The Growing Threats Against
Employment Background Checks
May 18, 2011
Presented by
John Beaudette
*The webinar (including audio) will also be available
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Today’s Topics
Employment Credit Report Restrictions
Employer’s Use of Criminal Records
Sample Criminal Record Policy/Matrix
“Ban the Box” Initiatives Increase
Quick Review of FCRA Adverse Action
Employers’ Use of Credit Reports
40% of employers do not use credit reports for any
47% of employers use credit reports for select
91% for jobs with financial/fiduciary responsibilities
46% for senior executive positions
34% for positions with access to highly confidential information
13% of employers use credit reports for all positions.
*SHRM member survey
Questions to Consider Before
Obtaining a Job Applicant’s Credit History
1. Is a credit report relevant to the position?
What is the level of risk involved in the position?
2. At what point in the hiring process should a
credit report be obtained?
3. How will I evaluate a credit report?
Not all debt is created equal
4. How much weight should be given to a credit
Should only be one factor
5. Do I understand the legal obligations ?
Pre-adverse notification / Credit reports have errors
Am I in a State that has specific restrictions?
Considerations prior to running a
credit report…
State laws that restrict use of credit reports for employment
• Hawaii – only when there is a conditional job offer and only when the
employer can demonstrate a “directly related to a bona fide occupations
Illinois --
Maryland –
unsupervised access to more than $2,500; signatory power over
businesses assets of more than $100; management and control of the business;
access to personal, financial or confidential information
(10/10/2011) only when “bona fide purpose that is
substantially job-related.”
Oregon -
Employer must disclose intent in writing to applicant
“substantially job-related.”
Employer must disclose intent in writing to applicant
Washington -
“substantially job-related.”
Employer must disclose intent in writing to applicant
A Few Myths about Employment
Credit Reports…
An employer can obtain a credit report on a job
applicant without the applicant ever knowing.
If an employer runs credit report, it will hurt the
applicant’s credit score that potential lenders see.
An employer can get an applicant’s “credit score”
like a lender.
An employer see an applicant’s age and marital
status from a credit report.
Criminal Record Checks by Employers
Statistics Clarify the Problem
Ex-offenders unable to get a job are three times as likely to
return to prison, than those who find employment.
One in four adults in the U.S. have a criminal record, or 64
million Americans. Nine million individuals release from prison
each year.
African Americans make up 13% of population, but account for
28.8% of arrests, and 55% of drug arrests (drug use – no
ethnic, racial disparity)
A disclosed criminal record reduces chance for a job call back
by 50%; significantly higher for African American men.
In 2010, 92% of SHRM members perform background checks –
choice of over 800 screening services
On-line federal, state repositories, and judicial information
systems; commercial databases, nationwide network of county
court researcher – accessibility continues to get better
Equal Employment Opportunity Commission
- Enforcement Agency of the Title VII of the
Civil Rights Act of 1964
EEOC – long known for taking action against overt,
intentional discrimination based on race, gender, national
origin and other protected categories.
EEOC now focusing on facially neutral selection criteria,
such as credit reports and criminal records
Blanket Policy has Disparate Impact on minority groups
Conviction constitutes reliable evidence, but still
cannot be an absolute bar from employment.
- Nature and gravity of the offense
- Length of time since conviction/release
- Nature of job sought/held
EEOC’s E-RACE Initiative…
 E-RACE Initiative (Eradicating Racism
and Colorism from Employment). By
2013, EEOC plans to:
 “Develop Strategies for Addressing 21st Century
Manifestations of Discrimination.”
 “Implement investigative and litigation strategies to
address selection criteria methods that may foster
discrimination…such as credit and background
checks, arrest and conviction records…”
 Individual Assessment of Conviction Data and a
Reasoned Exercise behind Disqualification of Applicants
with a Criminal History  An Employment Screening
Activist Group Finds No Shortage of
Employers Advertising with “Blanket”
Hiring Prohibitions
National Employment Law Project (NELP) found the
following job announcements:
“Qualified candidates must be able to pass: Background Check (no felonies or misdemeanors)…” –
Bank of America (600 clerical positions)
“All Applicants must have a FULLY clean background for past seven years.” - Aramark (janitorial
and food service positions)
“We are looking for people who have spotless background/criminal history.” – CORT Furniture
“No arrests or convictions of any kind for past seven years. No felony convictions of any kind for
life.” – OMNI Energy Services Corp.
“Applicants must also pass a background check investigation showing no felony convictions.” Domino’s Pizza
“You must not have any felony or misdemeanor convictions on your record.” – Crown Services Inc.
“All candidates must consent to a drug test and criminal background check (no felonies or
misdemeanors allowed). -- Peak Organization
“Openly Exclusionary no-hire bans are commonplace. That employers and staffing
firms continue to post such ads notwithstanding the 20-plus year-old Title VII
guidance issued by the EEOC suggests that even the national largest employers are
either unaware of civil rights and consumer protections for people with criminal
records or are indifferent to them.” – NELP March 2011
Lawsuits or EEOC Petitions in Progress…
Radio Shack/Choice Point – automatically rejected on-line
applicants who marked “yes” to felony record in last 7 years.
Accenture – rejects applicants and terminates employees with
criminal records regardless of fitness or ability to perform the
First Transit Inc. – hires no one with a felony or served any
time in jail
Burlington Northern Santa Fe RR – no felony convictions in
the past seven years
Lowes – Applicant for garden center attendant had 1999
felony drug conviction; never convicted of any other offense;
strong work history. 2009 he filed title VII charges with EEOC
against Lowes
US Census Bureau – roughly 700,000 people with criminal
record automatically disqualified
ABM Industries obtained background checks with dismissed
charges, against state law
EEOC v. Peoplemark – an EEOC Misstep
In 2008, the EEOC alleged Peoplemark had a Blanket Policy
which denied the hiring of or employment of any person
with a criminal record.
- Disparate Impact Against African Americans
- Violation of Title VII of Civil Rights Act
The Problem?
- Peoplemark had no such policy
- Peoplemark had hired individuals with a criminal record
On March 31, 2011, the judge through out the case and
chastised the EEOC for spending years and tax pay
dollars on an assertion they knew or should have known
was not true
- Ordered EEOC to pay Peoplemark $751,942 in legal fees
What does the research show about the relationship between
persons with a criminal record and job performance job
Blumstein and Nakamura Study
Took a large sample of 18-21 year-olds in New York in 1980 who had
been arrested for either Burglary, Aggravated Assault or Robbery and
tracked them over time.
Compared criminal histories to general population.
Authors found that 18 year-olds
3.8 years after being arrested for Burglary have the same risk of being
arrested as the general population.
4.3 years after being arrested for Aggravated Assault have the same risk of
being arrested as the general population.
7.7 years, after being arrested for Robbery have the same risk of being
arrested as the general population.
Conclusions –
The probability of ex-offender re-offending diminishes the longer he/she stays
The older the offender, the less time it takes to have the same arrest rate as the
general population
The probability of committing an offense involving the work place even more
Sample Background Check Policy
and Decision Matrix
Available at www.essclientservices. com
The Aspirations of “Ban the Box”
By requiring employers to not ask about applicant criminal
histories on the initial employment application,
advocates hope –
Removes the deterrence of ex-offenders from even applying
Deters the employer from “sifting out” ex-offenders
Gives the ex-offender a chance to demonstrate qualifications,
skills, experience
When a record is disclosed/found, forces the employer to take a
closer look at job relevance, time elapsed, seriousness of offense,
evidence of rehabilitation, other mitigating factors
Advocates hope federal and state government “ban the box”
policies will become a model to private employers and cause them
to see the discrimination against ex-offenders as “invidious and
*”Ban the Box to Promote Ex-offender Employment” (2007) Henry and Jacobs
“Ban the Box” Initiatives Increase
States and cities with current “Ban the Box” laws on
the books:
Hawaii – state law prohibits employers from asking about convictions
until after a conditional job offer
Massachusetts – state law prohibits employers from asking about
“criminal offender record information”
Various City and County Governments – CA, CT, FL, IL, MD, MA,
MN, NM, NY, OH, PA, RI, TN, TX, WA, WI (most apply only to the public
sector at this time)
“The only harm that I see the potential employers may encounter is the time and
money spent reading an application and interviewing an individual," she said.
"This legislation does not force the employer to hire or take away their ability to
judge the potential employee based on their criminal records”
-Philadelphia Councilwomen Donna Reed Miller (04/19/2011)
Quick Review of FCRA Adverse Action Steps
NELP contends that the failure of screening firms and employers to
provide “pre-adverse-action” notices mirrors the upsurge in
Title VII litigation.
Step One: Pre-Adverse Action Letter (before adverse action is taken)
Pre-Adverse Action Letter (requires certain language)
A copy of the report
Summary or Your Rights Under The Fair Credit Reporting Act
<Wait a reasonable period for the applicant/employee to receive the
letter and have the opportunity to dispute or explain information on
the report.>
Step Two: Adverse Action Letter (adverse action is taken)
Adverse Action Letter (requires certain language)
Summary or Your Rights Under The Fair Credit Reporting Act
*Letters and FTC Summary are available at or email
[email protected] for an “Adverse Action Kit.” ESS can process your
adverse actions for you; make the request to [email protected], or
form the IRAS web site.
Other Challenges…
ABA committee recommendations to
automatically seal misdemeanor and felony
convictions after passage of specified period of
law-abiding conduct.
Effective July 1, 2011, drug offenders in
Colorado, after 3-10 years of law-abiding
behavior may petition the court to seal the
Continually laws introduced to states and
counties to redact identifiers from criminal
 If you have any questions or would like
to get in touch with me, please feel free
to contact me at:
 [email protected]
 1-800-473-7778 x 101
*The webinar (including audio) will be available soon at

What is a “Criminal Background Check”?