or workers who have access to customers’ homes as part of their job duties. An employer may also determine that applicants for managerial, supervisory or policy-making positions will undergo a more rigorous background investigation due to their anticipated value to the employer and the greater liability arising from their wrongful conduct. Employers also should request every applicant’s written consent to their investigation of employment, educational, reference, licensing and public records information, as well as consent to the release of such information to the employer by third parties. In addition to the privacy issues that arise from background screening, employers must also avoid any disparate treatment that may violate discrimination laws. An employer may be held liable for unlawful discrimination, regardless of whether the discrimination is intentional, if its investigation policy results in unequal treatment or impact as to protected categories such as race, national origin, gender, pregnancy, sexual orientation, marital status, physical or mental disabilities, age, political activities, bankruptcy or other legally protected categories or activities.


746 N.E.2d 429, 435 (Ind. Ct. App. 2001). 746 N.E.2d at 436–37. 64 Michael Bologna, Defending Against Negligent Hiring Litigation Request Due Care in Hiring, Daily Lab. Rep. (BNA), at A7 (Sept. 16, 2003); see generally 1 LEX K. LARSON & THEODORE F. SHULTS, EMPLOYMENT SCREENING §§ 11.01–11.52 (2007). Negligent hiring is also recognized under federal law as a viable cause of action brought under 42 U.S.C. § 1983, the Federal Tort Claims Act, the Federal Employers’ Liability Act and maritime claims. EMPLOYMENT SCREENING, at § 12.04. 65 See Diaz v. Ashcroft, 324 F. Supp. 2d 343 (D.P.R. 2004) (finding defendant’s additional background investigation for a U.S. Marshall applicant was reasonable given the responsibilities of the position—e.g., securing federal judges and officers, inmates, etc.); Hill v. National Collegiate Athletic Assn., 7 Cal. 4th 1 (Cal. 1994) (finding that the NCAA did not violate student athlete’s right of privacy when it conducted drug testing because the drug-testing program that was reasonably calculated to further the defendant’s legitimate interest in safeguarding intercollegiate athletic competition). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 16 63

§ 2.2 USE OF SOCIAL MEDIA IN EMPLOYEE SCREENING & EMPLOYMENT DECISIONS Increasingly, employers are using the Internet, especially social networking websites such as Facebook, to screen applicants. Not surprisingly, employers tap into these electronic resources as they provide employers with a low-cost, easy-to-use screening tool for job applicants and/or employees. Internet searches may be used as a way to winnow a candidate list by searching for evidence of objectionable content (drug use, inappropriate photographs, etc.), discriminatory attitudes towards others, poor communication skills or misleading information about job qualifications. Conversely, the Internet can be used to confirm and even amplify an applicant’s credentials by providing support of a candidate’s qualifications online or evidence of a candidate’s excellent communication skills. While employers may utilize social networking sites as part of their background check process, the full legal implications continue to develop. Specifically, employers that screen applicants by monitoring Internet search engines and social networking sites may be at risk of violating federal, state or local laws. Therefore, the cautious approach is to obtain an applicant’s consent for the Internet search after extending a conditional job offer. Additionally, employers should consider implementing or modifying policies and practices to ensure the lawful use of information from Internet sites (e.g., implementing a policy specifying the personal information that may and may not be obtained from Internet sites for recruiting 66 purposes). Employers should also consider whether disclosure and background search authorization forms completed by applicants and existing employees should be revised to cover searches of Internet sites.67 A 2011 case regarding federal contractors as employees may offer some support for an employer’s right to collect information from the Internet. In National Aeronautics and Space Administration v. Nelson, the U.S. Supreme Court rejected a constitutional challenge to the collection of certain background information by the federal government as part of the process of credentialing federal contractors.68 The Court’s decision acknowledges the legitimate interest that the government has as an owner and employer in vetting workers. Because private-sector employers plainly have the same interest in “employing a competent, reliable workforce”69 and “separating strong candidates from weak ones,”70 the Court’s decision may prove useful to private-sector employers at a time when background checks are under close scrutiny from the EEOC and state legislatures. That said, the Court’s decision does not give public or private sector employers carte blanche to engage in background checks. The decision was limited to a consideration of federal constitutional privacy rights and did not consider the various laws that regulate the collection and use of background information by private-sector employers, including the FCRA and Title VII of the Civil Rights Act of 1964 (as interpreted by the EEOC).

§ 2.2(a) Social Media Content & the FCRA At a minimum, any employer that relies upon a third party, such as a recruiter, to screen job applicants should consider the FCRA requirements for background checks. (See discussion of the FCRA at § 1.3(a) above.) Similarly, employers that rely on background check companies that collect from social media sites information about applicants or employees also must comply with the FCRA. In complying with the FCRA, an employer must obtain a candidate’s consent before it can enlist the help of an agency to conduct a background check and issue a consumer report on that individual.71


18 Lab. Rel. Rep. (BNA) 592 (Oct. 20, 2008). 18 Lab. Rel. Rep. (BNA) 592 (Oct. 20, 2008). 68 562 U.S. 134 (2011). 69 562 U.S. at 149. 70 562 U.S. at 154. 71 15 U.S.C. § 1681m(b). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 67


Notably, the FCRA does not currently prohibit the use of reports that contain information gathered from social networking sites. However, applicants must be notified about the scope of the investigation.72 Employers should also examine the sources used by credit agencies for background checks to make sure applicants are adequately notified as required by law. In 2011, the FTC issued a letter closing its investigation into whether an “Internet and social media background screening service used by employers in preemployment background screening” complied with the FCRA.73 Although it did not impose a penalty, the FTC determined that the “social check” service in question, known as Social Intelligence, was “a consumer reporting agency because it assembles or evaluates consumer report information that is furnished to third parties that use such information as a factor in establishing a consumer’s eligibility for employment.” Therefore, employers that rely on a social check service, like Social Intelligence, to search social media for information about job candidates must comply with the FCRA.

§ 2.2(b) Social Media Content & Antidiscrimination Law Employers using the Internet or social networking sites to screen applicants also face exposure under federal and state antidiscrimination laws. Visiting sites like Facebook may shed light on protected criteria that employers would otherwise not ask at the hiring stage. For instance, Facebook profiles often indicate a person’s age, religion, disability or sexual orientation. Similarly, Internet searches can uncover information regarding an applicant’s membership in a cultural or religious organization that could motivate the filing of a lawsuit if an applicant is not hired. Employers who wish to conduct Internet searches on candidates may avoid the appearance of discrimination by having someone other than the decision maker—either another employee or an outside firm—conduct the search and report only specific, nonprotected information to the decision maker. Employers performing this type of Internet screening should revise their written policies to reflect a standard approach with respect to all job applicants. Evidence that the employer screened all applicants in a uniform manner or relied on a nondiscriminatory factor in refusing to hire a candidate may reduce exposure to liability. The risk of a discrimination claim also should serve as a warning for employers that consider using video resumes, another technological innovation in the hiring process. Even viewing a video resume where an applicant’s race, national origin, age and/or disability are noticeable may expose an employer to the risk of a discrimination claim that would not otherwise arise from reviewing a resume. As a result, it may be advisable for employers to reject and refuse to review video resumes sent by potential candidates.

§ 2.2(c) Social Media Content & Privacy Rights Before conducting social media checks on their own or relying on a third party, employers should consider that many applicants and employees may view such searches as a violation of their privacy. Screening potential employees by use of social networking sites also presents the risk of violating common law and statutory privacy rights. While information accessed through a search engine might be considered “public,” some social networking sites have measures in place to protect users’ privacy. Facebook, for instance, allows users to restrict access to their pages to those whom they invite to be “friends” through the site. This limited access suggests a heightened expectation of privacy. Therefore, applicants may assert that searches of social networking sites constitute an invasion of their privacy rights. Specifically, social networking profiles, such as one’s Facebook profile, may be akin to private areas that employer’s may not access without permission. However, in instances involving public profiles, it will be difficult for job applicants to demonstrate that they have a colorable claim since they 72

15 U.S.C. § 1681b(b)(2)(C). Letter from Maneesha Mithal, Associate Director, Federal Trade Commission, Bureau of Consumer Protection, Division of Privacy and Identity Protection, to Renee Jackson, Esq. (May 9, 2011), available at © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 18 73

may be unable to show that they have a “reasonable expectation of privacy” with respect to their Internet profiles.74 Employers are at greater risk if they access a private site, go to a site that the applicant believes to be private or find ways to circumvent privacy controls implemented by an applicant or social networking site. Specifically, an employer accessing a candidate’s or employee’s Facebook page may violate Facebook’s terms of service that restrict users usage to noncommercial purposes.75 An employer’s access to a social networking site in violation of the site’s terms of use may violate the federal Computer Fraud and Abuse Act76 (prohibiting unauthorized access to computers and networks) or the federal Stored Communications Act77 (prohibiting unauthorized access to electronic communications).

§ 2.2(d) Social Media Content & the Stored Communications Act The federal Stored Communications Act (SCA) protects from unauthorized access to an “electronic communication while it is in electronic storage” at an “electronic communication service,” provided the 78 communications are not readily accessible to the general public. In 2009, a federal court upheld a jury verdict against an employer for violating the SCA when an employer’s managers accessed (on several occasions and without authorization) a password-protected Myspace chat group that two employees used to air their grievances against the employer, and subsequently terminated the employees’ employment.79 One of the managers obtained the password from another employee who felt pressured to give it to the manager.80 A federal court in the District of New Jersey similarly addressed whether and when an employer can use an employee’s restricted social media content to impose discipline—however, this time the outcome was the opposite. In Ehling v. Monmouth-Ocean Hospital Service Corp., the plaintiff, a nurse and paramedic at the defendant-hospital, reacted to a fatal shooting of a guard at the Holocaust Museum in Washington, D.C. by posting a comment on Facebook suggesting she blamed the D.C. paramedics for allowing the 81 shooter to survive and telling the other guards they needed to go to target practice. The post went to each of plaintiff’s 300 Facebook friends, one of whom forwarded the post and some of the plaintiff’s other posts to a hospital manager. Concerned about the content of the post, hospital management disciplined the plaintiff. More than two years later, the hospital terminated plaintiff’s employment, and she brought suit in federal court alleging privacy violations. Among other claims, plaintiff alleged that the hospital gained access to her “friends only” Facebook page only because a member of upper management coerced an employee to access his Facebook account in the supervisor’s presence. Based on this 82 allegation, plaintiff asserted claims under the SCA. The court ruled that content on a restricted Facebook page was covered by the SCA because: (1) a Facebook post is an electronic communication; (2) Facebook archives user posts, thereby satisfying the requirement of “electronic storage;” (3) Facebook is an electronic communication service; and (4) a “friends only” Facebook page, by definition, is not publicly accessible.83 However, even if the SCA 74

See RESTATEMENT (SECOND) OF TORTS §§ 652A–652I. See Facebook, Statement of Rights and Responsibilities, available at 76 18 U.S.C. § 1030. 77 18 U.S.C. §§ 2701-2711. 78 18 U.S.C. § 2701. 79 Pietrylo v. Hillstone Rest. Group, 2009 U.S. Dist. LEXIS 88702 (D.N.J. Sept. 25, 2009) (denying employer’s motion for new trial re jury verdict finding employer had violated the SCA (but had not invaded plaintiffs’ common law right to privacy)). 80 2009 U.S. Dist. LEXIS 88702, at *8; see also Konop v. Hawaiian Airlines, 302 F.3d 868 (9th Cir. 2002) (airline executive could potentially be liable under the SCA for accessing a pilot’s closed website through false pretenses; the decision turned on whether the pilot that had shared his user name and password with the airline executive was, in fact, was a user of the plaintiff’s restricted website). 81 961 F. Supp. 2d 659, 663 (D.N.J. 2013). 82 961 F. Supp. 2d at 665. 83 961 F. Supp. 2d at 666-68. © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 19 75

protects restricted social media content, access to that content by an authorized user is lawful. In the plaintiff’s case, the Facebook friend who disclosed the content to hospital management was an authorized user because he was a legitimate Facebook user and “friend” to the plaintiff on Facebook. Moreover, the court found that, contrary to the plaintiff’s allegation, the friend independently and voluntarily disclosed plaintiff’s Facebook post to the hospital manager.84 As a result, the court granted the hospital’s motion for summary judgment on this count. While the SCA claim was the principal focus of the court’s attention, the court also granted summary judgment for the hospital on the plaintiff’s common-law invasion of privacy claim. The court reasoned that an intrusion on a private sphere is a fundamental element of that claim, and the hospital never intruded on the plaintiff’s Facebook page because it did not access the page using the plaintiff’s login credentials or the login credentials of one of the plaintiff’s Facebook friends, nor did it direct plaintiff’s coworker to access the page. Rather, the court found that the hospital was “the passive recipient[] of information that [it] did not seek out or ask for.”85 Because there was no actionable intrusion, the court did not reach a particularly important and pressing issue, i.e., whether the plaintiff’s Facebook page was private for purposes of a common-law invasion of privacy claim given that plaintiff permitted 300 “Friends” to access her page, and none of those “Friends”—as was demonstrated by the coworker—had any obligation to keep the plaintiff’s Facebook posts confidential. A 2009 California appellate court decision demonstrates that a job applicant or employee would not have a viable claim based upon an employer’s access to that person’s unrestricted postings on a social media site.86 The court affirmed the dismissal of the plaintiff’s invasion of privacy claim, reasoning that her online posting was not a private fact: “By posting the article on, [she] opened the article to the public at large. Her potential audience was vast.”87

§ 2.2(e) Social Media Content & the Federal Constitution In 2013, the ubiquitous “thumbs-up” icon in Facebook gained new significance for employers in Bland v. Roberts.88 The Fourth Circuit Court of Appeals, in a case of first impression, held that a public employee fired for “liking” the campaign page of his boss’s political adversary had engaged in speech protected by the First Amendment of the U.S. Constitution. In the midst of a heated election campaign for a city sheriff position, the incumbent sheriff learned that two of his deputies had posted expressions of encouragement for his adversary on Facebook. The sheriff warned his staff that those who openly supported his adversary would lose their jobs if he were reelected.89 Upon his reelection, the sheriff was true to his word and did not reappoint the two deputies and several other employees who had supported his adversary. In response, they sued the sheriff, alleging, among other things, that he had violated their First Amendment right to freedom of speech given that Facebook activity constituted protected speech. The Fourth Circuit concluded that “liking” a political candidate’s campaign page is “the Internet equivalent of displaying a political sign in one’s front yard.”90 Moreover, the “liking” of the campaign page made the deputy’s support for the sheriff’s adversary “unmistakable,” thereby creating a material issue of fact as to whether the sheriff’s decision not to reappoint the deputy was based on his protected speech.91 Although this case involved public employees, there are important implications for private employers. The case provides a textbook example of a decision maker learning, through social media, too much information about an employee’s private life. As an analogy to the sheriff’s actions, decision makers who learn through social media about an employee’s sexual orientation, disability or family medical history 84

961 F. Supp. 2d at 670. 961 F. Supp. 2d at 674. 86 Moreno v. Hanford Sentinel, Inc., 172 Cal. App. 4th 1125 (2009). 87 172 Cal. App. 4th at 1130. 88 730 F.3d 368 (4th Cir. 2013); see also Philip Gordon, What’s in a “Like?” Precedent-Setting Case Poses New Risk for Employers, LITTLER INSIGHT, Sept. 25, 2013, available at 89 730 F.3d 368 at 381. 90 730 F.3d 368 at 386. 91 730 F.3d 368 at 386-87. © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 20 85

(i.e., genetic information) can no longer claim lack of knowledge as a defense to a failure to hire or wrongful termination claim. In addition, although First Amendment protections extend only to public employees, more than 30 states have some form of protection for employees’ lawful off-duty conduct, some of which specifically prohibit adverse actions against employees for their political activity and/or associations. Therefore, employers considering discipline in response to an employee’s “like” need to evaluate potential liability under these state laws.

§ 2.2(f) Social Media Content & the National Labor Relations Act Although not related specifically to the use of social media in the hiring process, the National Labor Relations Board (NLRB or “Board”) remains active in the area of employees’ social media content. In Hispanics United of Buffalo, Inc., the Board found that a nonunion employer’s termination of five employees for Facebook postings was unlawful, awarding the employees full reinstatement and back pay.92 The controversy arose when one employee criticized the work of five of her coworkers. In response, one of the employees sent a message from her personal computer to the other four employees, which sparked a number of off-duty comments being posted to the complaining employee’s Facebook page. That employee then complained to her supervisor that the postings violated the employer’s “zero tolerance” policy against bullying and harassment. The employer investigated and ultimately fired the five employees for violating its policy. Despite no union involvement, the NLRB upheld an administrative law judge’s decision that the terminations violated the National Labor Relations Act (NLRA). The Board ruled that comments posted on Facebook are protected in the same manner and to the same extent as comments made at the “water cooler” and can thus constitute concerted protected activity.93 “Likes” on Facebook and postings containing obscenities may also receive protections under the NLRA. In Triple Play Sports Bar & Grille, a former employee posted a “status update” in a Facebook discussion indicating her former employer’s alleged failure to properly withhold the correct amount of taxes from her paycheck (which she indicated caused her to owe money when she filed her tax return).94 A current employee “liked” that post and another employee commented on the post indicating she “owed too” and added an obscenity in relation to one of the company’s owners. The employer subsequently fired the two employees. The Board found that the “Like” and the second employee’s conduct constituted protected, concerted activity under section 7 of the NLRA and held that off-duty social media exchanges may lose their protections if they are disloyal and unconnected to ongoing labor disputes or defamatory.95 The Board further found that the company’s Internet/Blogging policy, which prohibited “inappropriate discussions about the company,” was unlawful as employees would reasonably interpret it to encompass protected activities. The Second Circuit Court of Appeals upheld the Board’s decision, suggesting that the use of an obscenity in a social media post that may be accessible by customers is not enough, by itself, for the employee’s communications to lose NLRA protection.96 The court also held that the company’s Internet/Blogging policy violated the NLRA because it could be reasonably interpreted to proscribe any discussions that the company deemed inappropriate about the terms and conditions of employment.97

§ 2.2(g) Social Media Content & State Law In keeping with the trend to protect the privacy of social media, several state governments have acted to restrict employers’ ability to require applicants to provide access to the applicants’ social media accounts. Employers that require applicants to provide access to social media accounts should be aware that such a practice could be explicitly prohibited in their state. As of September 15, 2016, the following states have 92

359 N.L.R.B. No. 37 (Dec. 14, 2012). 359 N.L.R.B. No. 37, at **37–38. 94 Three D, L.L.C. v. NLRB, 629 F. App’x 33 (2d Cir. 2015). 95 Three D, L.L.C. d/b/a Triple Play Sports Bar & Grille, 361 N.L.R.B. No. 312 (Aug. 22, 2014) (citing NLRB v. Electrical Workers Local 1229, 346 U.S. 464 (1953) and Linn Plant Guards Local 114, 383 U.S. 53 (1966) for standards). 96 Three D, L.L.C. v. NLRB, 629 F. App’x 33 (distinguishing NLRB v. Starbucks Corp., 679 F.3d 70 (2d Cir. 2011)). 97 629 F. App’x at 38. © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 21 93

enacted legislation that prohibits employers from requiring employees and/or job applicants to provide access to their personal social media accounts: Table 1: State Legislation Prohibiting Employers from Requiring Applicants and/or Employees to Provide Access to Personal Social Media Accounts98 State Source Arkansas ARK. CODE ANN. § 11-2-124 California CAL. LAB. CODE §§ 980 et seq. Colorado COLO. REV. STAT. § 8-2-127 Connecticut CONN. GEN STAT. § 31-40x Delaware DEL. CODE ANN. tit 19, § 709A. Illinois 820 ILL. COMP. STAT. 55/10 Louisiana LA. REV. STAT. ANN. §§ 51:1951-1953, 51:1955 Maine ME. REV. STAT. ANN. tit. 26, §§ 615-619 Maryland MD. CODE ANN., LAB. & EMPL. § 3-712 Michigan MICH. COMP. LAWS §§ 37.272-.278 Montana MONT. CODE ANN. § 39-2-307 Nebraska Workplace Privacy Act, Leg. Bill 821, 104th Leg., 2d Sess. (2016) Nevada NEV. REV. STAT. § 613.135 New Hampshire N.H. REV. STAT. §§ 275:73 to 275:75 New Jersey N.J. STAT. ANN. §§ 34:6B-6 to 34:6B-10 New Mexico N.M. STAT. ANN. § 50-4-34 (job applicants only) Oklahoma 40 OKLA. STAT. §§ 173.2-.3 Oregon OR. REV. STAT. § 659A.330 Rhode Island R.I. GEN. L.§§ 28-56.1 to 28-56.6 Tennessee TENN. CODE ANN. §§ 50-1-1002 to 50-1-1003 Utah UTAH CODE ANN. §§ 34-48-102, 34-48-201 to 34-48-203 Virginia VA. CODE ANN. § 40.1-28.7:5 Washington WASH. CODE §§ 49.44.200-.205 West Virginia W. VA. CODE §§ 21-5G-1 Wisconsin WIS. STAT. § 995.55 These laws have created an unwieldy legislative patchwork with a variety of restrictions that will leave many multistate employers struggling to create a uniform policy. A summary of the general factors is included below; specific states are listed only for illustrative purposes and should not be considered a comprehensive list.

§ 2.2(g)(i) Variations in Prohibited Conduct The following are some types of prohibited conduct under the various social media laws: 


Request or requirement that applicants or employees disclose their user name, password or other information needed to access a personal social media account: Most states forbid it. New Mexico, however, applies the prohibition only to applicants.

For additional information on pending legislation, see the website for the National Conference of State Legislatures ( Note, there are additional state laws with similar restrictions on access to social media passwords that apply only to higher education institutions. © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 22

Requirement that applicants or employees accept a request, such as a Facebook “friend request,” that would permit access to restricted content: Some states forbid it (e.g., Illinois, Michigan, Washington).

Any request or requirement that an applicant or employee provide the employer access to a personal account, regardless of means: New Jersey, for example, has a broad prohibition; employers cannot request/require an applicant/employee “in any way” provide it with access.99

Permitting the employer to observe applicant’s or employee’s restricted social media content after he or she has logged in (i.e., “shoulder surfing”): Some state expressly forbid it (e.g., Delaware, Illinois, Michigan, Washington); others do not (e.g., Arkansas, Colorado).

Request to change privacy settings to permit employer access to restricted social media content: Some state expressly forbid it (e.g., Delaware, Maine, Michigan, Washington); others do not (e.g., California, Michigan, Nevada, Oregon).

Requirement that that applicants or and employees have a personal social media account as a condition of employment or authorize the employer to advertise on their personal social media accounts: Oregon was the first state to include these categories of prohibited conduct.

It remains an open question whether state courts will read the slightly narrower statutes and those statutes that prohibit only compelled disclosure of login credentials to encompass other methods for circumventing user-created restrictions on access to personal social media.

§ 2.2(g)(ii) Variations in Type of Online Account Protected States vary in how broadly they define the type of personal online account an employer is prohibited from requesting access to, for example: 

Broad definition: Some states broadly define social media (e.g., Arkansas, California, Colorado, Maryland, Michigan, Nevada, Utah). For example, Nevada defines social media account to mean “any electronic service or account or electronic content, including, without limitation, videos, photographs, blogs, video blogs, podcasts, instant and text messages, electronic mail programs or services, online services or Internet website profiles.”100

Narrow definition: Other states apply their password protection laws only to social media accounts, excluding other personal online services from their laws’ purview (e.g., Illinois, New Jersey, New Mexico, Oregon, Washington).

The legislative patchwork also presents material differences regarding the target of an access request, for example: 

Access to applicant’s or employee’s own restricted social media content: Virtually all states prohibit an employer from requiring an applicant’s or employee’s access to their own social media content.

Access to coworker’s restricted social media content: Some states go further by prohibiting employers from asking an employee to help obtain access to the restricted social media content of a coworker (e.g., California, New Jersey).

§ 2.2(g)(iii) Variations in Exceptions to Prohibited Conduct There is also a range of exceptions to the general prohibitions, for example: 99




“Nonpersonal account” exception: Some states expressly provide that employers can demand that employees provide login credentials to nonpersonal accounts used for the employer’s business purposes. The precise formulation of these exceptions varies, but the general theme of most of them is that if the employer creates or pays for the account, the general prohibition regarding access does not apply. Some states do not expressly provide such an exception (e.g., Illinois). Other states take the exception one step further by permitting employers to request the login credentials for a personal social media account that the employee uses to conduct the employer’s business (e.g., Delaware, Utah).

Workplace investigation exception: The uniformity of the “nonpersonal account” exception evaporates with respect to accessing social media content for workplace investigations. On this topic, the states are divided into roughly three camps:

No exception: Some states have no exception for workplace investigations (e.g., Illinois, Nevada, New Mexico).

Broad exception: Some state have what could be characterized as a broad exception (e.g., Arkansas, California, Delaware, Michigan, New Jersey, Utah). California’s exception, for example, reads as follows: “Nothing in this section shall affect an employer’s existing rights and obligations to request an employee to divulge personal social media reasonably believed to be relevant to an investigation of allegations of employee misconduct or employee violation of applicable laws and regulations, provided that the social media is used solely for purposes of that investigation or a related proceeding.”101

Narrow exception: Some states have relatively narrow exceptions for workplace investigations (e.g., Colorado, Maryland, Oregon, Washington). The Colorado and Maryland laws, for example, permit requests for access to employees’ personal social media content only when necessary to investigate violations of securities laws or regulations or potential misappropriation of trade secrets. Notably, the states with a workplace investigation exception appear to permit the employer to require the disclosure only of social media content, not the employee’s login credentials.

Compliance with statutory or regulatory requirements exception: These password-protection laws could interfere with the ability of broker-dealers and other employers to comply with statutory or regulatory requirements to monitor business-related posts by employees, regardless of whether the account used to post is personal or employer-provided. Here, too, states have varying approaches: 

Several states have adopted language championed by the securities industry that appears to allow employers to request login credentials when required to comply with legal obligations or the rules of a self-regulatory organization, such as the Financial Industry Regulatory Authority’s rules on the supervision of online communications (e.g., Arkansas, Delaware, Illinois, Maine, Michigan, Nevada, New Jersey, Oregon, Utah, Washington). Washington law, for example, provides as follows: “This section does not prevent an employer from complying with the requirements of state or federal statutes, rules or regulations, case law, or rules of self-regulatory organizations.”102

Other states have adopted narrower exceptions that appear to permit requests for social media content to investigate compliance with securities laws or regulations (e.g., Colorado, Maryland).


CAL. LAB. CODE §§ 980 et seq. WASH. CODE §§ 49.44.200. © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED.



§ 2.2(g)(iv) Other Variations in State Laws The social media laws have several other variations. 

Exception for publicly available social media content: Some expressly state that it is not unlawful for employers to access publicly available social media content (e.g., Arkansas, Delaware, Illinois, Maine, Michigan, New Jersey, New Mexico, Oregon, Utah); other states do not speak to this issue, however, there does not appear to be any viable basis for an applicant or employee to complain about an employer’s access to publicly available social media content.

Exception for inadvertent acquiring of login credentials: Some expressly state that employers do not engage in prohibited conduct if they inadvertently acquire social media login credentials while monitoring corporate electronic resources as long as the employer does not use the information to access an employee’s personal social media (e.g., Arkansas, Oregon, Washington).

Immunity for failure to request/require access to social media content: Some statutes confer on employers immunity from claims based on their failure to request or require that an applicant or employee provide access to restricted, personal social media content (e.g., Michigan, Oregon, Utah).

§ 2.2(g)(v) Variations in Available Remedies The remedial schemes for violation of these laws vary widely as well: 

No remedial provision: Some states’ statutes do not include a remedial provision and do not expressly incorporate one by reference (e.g., Arkansas, Delaware, Nevada and New Mexico).

No private right of action: Some statutes provide no private right of action (e.g., California, Colorado and New Jersey).

Yes private right of action, but with cap on recovery: Other states provide a private right of action with varying caps: e.g., Utah and Washington ($500); Michigan ($1,000); Illinois and Maryland (no cap); and Oregon (unclear).

Express administrative remedies: Some states expressly create administrative remedies (e.g., California, Colorado, Illinois, Maine, New Jersey and Oregon); others do not.

§ 2.3 USE OF CREDIT CHECKS IN EMPLOYEE SCREENING & EMPLOYMENT DECISIONS There has been vocal public opposition to the use of credit checks for employment decisions. Opponents of such checks contend that applicants and employees are in a “Catch 22.” Applicants do not have a job to pay their bills, which negatively impacts their credit rating. Prospective employers then reject candidates 103 with poor credit ratings; thus, a candidate’s unemployment makes it more difficult to get a job. Creditcheck proponents contend that businesses do not use checks as often as reported in the media and that they are performed principally for positions where poor credit poses a risk of theft or other harm to the 104 organization. Many states have now enacted laws that impose similar or additional restrictions on how employers obtain and use credit or consumer reports for background checks on prospective employees. During the past several years, a number of states have enacted laws that afford greater protections to applicants— particularly in the area of prohibiting (subject to certain exceptions) employers from using or inquiring 103

Liz Pulliam Weston, How Bad Credit Can Cost You a Job,, Aug. 17, 2009, available at http:// 104 Christine V. Walters, FiveL Company, on behalf of Society for Human Resource Management, Statement to the U.S. Equal Employment Opportunity Commission (Oct. 20, 2010). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 25

into an applicant’s credit report for employment purposes.105 As of September 15, 2016, the following states have laws that limit the use of credit history in employment decisions: Table 2: States with Laws that Limit Use of Credit History in Employment Decisions  Maryland  California  Nevada  Colorado  Oregon  Connecticut  Vermont  Hawaii  Washington  Illinois Local jurisdictions may have restrictions as well (e.g., New York City). These laws vary in scope and detail. As examples, two state laws are discussed below: 

Colorado: The Colorado law imposes expansive restrictions on employers’ use of credit history.106 The law generally prohibits employers from inquiring into or using an applicant’s or employee’s credit history for employment purposes. The only employers excluded from this general prohibition are banks and financial institutions (terms that the law does not define) and those employers who are required by law to conduct credit checks. Employers covered by the statute can conduct credit checks only on limited categories of employees. The employee must constitute “executive or management personnel or officers” or “professional staff to executive or management personnel.” Even more restrictively, employees falling within those categories can only be subjected to a credit check if they set the direction of the business; have fiduciary responsibilities; are authorized to enter into contracts; or have access to sensitive employee, employer or customer information. Before conducting a credit check based on this exception, the employer must disclose, in writing, to the applicant or employee the employer’s bona fide purpose for conducting the check.

Nevada: Nevada’s law bans almost all employers from requiring applicants or current employees to consent to a credit check as a condition of employment.107 Exceptions to this general prohibition include the following: (1) when the employer is required or authorized by state or federal law to use credit information for employment purposes; (2) when the employer reasonably believes the employee or prospective employee has engaged in specific activity that may constitute a violation of state or federal law; and (3) when a credit report is “reasonably related to the position for which the employee or prospective employee is being evaluated.” The Nevada law states that a credit report is reasonably related to an evaluation of the position sought if the duties of the position involve: (1) the care, custody and handling of, or responsibility for, money, financial accounts, corporate credit or debit cards or other assets; (2) access to trade secrets or other proprietary or confidential information; (3) managerial or supervisory responsibility; (4) the direct exercise of law enforcement authority as an employee of a state or local law enforcement agency; (5) the care, custody and handling of, or responsibility for, the personal information of another person; (6) access to the personal financial information of another person; (7) employment with a financial institution chartered under state or federal law, including a subsidiary or affiliate of such a financial institution; or (8) employment with a licensed gaming establishment (as defined by Nevada state law).


For more current information, see National Conference of State Legislatures, Use of Credit Information in Employment 2015 Legislation (June 2, 2015), available at 106 COLO. REV. STAT. § 8-2-126; 7 COLO. CODE REGS. § 1103-4. Vermont’s law is similar in breadth. VT. STAT. ANN. tit. 21, § 495I. 107 NEV. REV. STAT. § 613.570. © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 26

§ 2.4 USE OF CRIMINAL RECORDS IN EMPLOYEE SCREENING & EMPLOYMENT DECISIONS A significant number of employers conduct criminal background checks on some or all of job candidates. Conducting such a search may be an important step in avoiding a negligent hiring claim. However, employers should be aware of the “EEOC Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII,” issued in 2012, which cautions employers that a blanket policy against hiring employees with a criminal record may run afoul of Title VII.108 The EEOC retracted its position (to some degree), after it received resistance from several states, and assured employers that conducting a criminal background check remains lawful. (See discussion at § 2.4(a) below.) Because this issue remains an area of potential EEOC litigation interest, employers should: • Review their policies to ensure they comply with the 2012 EEOC guidelines. • Ensure that hiring managers are properly trained regarding proper questions and what may and may not be considered. • Conduct a privileged review of their conviction-based screening policies to help identify any areas that may increase the risk of disparate impact claims (e.g., lengthy disqualification periods for ex-offenders) and determine how any potential risk balances out against negligent hiring and other risks (e.g., mandatory screening requirements for regulated employers, such as financial institutions). • Develop narrowly tailored exclusions for criminal conduct and consider conducting an individualized assessment of an applicant’s or employee’s criminal history before making an employment-related decision. Because various laws affect the use of criminal records for employment purposes, such as Title VII, the federal FCRA and state fair employment and fair credit reporting laws, employers should also continue to be mindful of their obligations to comply with all of these laws.

§ 2.4(a) EEOC Guidance on Consideration of Arrest & Conviction Records The EEOC’s Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII109 raised concerns with employers because it suggests that the use of criminal history in employment decisions may violate antidiscrimination laws pertaining to race and national origin. As in past guidance, the EEOC distinguishes between arrests and convictions. With regard to arrest records, the EEOC notes: The fact of an arrest does not establish that criminal conduct has occurred, and an exclusion based on an arrest, in itself, is not job related and consistent with business necessity. However, an employer may make an employment decision based on the conduct underlying an arrest if the conduct makes the individual unfit for the position in question.110


Available at EEOC, Enforcement Guidance, Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (Apr. 25, 2012), available at 110 EEOC, Enforcement Guidance, Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (Apr. 25, 2012). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 27 109

To illustrate an employer’s legitimate reliance on the facts underlying an arrest to make an employment decision, the EEOC provides the example where a school terminates an administrator because it has credible evidence that the administrator who had been arrested for allegedly abusing schoolchildren actually engaged in the alleged conduct, even if the administrator was not ultimately convicted of any crime. Unlike an arrest, the EEOC considers a conviction generally sufficient evidence that the conduct occurred. Nonetheless, the agency asserts that an employer generally should not rely upon a conviction by itself when making an employment decision. The EEOC also cautions that an employer must treat individuals equally when considering criminal history. When looking for dissimilar conduct, the EEOC looks for biased statements, inconsistencies in the hiring process and statistical evidence showing disparate treatment. An employer’s facially neutral policy may still be discriminatory if it has a disparate impact when the policy is not job related and consistent with business necessity. The EEOC sets forth two situations where employers can consistently show that use of criminal history is job related and consistent with business necessity even if there is a disparate impact: 1. “The employer validates the criminal conduct exclusion for the position in question in light of the Uniform Guidelines on Employee Selection Procedures (if there is data or analysis about criminal conduct as related to subsequent work performance or behaviors).”111 2. The employer satisfies the three factors used in Green v. Missouri Pacific Railroad112 to consider conviction records: (1) the nature and gravity of the offense or offenses; (2) the length of time since the conviction occurred; and (3) the nature of the job held or sought.113 Therefore, an employer most likely would be justified in requesting conviction records and using those records as a basis for rejecting a job candidate where the candidate was seeking a position that requires the employee to: (1) have or use a security clearance; (2) handle substantial amounts of cash; (3) be covered by a fidelity bond; or (4) act as a fiduciary on behalf of the employer. An employer uses targeted exclusion if it utilizes the Green factors to exclude individuals from specific positions for specific conduct within a set time period. However, in some situations the “use of individualized assessments can help employers avoid Title VII liability by allowing them to consider more complete information on individual applicants or employees as part of a policy that is job-related and consistent with business necessity.”114 Such individual assessment may include consideration of the following factors: • the age of the offender when the offense occurred and the nature and number of convictions; • the facts surrounding each offense; • the job-relatedness of each conviction; • the length of time between a conviction and the employment decision;


EEOC, Enforcement Guidance, Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (Apr. 25, 2012). The Guidelines were adopted by the EEOC, Civil Service Commission, Department of Labor and Department of Justice to ensure fair hiring procedures. See 112 549 F.2d 1158 (8th Cir. 1977). 113 549 F.2d at 1160. 114 EEOC, Enforcement Guidance, Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964, as Amended (Apr. 25, 2012). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 28

• the applicant’s employment history before and after the conviction; and • the applicant’s efforts at rehabilitation.115 In 2013, the EEOC’s guidance met with resistance from the Attorneys General (AGs) of several states regarding the EEOC’s role in enforcing Title VII.116 The AGs expressed concern that the EEOC’s guidance and its application was “gross federal overreach,” and that it was attempting to improperly expand Title VII. In particular, the AGs disagreed with the EEOC’s assertion that broad-scale criminal conviction screens are rarely job related or consistent with business necessity, arguing that: “An employer may have any number of business-driven reasons for not wanting to hire individuals who have been convicted of rape, assault, child abuse, weapons violations, or murder,”117 which could include concerns for customer and employee safety, and a desire to reduce potential liability. They opined that the EEOC: (1) might be acting to improperly expand Title VII’s protection to those with a criminal history; and (2) potentially was trying to usurp the legislature’s role regarding the expansion of Title VII.118 In response, the EEOC Chair Berrien clarified that “it is not illegal for employers to conduct or use the results of criminal background checks, and the EEOC has never suggested that it is.”119 She asserted the EEOC was acting within the scope of its authority to prevent disparate impact racial discrimination and denied the EEOC was requiring individualized assessments of applicants with a criminal history. Rather, the agency was “encouraging” a two-step analysis: the first step as a “targeted screen” to consider the nature of the crime, the time elapsed, and the nature of the job; and the second step to provide an opportunity for individualized assessment for those people who are screened out. “[A]n employer may decide never to conduct an individualized assessment if it can demonstrate that its targeted screen is always job related and consistent with business necessity.” Title VII itself supersedes state and local laws inconsistent with it; the Guidance itself does not supersede any state or local laws. The EEOC subsequently issued seven additional questions and answers to augment its Enforcement Guidance, reiterating its fundamental policy approaches on this topic: • The fact of an arrest does not establish that criminal conduct has occurred. Arrest records are not probative of criminal conduct, as stated in the Commission’s 1990 policy statement on Arrest Records. However, an employer may act based on evidence of conduct that disqualifies an individual for a particular position. • Convictions are considered reliable evidence that the underlying criminal conduct occurred, as noted in the Commission’s 1987 policy statement on Conviction Records. • National data supports a finding that criminal record exclusions have a disparate impact based on race and national origin. The national data provides a basis for the Commission to investigate Title VII disparate impact charges challenging criminal record exclusions.


EEOC, Enforcement Guidance, Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964, as Amended (Apr. 25, 2012). 116 The states include: Alabama, Colorado, Georgia, Kansas, Montana, Nebraska, South Carolina, Utah and West Virginia. See Letter from Patrick Morrisey, Att’y Gen., State of W. Va., et al., to EEOC, 2 (July 24, 2013). 117 Letter from Patrick Morrisey, Att’y Gen., State of W. Va., et al., to EEOC, 2 (July 24, 2013). 118 “Title VII’s prohibition on practices that have a disparate impact should not be used as just another regulatory tool to advance your agency’s policy agenda.” Letter from Patrick Morrisey, Att’y Gen., State of W. Va., et al., to EEOC, 2 (July 24, 2013). 119 Letter from Jacqueline Barrien, Chair of the EEOC, to Patrick Morrissey, Att’y Gen., State of W. Va., et al. (Aug. 29, 2013), available at © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 29

• A policy or practice that excludes everyone with a criminal record from employment will not be job related and consistent with business necessity and therefore will violate Title VII, unless it is required by federal law.120 The EEOC and U.S. Federal Trade Commission (FTC) issued joint guidance to employers, in the form of “tip sheets,” on the use of background checks in employment. The tip sheets do not deviate from prior agency guidance on this topic, but rather provide “best practices” guidelines and additional resources.

§ 2.4(b) OFCCP Guidance on Criminal Records as a Screening Technique The U.S. Department of Labor’s (DOL) Office of Contract Compliance Programs (OFCCP) was also active in this area. In late January 2013, the OFCCP issued Directive 306 to advise federal contractors and subcontractors about potential discriminatory liability that could result from using criminal records as a screening device.121 According to the agency, policies and practices that exclude workers with criminal records without taking into account the age and nature of the offense could run afoul of Title VII of the Civil Rights Act by adversely impacting minority candidates. In addition to discussing the ways in which using criminal background checks may violate antidiscrimination laws, the four-page directive provides information on: (1) the EEOC’s guidance on this topic; and (2) the Training and Employment Guidance Letter issued by the DOL’s Employment and Training Administration that addresses the relevance of excluding candidates with criminal records to existing nondiscrimination obligations of public workforce system entities.

§ 2.4(c) State & Local “Ban-the-Box” Laws on Inquiries into Applicants’ Criminal History A number of jurisdictions have acted independently to restrict employer inquiries into applicants’ criminal history. While some states and localities impose restrictions on the types of criminal history information an employer can request at the application stage, so-called “ban-the-box” laws are more restrictive—requiring employers to remove from employment applications all questions about an applicant’s criminal record and wait until later in the hiring process to present the inquiry. Some of these laws also prohibit employers from ordering a third-party criminal background check on a job applicant until after a conditional offer of employment has been made. The ban-the-box restrictions vary considerably in many respects. For example, each law delays the criminal history inquiry to a specific stage later in the hiring process, ranging from just after an initial screen to after a conditional offer of employment. The laws also contain a number of different exceptions. Because this area has been particularly active, employers must remain vigilant about changing laws and ordinances in the geographic areas in which they operate and in which their applicants reside. Table 3 identifies those jurisdictions that have adopted a ban-the-box law applicable to private employers as of September 15, 2016. The table does not address every aspect of the law, including its exceptions or the restrictions, if any, imposed on an employer’s use of criminal history information in making hiring decisions. Rather, the information below provides a snapshot of covered employers and the timing of a criminal history inquiry, if allowed. The table also does not identify those laws or executive orders that apply only to public or state employees or to employers that do business or contract with state or city governments.


EEOC, Questions and Answers About the EEOC’s Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII, available at 121 See OFCCP, Directive No. DIR 2013-02, Complying with Nondiscrimination Provisions: Criminal Record Restrictions and Discrimination Based on Race and National Origin (Jan. 29, 2013), available at © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 30

Table 3: States & Localities with “Ban-the-Box” Laws Applicable to Private Employers Jurisdiction San Francisco, California

Connecticut (effective January 1, 2017)

Applicability/Threshold Employers doing business in San Francisco that employ 20 or more people (including owners, management and supervisors), regardless of location.122 Employer with one or more employees, including the state or any political subdivision of the state.123

District of Columbia

Employers with more than 10 employees (do not need to be fulltime) in the District of Columbia.124


No limitations with regard to employer location or number of employees.125


Employers with 15 or more employees in the current or preceding year (no geographic limitation).126

Chicago, Illinois

All private employers, including those that are exempted from the state law (therefore, employers 127 smaller than 15 employees).

Timing of Inquiries Prohibits consideration of an applicant’s past convictions until after the applicant has been identified as a finalist for a position. Prohibits employer from seeking information about prior arrests, criminal charges, or convictions as part of an initial employment application. However, the prohibition does not apply when: (1) the employer is obligated pursuant to a federal or state law to ask about such criminal history for the position in question; and (2) a position requires a security, fidelity, or equivalent bond. Prohibits inquiring about criminal history information during the application process and obtaining a criminal background check until after a conditional offer of employment is made. Prohibits inquiring into an applicant’s conviction history until after the applicant receives a conditional offer of employment. Prohibits inquiring about or considering criminal record or criminal history until after the applicant has been determined to be qualified for the position and notified that he or she has been selected for an interview. If there is no interview, the inquiry cannot take place until after the applicant receives a conditional offer of employment. Prohibits inquiring into an applicant’s conviction history until after the applicant is selected for an interview or receives a conditional offer.


S.F., CAL., POLICE CODE § 4903. CONN. GEN STAT. § 31-51i. 124 Fair Criminal Record Screening Amendment Act of 2014 (Aug. 22, 2014). 125 HAW. REV. STAT. §§ 378-1 to -2. 126 820 ILL. COMP. STAT. 75/10. 127 Chicago, Ill., City Council Ordinance No. 02014-8347 (Nov. 5, 2014). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 123


Jurisdiction Baltimore, Maryland

Timing of Inquiries Prohibits inquiring into an applicant’s conviction history until after a conditional offer of employment. Montgomery County, Employers doing business in the Prohibits investigating an County that employ 15 or more applicant’s conviction history until Maryland after the conclusion of the first persons full-time in the County.129 interview. Prince George’s County, Employers with 25 or more full-time Prohibits inquiring into an applicant’s arrest or conviction Maryland employees in the county.130 record until after a first job interview. Applies to “any employer that does Among other restrictions, Massachusetts business in Massachusetts and takes prohibits conviction history question on initial written applications in Massachusetts.”131 application unless there is a legal restriction that applies to the specific job or occupation. No limitations with regard to Prohibits inquiring into an Minnesota employer location or number of applicant’s criminal history until employees; applies to “all after the applicant has been Minnesota employers, including the selected for an interview or, if ‘Minnesota operations of companies there is not an interview, before a conditional offer of employment. that operate in multiple states.’”132 City of Columbia, Missouri Ordinance does not specify which Prohibits inquiring into or seeking employers are covered, but information about an applicant’s identifies certain exceptions where criminal history until after a conditional offer of employment. the law does not apply.133 Employers that have 15 or more Prohibits inquiring into a New Jersey employees over 20 calendar weeks candidate’s criminal history until and do business, employ persons or the employer has conducted the takes applications for employment first interview with the candidate. within New Jersey.134 Buffalo, New York Employers with 15 or more Prohibits inquiring into an employees located in the Buffalo applicant’s criminal history until 135 after an application has been city limits. submitted and not before the initial interview.


Applicability/Threshold Employers with 10 or more full-time equivalent employees in the City of Baltimore.128

Baltimore, Md., City Council Bill No. 13-0301, § 14-1. Montgomery Cnty., Md., Council Bill No. 36-4. 130 Prince George Cnty., Md., Council Bill No. CB-78-2014 (Nov. 19, 2014). 131 Massachusetts Comm’n Against Discrimination, Fact Sheet, available at The state agency also noted it will “consider other scenarios on a case-by-case basis.” 132 MINN. STAT. § 364.021; see also Ban the Box FAQ for Private Employers, available at 133 COLUMBIA, MO., MUN. CODE § 12-90. 134 N.J. STAT. ANN. §§ 34:6B-11 to 34:6B-19; see also N.J. ADMIN. CODE § 12:68. 135 BUFFALO, N.Y., CODE § 154-25. © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 32 129

Jurisdiction New York City, New York

Applicability/Threshold Virtually any employer with four or more persons.136

Rochester, New York

Employers that: (1) have four or more employees (located anywhere); and (2) employ individuals in a position for which the primary place of work is located within the City of Rochester.137 Legislation does not state which “employers” are covered, therefore, all Oregon employers should assume they are covered unless they fit within one of the law’s enumerated exemptions.138 Employers with six or more employees, at least one of whom is in a “position being performed a majority of the time within the City of Portland.”139 Employers in the City of Philadelphia.140


Portland, Oregon

Philadelphia, Pennsylvania

Rhode Island

Employers with four or more employees.141

Austin, Texas

Any person, company, corporation, firm, labor organization, or association (or agency acting on behalf of an employer) that employs at least 15 individuals whose primary work location is in the City of Austin for each working day in each of 20 or more calendar weeks in the current or preceding calendar 142 year.

Timing of Inquiries Prohibits making any inquiry or statement regarding pending arrest or criminal convictions unless and until the applicant receives a conditional offer of employment. Prohibits inquiring into an applicant’s conviction history until after the first interview.

Prohibits requiring job applicants to disclose criminal convictions prior to an initial interview or, if there is no interview, prior to a conditional offer of employment. Prohibits consideration of applicant’s criminal history until an applicant receives a conditional offer of employment. Prohibits inquiring into an applicant’s conviction history until after the applicant has submitted an application and completed a first interview. Prohibits inquiring about an applicant’s criminal history until during or after the first interview with the applicant. Prohibits soliciting applicant’s criminal history on a job application, procuring or considering an applicant’s criminal history until after making a conditional offer.


Fair Chance Act, N.Y.C., N.Y. , Law No. 63 (June 29, 2015). ROCHESTER, N.Y., MUN. CODE §§ 63-12 to 63-15. 138 H.B. 3025, 2015 Or. Laws ch. 559 (June 25, 2015). 139 Portland, Or., Ordinance No. 187459 (Nov. 25, 2015). 140 PHILA., PA., MUN. CODE § 9-3504. 141 R.I. GEN. LAWS §§ 28-5-6 to 28-5-7. 142 Austin, Tex., Fair Chance Hiring Ordinance (Mar. 24, 2016). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 137


Jurisdiction Vermont (effective July 1, 2017)

Applicability/Threshold Employers doing business in or operating within the state, and any agent of such employer that has one or more individuals performing services for it within the state.143

Seattle, Washington

Employers with one or more employees. However, covered employees are individuals who perform services when the physical location of those services is within the City of Seattle at least 50% of the time.144

Timing of Inquiries Prohibits employers from requesting criminal history record information on its initial application form, from inquiring about it during an interview or once the prospective employee has been otherwise qualified for the position, with some limited exceptions. Prohibits inquiring about an applicant’s criminal history or a criminal background check until after the employer has completed an initial screening of applications or resumés to eliminate unqualified applicants.

Following the growing number of states and localities that have decided to “ban-the-box” on job applications, in May 2016, the Office of Personnel Management (OPM) published a proposed rule to revise its regulations regarding when during the hiring process a federal agency can request background information, including criminal history, about applicants for federal employment. The proposed rule would require federal agencies to delay inquiries into an applicant’s criminal history until after a conditional offer of employment has been made, unless an exception is granted by the OPM.145 Also note, in some instances federal law may actually require employers to inquire into employee arrest records. For example, a federal district court in New York found no violation of a job applicant’s rights under the New York City Human Rights Law after his prospective employer inquired into his criminal history. The court found that, under the Securities Exchange Act of 1934, the employer was required to maintain records of the arrest of any employee for any misdemeanor involving violation of securities or banking laws, fraud, forgery or other crimes related to financial dishonesty or for any felony.146

§ 2.5 OTHER BACKGROUND SCREENING TECHNIQUES UNDER STATE LAW § 2.5(a) Obtaining & Using Fingerprints or Photographs Many states specifically permit and/or require the fingerprinting of certain classes of people (e.g., criminals, private investigators, applicants for a firearm, applicants for a driver’s license, school bus and taxi drivers, child care personnel, school employees, professional boxers and wrestlers, those involved in horse racing, etc.). While only a few states prohibit employers from requiring that job applicants submit a photograph as part 147 of the job application process, employers should generally avoid the practice. Requiring applicants to submit photographs with employment applications can have dangerous implications because of the 143

VT. STAT. ANN. tit. 21, § 495j (effective July 1, 2017). SEATTLE, WASH., MUN. CODE § 14.17.020. 145 81 Fed. Reg. 26173 (May 2, 2016) (which would amend 5 C.F.R. pts. 330 and 731). Comment period closed on July 1, 2016; as of September 15, 2016, no final rule had been issued. 146 Shapira v. Charles Schwab & Co., Inc., 225 F. Supp. 2d 414 (S.D.N.Y. 2002). 147 See, e.g., CAL. CODE REGS. tit. 2, § 11016 (“Photographs shall not be required as part of an application unless pursuant to a permissible defense”); KAN. ADMIN. REGS. § 21-30-17(c) (“prohibits… [a]ny requirement or suggestion that an applicant submit a photograph with his application or at any time before he is hired”). 144



potential for use to impermissibly screen out minority or older applicants.

§ 2.5(b) Obtaining & Using Workers’ Compensation Claims When an employee’s workers’ compensation claim goes through a state’s system or the Workers’ Compensation Appeals Board, the case becomes public. Nonetheless, in the same way that employers must disregard an applicant’s past bankruptcy claims in taking work-related adverse action, they must also disregard an individual’s past workers’ compensation claims or related medical information.

§ 2.5(c) Unemployment Status When the global economic downturn occurred in 2008, there was increased attention from the EEOC, the U.S. Congress and state legislatures to pre-employment inquiries that appeared to preclude unemployed candidates from consideration for a position. In response, New Jersey, Oregon, New York City and the District of Columbia acted to restrict such inquiries of job applicants.

§ 3 PRACTICAL GUIDELINES FOR EMPLOYERS § 3.1 PERMISSIBLE INTERVIEW QUESTIONS There are limits to what an interviewer can ask prospective or current employees when making hiring, retention, promotion or other important employment decisions. Following is a list of areas of inquiry that employers should keep in mind when interviewing prospective employees or conducting reference checks or background investigations. Topic: ADDRESS/ RESIDENCE

You May Ask: “Can you be reached at this address? If not, would you care to leave another?” “Can you be reached at these telephone numbers? If not, would you care to leave another?”

You Should Not Ask: “Do you own your home or rent?” “Do you live with your spouse?” “With whom do you live?”


Only questions that verify non-minor status; i.e., “Are you over 18?” “If hired can you show proof of age?” “If under 18, can you after employment submit a work permit?”

“How old are you?” “What is your date of birth?” “What is your age?” “When were you born?” Dates of attendance or completion of elementary or high school. Any questions that imply a preference for persons under 40 years of age.


“Are you able to perform the essential functions of the job applied for either with or without a reasonable accommodation? Yes or No?”

Any question that is likely to illicit information regarding whether an applicant (or current employee) has AIDS/ HIV.


Employers should check applicable state and local laws, including any “ban the box” laws, with respect to restrictions on the timing and substance of inquiries about arrests and convictions. In some jurisdictions, the following broad inquiry will be permissible: “Have you ever been convicted of a criminal offense? Do not include convictions that were sealed,


Any question regarding an arrest that did not result in a conviction including in some jurisdictions even about pending charges in court. Any question regarding criminal records that have been sealed, eradicated or expunged, or otherwise judicially dismissed by a court. Any question about proceedings against an applicant as a juvenile.




You May Ask: eradicated or expunged, or convictions that resulted in referral to a diversion program. (Note: Convictions will not necessarily disqualify an applicant from employment. Factors such as the age and time of the offense, the seriousness and nature of the violation, and rehabilitation will be considered when making any employment decisions).” “Are you authorized to work in the U.S.? If hired, you will be required to submit verification of your legal right to work in the United States.” BUT ask this of all applicants, not only persons appearing to the interviewer to speak a primary language other than English or to be foreign-born.


Statement that photograph may be required after employment.

COURT RECORDS (see also “Arrests & Convictions,” above)

“Has a court, jury or government agency ever made a finding you committed unlawful harassment or discrimination?”


“Can you, with or without reasonable accommodation, perform the essential duties of the job(s) for which you are applying (see attached job description)?” “Are you currently able to perform the essential duties of the job(s) for which you are applying?” If the disability is obvious, or disclosed, you may ask about accommodations. Statement by employer that offer may be contingent on applicant’s passing a job related physical examination.


Current use of illegal drugs. Recent


You Should Not Ask:

“Are you a United States citizen?” “Where were you born?” Or any questions regarding birthplace or citizenship status of applicant, applicant’s spouse, parents or other relatives. Any questions concerning race or color of skin, eyes, hair, etc. Should not require applicant to affix a photograph to application nor should applicant be given the option of attaching a photograph. “Have you ever filed for bankruptcy?” “Have you ever sued or filed claims or complaints against your employer?” “Have you ever been a plaintiff in a lawsuit?” “Do you have any physical disabilities or handicaps?” Questions regarding applicant’s general medical condition, state of health, or illnesses. “Are you disabled?” An employer MAY NOT make any medical inquiry or conduct any medical examination prior to making a conditional offer of employment. “Have you ever filed for or received workers’ compensation?”148 What medical problems the applicant may have. The amount of sick time or medical leave taken at last job. Questions that may reveal an applicant’s family medical history or other genetic information. Questions about past addictions.

In EEOC v. Arrow Forklift Parts, Inc., No. 40-00-00456-CV-W-6-HFS (settlement agreement W.D. Mo. Mar. 30, 2001) (defendant agreed to pay $27,500 to a rejected applicant—$13,500 in back pay, $2,000 in interest and $12,000 in compensatory damages—who completed a job application containing the question: “Do you have a disability, handicap or medical condition that limits your job performance?” Responding to the question, applicant stated that she had sustained a back injury and that she had a workers’ compensation claim pending. During the applicant’s interview, defendant’s personnel administrator allegedly told her that the company did not hire people who had filed workers’ compensation claims). © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 36








You May Ask: use of illegal drugs. “Are you presently enrolled or do you intend to enroll in school?” “What subjects did you excel in at school?” “Did you participate in extracurricular activities?” “What did you select as your major?” “Did you work an outside job while attending school? Doing what? What did you like/ dislike about your part-time job during school?” “Are you interested in continuing your education? Why? When? Where?” “Did your education prepare you for the job you are seeking with us? In what ways?” “Do you have any special skills or knowledge?” “Are your skills recent?” “When did you last use a computer (or any other specific program, machine or skill)?” “Do you enjoy being active in community affairs?” “Are there any activities which have provided you with experience, training, or skills which you feel would be helpful to a position with us?” “How will your involvement in [activity] affect your work here?”

You Should Not Ask: Questions about use of prescription drugs or frequency of alcohol use.

“Who paid for your educational expenses while you were in school?” “Did you go to school on a scholarship?” “Do you still owe on student loans taken out during school?” “When did you graduate from high school?”

“Does your physical condition make you less skilled?”

“How many children do you have?” “Who takes care of your children while you are working?” “Do your children go to day care?” “What does your husband (or wife) think about your working outside the home?” “What does your husband (or wife) do?” “What is your husband’s (or wife’s) salary?” Name of spouse or children of applicant. Is your spouse the same gender as you? “Please state the name(s) of any “Is it Mrs. or Miss?” “Are you single? relatives already employed by this Married? Divorced? Separated? Engaged? company or a competitor.” “Whom Widowed?” “Do you have a domestic should we contact in case of an partner?” “What is your maiden name?” emergency?” Identity of applicant’s spouse. “Have you served in the army of a foreign “Have you served in the U.S. country?” “What type of discharge did military?” “Did your military service you receive from the U.S. military and training provide you with skills service?” “Can you provide discharge you could put to use in this job?” papers?” “Have you ever used another name?” or, “Is any additional information “What is your maiden name?” relative to change of name, use of an

“Do you have any commitments that would prevent you from working regular hours?” “Can you work overtime, if needed?” “Are you now or do you expect to be engaged in any other business or employment? If ‘yes,’ what kind of business or employment is it? How much time does it require?”




You May Ask: You Should Not Ask: assumed name, or nickname necessary to enable a check on your work and educational record? If yes, please explain.” “What is your national origin?” “Where were you born?” “What is the origin of your name?” “What is your native In order to comply with the Federal language?” “What country do your Immigration Reform and Control Act ancestors come from?” “Do you read, of 1986, you may ask: write, or speak Korean (or another foreign language)?” (unless based on job NATIONAL ORIGIN “Are you prevented from being employed in the United States requirements) How applicant acquired the because of your visa or immigration ability to read, write or speak a foreign status?” language. Or any other questions as to nationality, lineage, ancestry, national origin, descent or parentage of applicant, applicant’s parents or spouse. Name and address of person to be Name and address of relative to be NOTICE IN CASE notified in case of accident or notified in case of accident or emergency. OF EMERGENCY emergency. About any organization memberships, excluding any organization of which the name or For a list of all organizations, clubs, character indicates the race, color, societies and lodges to which the ORGANIZATIONS creed, sex, marital status, religion, applicant belongs. national origin or ancestry of its members: “Do you enjoy being active in community affairs?” Any applicant to submit a photograph For a photograph after hiring for whether mandatory or optional before PHOTOGRAPHS identification purposes. hiring. “Are you pregnant?” “When was your “How long do you plan to stay on the most recent pregnancy terminated?” “Do job?” “Are you currently able to you plan to become pregnant?” Any PREGNANCY perform the essential duties of the questions about medical history job(s) for which you are applying?” concerning pregnancy and related matters. “How did you overcome problems you faced there?” “Which problems frustrated you the most?” “Of the jobs indicated on your application, “How many sick days did you take at your which did you enjoy the most, and old job?” “Did you file any claims against PRIOR why?” “What were your reasons for your former employer?” “Have you EMPLOYMENT leaving your last job?” “Have you sustained any work related injury?” ever been discharged from any position? If so, for what reason?” “Can you meet the attendance requirements of the job?” Questions put to applicant’s former “By whom were you referred for a employers or acquaintances that the position here?” Names of persons employer would be prohibited from REFERENCES willing to provide professional and/or asking the applicant, such as questions character references for applicant. that elicit information specifying the © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED.



You May Ask:


Statement by employer of regular days, hours or shifts to be worked. “Are you available to work on weekends?” (if there is a legitimate business reason for this question)


You Should Not Ask: applicant’s race, color, religion, national origin, disability, age or sex. “What is your religion?” “What church do you go to?” “What are your religious holidays?” “Does your religion prevent you from working weekends or holidays?” “Are you a gay/lesbian/bisexual?” “Do you have a domestic partner?” “What is your view regarding same-sex partner benefits?”

§ 3.2 RECOMMENDATIONS FOR EFFECTIVE & LAWFUL HIRING § 3.2(a) Understand Your Needs & the Evolving American Workforce • Realize that retaining your best employees is vital to meeting your hiring needs. • Identify your talent and skills gaps. • Recruit using the best available means to suit your needs and meet legal obligations, while recognizing and planning for potential risks. • Train managers on how to get and keep talented workers lawfully. • Prepare for the demographically evolving workforce.

§ 3.2(b) Understand the Law of Preemployment Screening • Train those involved in the hiring process on how to perform lawful interviews. • Maximize your knowledge of applicants with effective job applications, productive interviews, and thorough background checks. • Adopt objective standards for qualifications to the greatest extent possible (and be prepared for EEOC testers and Title VII challenges). • Ensure that any preemployment testing is lawful under federal and state antidiscrimination and privacy laws.

§ 3.2(c) Adopt Lawful & Reasonable Standards for Obtaining & Using Consumer Reports • Establish and enforce a company policy to control the acquisition and use of applicant consumer and investigative consumer reports. • Ensure that policies and practices comply with the FCRA, as amended, and relevant state laws. • Verify the name and Social Security number contained in the consumer report to make sure that it corresponds to the name and Social Security number provided by the applicant. Any errors, © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED.


inconsistencies, omissions or other problems should be brought to the attention of the manager or supervisor responsible for implementation of the company’s consumer report policy. • Make certain that all individuals reading and reviewing consumer reports to the extent allowable in your state have been fully trained to understand and properly utilize the information disclosed by the report. • Avoid imposing blanket rules concerning employment of individuals with criminal convictions. Nevertheless, employers are strongly encouraged to conduct criminal background checks on all candidates for employment and that a fact-specific analysis of job requirements be applied when convictions are discovered. With the unfortunate rise in workplace violence, such investigation and analysis may end up being extremely important. • Ensure that anyone performing investigatory or consumer reporting work is properly licensed and, with the permission of such persons, perform a background checks on them before they perform any work. Do not assume that a license equals a clear criminal or credit background. Because such persons will have access to applicants’ personal information, they should be chosen with great care. • Require any consumer reporting agency or private investigator participating in your background check process to confirm both an understanding of and compliance with all applicable legal requirements, each of which should be clearly identified in the written confirmation. • Only conduct credit checks after you have checked your state laws, as restrictions prohibit them in many circumstances. After checking, only conduct credit checks when you have a legitimate interest in the credit or financial history of an individual based upon the duties of the job or position for which the applicant is applying. Screening applicants based on credit history has been shown to have an adverse impact on minorities and may not be a good indicator of job performance. • Do not deny employment to an applicant solely on the basis of a poor credit record if the applicant appears suitable for the position on the basis of other job-related criteria.149 • Consider the length of time since the last adverse item in a consumer report. Obviously, a lengthy, ongoing history of undesirable events is likely to be more of a risk than old or infrequent problems or incidents. • Before denying employment on the basis of a consumer report, provide the applicant an opportunity to explain the reasons for negative items on the report. • Be prepared to explain the job-related reasons why the applicant’s consumer report history renders the applicant unsuitable for a particular position. • Be sure all background investigation materials are properly disposed of when no longer needed.

§ 3.3 FCRA COMPLIANCE The following outlines the basic requirements to comply with the federal fair credit reporting statute (FCRA). Since many states have more restrictive regulations, it is critical for employers to check applicable state laws as well. 149

The U.S. Bankruptcy Code, 11 U.S.C. § 525(b) prohibits discrimination against an individual who has previously declared bankruptcy. The Third Circuit Court of Appeals, in Rea v. Federated Investors, 2010 U.S. App. LEXIS 25501 (3d Cir. Dec. 15, 2010), upheld a ruling that the Bankruptcy Code does not create a cause of action against a private employer who discriminates in hiring based on a previous declaration of bankruptcy. © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 40

§ 3.3(a) Disclosure & Written Consent Before requesting a consumer or investigative consumer report, an employer must do both of the following: 1. Separately Disclose that It May Request a Report: Provide the employee or applicant with a clear and conspicuous disclosure that a report may be requested. This must be provided in a “separate document” that does not refer to other subjects. 2. Obtain Written Consent: The employer must also obtain written consent from the employee or applicant.

§ 3.3(a)(i) Common Questions Concerning Disclosure & Written Consent • Is it sufficient to include the disclosure that a report may be requested in the job application? No. The disclosure must be provided to an applicant in a separate document. • Does the consent requirement apply to investigative consumer reports, even though the special disclosure (see next question) can be issued as late as three days after the report is first requested? Yes. Because investigative consumer reports are a subset of “consumer reports” under the FCRA, the general requirement of written disclosure to the employee or applicant and written permission from the employee or applicant, “at any time before” the employer procures the report, applies. • Are there additional disclosure requirements applicable to investigative consumer reports?150 Yes. Where an employer seeks to obtain an investigative consumer report, the FCRA requires an additional disclosure. This disclosure, the required timing of which is different from that for consumer reports (see below), must specify: (1) that an investigative consumer report, which must be clearly defined, may be made; and (2) that the employee or applicant may request additional information as to the complete and accurate nature and scope of the investigation. This disclosure letter must be sent within three days of requesting the investigative consumer report. A copy of the FTC’s “A Summary of Your Rights Under the Fair Credit Reporting Act” must accompany this letter when it is sent to the applicant or employee. If an individual writes back and requests information as to the nature and scope of an investigative consumer report, the Act requires that the employer supply this information within five days of receiving the written request. • Are there any additional requirements applicable to reports containing medical information? Yes. The FCRA prohibits consumer reporting agencies from providing consumer reports that contain medical information for employment purposes, unless the applicant or employee has explicitly consented to the release of the medical information in addition to authorizing the obtaining of a consumer report generally. Because this may implicate the ADA, GINA and state privacy and antidiscrimination laws, legal advice in this regard is recommended. • May the employer phrase a consent such that it applies not only to consumer reports related to the job application, but also to any reports that might be obtained after commencement of the employment relationship? Under FCRA, yes, however under some state


Investigative consumer reports are often ill-advised in the employment context due to privacy concerns and other practical considerations. Any employer wishing to utilize such reports is advised to obtain legal advice concerning the specific forms and policies that may be advisable for that employer’s unique needs and situation. © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 41

laws, it may not.151 The FCRA provides that the disclosure may be made “at any time before the report is procured or caused to be procured.” Also, an FTC staff opinion letter states: [A]n employer may choose to provide a general disclosure in writing to all current employees and obtain their written authorizations at one time. Thus, should it become necessary to obtain a consumer report on any individual employee, the disclosure will have already been given and the authorization already obtained, and the employee would not have to be told that a consumer report had been procured until the employer was prepared to take adverse action based on information in the report.152 This consent form should be signed by all job applicants in anticipation that the employer may on occasion determine that a post-employment consumer report is desirable, without giving and obtaining further pre-report notice and consent. Employers should also include similar language in their employee handbooks and all notices and consents signed by current employees. • Can an employer simplify the difference in required disclosures for consumer reports and investigative consumer reports by including the special investigative consumer report notice in the initial, separate disclosure required for all consumer reports? Yes. Nevertheless, inconvenience and unnecessary administrative burdens may result from such an approach. The investigative consumer report notice triggers the employee’s or applicant’s immediate right to request additional disclosure from the employer, as mentioned above. If the employer either does not intend to actually request investigative consumer reports, or intends to do so only in isolated circumstances, it is advisable to issue a separate investigative consumer report notice only once it becomes necessary. An employer that includes both types of disclosures in one document for all employees and applicants must be prepared to respond to resulting requests for additional disclosures concerning investigative consumer reports, including a standard statement (where applicable) that the employer has not requested such a report to date, that the employer will notify the applicant or employee further should such a report be requested, and that such notice will be provided not later than three days after the report is first requested.

§ 3.3(b) Certification to the Consumer Reporting Agency Before obtaining a consumer report, the employer must provide certification to the consumer reporting agency retained to produce the report. Most, if not all, consumer reporting agencies will request that the employer sign a certification agreement. Employers should carefully review these agreements to ensure minimum compliance with applicable law and that no undesirable, additional requirements are incorporated. The employer must certify all of the following: 1. Disclosures and consent have been made and obtained: The disclosures required for consumer reports have been made to, and written consent has been obtained from, the applicant or employee who is the subject of the requested report. 2. Pre-adverse-action disclosures will be made if required: The additional procedures required by the FCRA in the event of a potential adverse action (described below in Step Three) will be followed before any adverse action is taken.


For example, New York state does not allow this. Under California law, whether consent can have prospective effect is an unsettled question. 152 Lewis, Federal Trade Commission Staff Op. Letter, June 11, 1998, available at http:// os/ statutes/ fcra/lewis.shtm. © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 42

3. No state or federal EEO laws or regulations will be violated: The information from the consumer report will not be used in violation of any applicable federal or state equal employment opportunity law or regulation. 4. Additional investigative consumer report disclosures made if applicable: The additional disclosures required concerning requests for investigative consumer reports have been issued as required by the Act. (The agency must receive this certification before it can prepare or furnish the investigative report). 5. Further disclosure concerning investigative consumer reports if requested: The employer will comply with applicable requirements that additional disclosures be made upon request from individuals on whom investigative consumer reports have been requested.

§ 3.3(b)(i) Common Questions Concerning Certification • Who prepares the required certification? The consumer reporting agency typically will prepare this form and ensure that it is completed by the employer before providing a report to an employer for employment purposes. • May the employer request an investigative consumer report before certifying that the special applicable disclosure has been made? Yes, because the required disclosure to the applicant or employee may be made as late as three days following the request. The consumer reporting agency, however, cannot prepare the report or provide the report to the employer until the certification has been made.

§ 3.3(c) Providing Documents Before “Adverse Action” When an employer obtains a consumer report (including an investigative consumer report) that influences, in whole or in part, the decision not to hire an individual, the employer must provide the following two documents to the individual prior to making any final employment decisions based on the consumer or investigative consumer report: • Copy of Consumer Report: A copy of the consumer report or investigative consumer report that has been relied upon; and • Summary of Rights Prescribed by the FTC: The summary of consumer rights prescribed by the FTC. (This summary should be provided to the employer by the consumer reporting agency when the employer requests a report for employment purposes.)153 This procedure allows applicants or employees to see the report that will be used against them.

§ 3.3(c)(i) Common Questions Concerning Pre-Adverse Action Requirements • How long must an employer wait before implementing an adverse action based on a consumer report, after providing copies of the consumer report and the FTC summary of rights to the applicant or employee? The law is silent on this point. A reasonable interpretation of this silence is that no particular timing is required by law. Some employers may wish to adopt reasonable procedures for allowing applicants and employees to respond before implementation of adverse actions based on consumer reports so as to avoid potential difficulties arising from inaccurate reports. The FTC has issued three staff opinion letters indicating that an employer must wait a “reasonable” amount of time after supplying the pre-adverse action materials but


Copies of all FTC notices related to the FCRA are available on the FTC’s website, © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 43

before taking final adverse action.154 These opinion letters state that a reasonable period of time is required because the purpose of the Act is to allow consumers (applicants or employees) to discuss the report with employers before adverse action is taken. One letter states that a five-day waiting period appears “reasonable,” but also states that “the facts of any particular employment situation may require a different time.”155 • What if a consumer report contains negative information about an applicant or employee, but did not ultimately influence the adverse action or would not change the result even if it was revised to omit such information? Under these circumstances, the employer is not technically required to forward a copy of the report or the FTC summary of rights to the employee or applicant before taking adverse action.

§ 3.3(d) Notice After Adverse Action After the employer has provided copies of the consumer report and the FTC summary of FCRA rights, and waited any “reasonable” time period it has decided to establish, the employer may take adverse action. After taking such action, the employer must provide an adverse action notice. This notice may be provided orally, in writing or electronically. Written notice is advisable, as it serves to show compliance with the Act. The adverse action notice must contain all of the following: 1. Consumer reporting agency contact information: The name, address, and telephone number of the consumer reporting agency (including a toll-free telephone number established by a national agency) that provided the report. 2. Statement that agency is not the decision maker: A statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to inform the consumer as to the specific reasons why the adverse action was taken. 3. Statement of right to obtain a free copy: A statement of the consumer’s right to obtain a free copy of the consumer report from the consumer reporting agency by making a request within 60 days of receiving the adverse action notice. 4. Statement of right to dispute report: A statement of the consumer’s right to dispute the accuracy or completeness of any information in the report.

§ 3.3(d)(i) Common Question Concerning Post-Adverse Action • Does the Act require that the employer provide an explanation to job applicants or employees about which part of a consumer report influenced the adverse decision? No. The employer is not required to provide a more detailed rationale for the decision and should not share such rationale with the consumer reporting agency.

§ 3.3(e) Policy, Procedure & Training As with most human resources tasks, instituting and following a clear written policy and procedure checklist patterned on technical legal requirements is always a sensible course of action. This will serve to reduce the risk of overlooking any of the required steps or disclosures. Additionally, any manager(s) responsible for administering the background check function and/or selecting third-party investigation services must be well trained in these technical requirements as well as any policy and procedure the employer may adopt. 154

Brinckerhoff-Weisberg, Federal Trade Commission Staff Op. Letter, June 27, 1997; Hawkey, Federal Trade Commission Staff Op. Letter, Dec. 18, 1997; Coffey, Federal Trade Commission Staff Op. Letter, Feb. 11, 1998. Copies of these FTC letters are available on the FTC’s website, statutes/fcra/index.htm. 155 Brinckerhoff-Weisberg, Federal Trade Commission Staff Op. Letter, June 27, 1997, available at © 2016 LITTLER MENDELSON, P.C. ALL RIGHTS RESERVED. 44



Littler on Background Screening & Privacy Rights in Hiring