Employment And Labor Insight: Year In Review - Are Your Employment Procedures, Practices And Policies In Compliance?


As we enter 2013, we would like to update you on the importance of reviewing your application, background check procedures, employment policies and employee handbook for compliance with the changing laws in these areas. Considering the developments in 2012, we anticipate that, in 2013, the National Labor Relations Board (NLRB) will continue its heightened focus on employment policies and compliance with the National Labor Relations Act (NLRA), and other federal and state regulators will concentrate on the enforcement of laws governing applications and background check procedures.


In 2012, the Equal Employment Opportunity Commission (EEOC) issued new enforcement guidance on arrest and conviction records, which narrows the circumstances under which applicants may be excluded based on arrest or conviction records. We advise employers to amend any question on their employment application regarding criminal offenses, and their hiring procedures, to conform with the following example:

Have you ever been convicted of a criminal offense? Do not include convictions that were sealed, eradicated or expunged, or convictions that resulted in referral to a diversion program.

Saying "yes" is not a bar to employment at [COMPANY NAME]. Please provide additional information in the space below or an extra sheet, if necessary. [COMPANY NAME] will make an individualized assessment of the information provided, taking into account factors including, but not limited to, the nature of the crime, the time elapsed, the facts and circumstances surrounding conviction, the nature of the job applied for and business necessity.

Credit Checks

In 2012, a number of state legislatures considered legislation affecting an employer's ability to run credit checks on employees or applicants, indicating increased regulatory attention to this employment practice. Currently, state statutes regulate credit checks by employers in California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington. Also, the EEOC has cautioned that pre-employment inquiries into credit ratings may have a disparate impact on certain racial groups and women, in violation of Title VII.

FCRA Disclosures and Authorizations

As of January 1, 2013, employers are required to use new Fair Credit Reporting Act (FCRA) disclosures in connection with background check procedures. The responsibility for issuing certain FCRA disclosures was transferred from the Federal Trade Commission to the Consumer Financial Protection Bureau (CFPB), and the CFPB amended the disclosures to refer consumers and employers to the CFPB for assistance. Relevant to employers are the changes to the attached "Notice to Users of Consumer Reports: Obligations of Users Under the FCRA," which background check providers are required to provide to employers who procure consumer reports, and the attached "Summary of Your Rights Under the Fair Credit Reporting Act," which employers are required to provide to applicants and employees with an FCRA disclosure and authorization form when the employer obtains an investigative consumer report and with any pre-adverse action notice sent when an employer intends to rely on information contained in a background check report to make an employment decision.

Also, employers often include a release of liability on their FCRA Disclosure and Authorization forms. However, in a 2012 case, a federal district court in the District of Maryland denied the employer's motion to dismiss a lawsuit that was brought regarding its background checks, in part because the employer included a release of liability on its Disclosure and Authorization form. Due to this case, we recommend that employers include a release on a document separate from the Disclosure and Authorization form, such as the employment application. For example:

I understand that, per the separate Disclosure, Notice and Authorization of Intent to Obtain a Consumer Report, [COMPANY NAME] and/or its agents may procure a consumer report and/or an investigative consumer report in connection with my application for employment and throughout the course of my employment. I hereby release all persons, companies or other entities furnishing such information from liability and responsibility in connection herewith.

Employment Policies and Handbooks

The NLRB has recently taken an aggressive stance towards reviewing employment policies for compliance with the NLRA. The NLRB has focused on non-unionized employers and has found a variety of common policies to be unlawful, including policies related to social media, electronic communications, confidentiality, internal investigations, code of ethics, non-disparagement, employee communications with the media, and solicitation and distribution at the workplace. The NLRB is likely to continue its aggressive enforcement efforts in the upcoming year. Our group has kept up-to-date on the latest NLRB decisions and we are working proactively with our clients to ensure the legality of their policies.


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