Employee Background Checks: The First Step Before Determining Wages

more+
less-

In past Franczek Radelet Alerts and webinars, my colleagues and I have talked at length about the potential pitfalls for employers of background checks and the changes that the advent of the Consumer Financial Protection Bureau (CFPB) and the resulting reorganization at the FTC meant for employers. Yes, I know, this is a wage and hour-focused blog, but before you can tackle wage and hour issues, you have to hire employees! Many employers who do background checks have not given much thought to what (if any) documentation they collect from applicants or employees before running them, so with hiring season upon us for many seasonal industries, now is a good time for a reminder about this “pre wage and hour” issue.

The situations we encounter can vary: relying on printed or online forms from a provider like ADP or Paychex, grabbing an application form from the Internet or a mailing list of HR professionals, or sometimes relying on whatever language is on the job application you’ve used for years.

Judy Greenwald, who I have had the pleasure of speaking with in the past on other topics, wrote last month in Business Insurance about a new class action lawsuit filed against Whole Foods’ California division alleging that Whole Foods’ online authorization form used to get job applicants’ approval for criminal background checks violates the federal Fair Credit Reporting Act:

According to the lawsuit filed in U.S. District Court in Oakland, Calif., in Esayas Gezahegne v. Whole Foods Market California Inc., the language in the authorization includes a waiver of claims against those who obtain a consumer reports, in violation of the FCRA. Consumer reports include criminal background checks, credit checks and other similar reports…

The online authorization forms all contained language releasing those who obtained the consumer reports from all liability, in violation of the FCRA’ s requirement that the authorizations be pristine documents that contain nothing other than the required disclosures and the requested authorization. In other words, defendant’s authorization forms were facially invalid,” the lawsuit states.

As I discussed during our webinar on background checks back in 2012, a number of courts have begun requiring employers to draft a standalone disclosure without releases. This lawsuit is one more reminder of that point!

Private attorneys are not the only ones scrutinizing background checks. Earlier this month, the Federal Trade Commission and the EEOC released joint guidance on employment background checks that further explains that:

Hiring decisions are among the most important choices for any employer, but the process can be complex. For the first time, the Federal Trade Commission (FTC) and the Equal Employment Opportunity Commission (EEOC) have co-published two short guides on employment background checks that explain the rights and responsibilities of the people on both sides of the desk.

The FTC and the EEOC want employers to know that they need written permission from job applicants before getting background reports about them from a company in the business of compiling background information. Employers also should know that it’s illegal to discriminate based on a person’s race, national origin, sex, religion, disability, or age (40 or older) when requesting or using background information for employment.

At the same time, the agencies want job applicants to know that it’s not illegal for potential employers to ask someone about their background as long as the employer does not unlawfully discriminate. Job applicants also should know that if they’ve been turned down for a job or denied a promotion based on information in a background report, they have a right to review the report for accuracy.

If you haven’t looked at your forms in the last year, now would be a good time to make sure that what you are using won’t run afoul of the FTC, EEOC, and your own applicants.

Topics:  Background Checks, CFPB, Criminal Background Checks, Wages

Published In: Civil Rights Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Franczek Radelet P.C. | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »