VOL. 34, NO. 3
WINTER 2008
Employee
Relations
L A W
J O U R N A L
Watch Your Back: Smart Hiring
and Proper Background Checks
Leonora M. Schloss and J. Gregory Lahr
Although nothing can guarantee that an employee will not commit an act of violence
or other crime in the workplace, the authors note that employers can substantially
decrease the risk of such occurrences by methodically following a lawful process that
thoroughly screens all applicants, and by recognizing warning signs indicating that
a candidate is not an appropriate hire for the workplace.
P
erhaps now more than ever, employee hiring can be a difficult,
stressful, and lengthy process that is fraught with potential pitfalls
if not handled properly, and if not armed with the right information
to make educated decisions.1 In view of numerous stories relating to
résumé fraud, fictitious academic qualifications, violence in the workplace, harassment and discrimination, corporate scandals, and employee
theft, employers must be vigilant and well-informed when making hiring decisions. If not, liability issues may arise in a variety of instances,
involving current employees, prospective employees, and clients.
Irrespective of the size of your business, pre-employment screening is
a necessary hiring practice to avoid lawsuits and costly hiring mistakes.
Indeed, perhaps the most important step employers can take to ensure
the safety of their workplace, and limit liability, is to conduct background checks of all new hires, and sometimes on existing employees.
Undoubtedly, the most efficient and effective way to handle problem
employees is before they are offered a job, and careful consideration of
Leonora M. Schloss is a partner in the Los Angeles office of Sedgwick,
Detert, Moran & Arnold LLP, specializing in wage/hour and leaves of
absence issues and litigation, drafting policies, advising employers,
conducting wage/hour classification audits, and defending discrimination,
harassment, and whistleblower lawsuits. J. Gregory Lahr is an associate
in the firm’s New York office litigating commercial disputes, preparing
coverage opinions, and litigating and providing counseling on a variety
of employment matters. The authors may be reached at leonora.schloss@
sdma.com and gregory.lahr@sdma.com, respectively.
Smart Hiring and Proper Background Checks
an individual’s background can help guide this very important decisionmaking process.
By utilizing a thorough employment application, conducting detailed
interviews and reference checks, and, where necessary, investigating an
applicant’s background, problematic issues may be revealed to indicate that
the candidate should not be hired. Although a careful screening process
may be achieved through an application, interview, and reference check,
conducting a further investigation of the applicant may disclose issues that
are not apparent on an application or during an interview. Unearthing
potential problems in the pre-employment stage may decrease the number of personnel problems later on, as well as reduce the possibility of
employer liability for lawsuits brought by employees and customers.
Fortunately for employers, background checks are becoming much
more commonplace, even for respected lateral transfers with reputable
credentials. Thus, the likelihood that a candidate will be “appalled” by
the thought of being investigated has diminished. Irrespective of how a
candidate may react to a background check, it is simply good policy for
an employer to perform a background check to eliminate or substantially decrease its exposure to a lawsuit.
Many employers now conduct background checks into an individual’s
creditworthiness and criminal background before making decisions
about hiring, promotion, reassignment, or job retention. Such an investigation can reveal criminal prosecutions, bankruptcies, overdue payments, overdrawn credit, and debt collection activity. To the extent
negative information is discovered, it may demonstrate that the candidate is not suited for a position handling the company’s cash, corporate
finances, or clients’ personal property.
Federal and state law, however, do not permit indiscriminate scrutiny
of a job applicant’s personal background solely in the interest of security or merely to avoid future liability. In that regard, employers must be
aware of the permissible scope of inquiry of an applicant’s background,
and in particular with the procedural requirements of the Federal Fair
Credit Reporting Act (FCRA) and any state equivalents, before conducting background checks or acting upon information provided by such an
investigation to make employment decisions.
Discussed herein are significant issues that employers face when
deciding whether and how to conduct an investigation into a candidate’s
background, and what may result if an employer elects to do nothing
to research a candidate.
WHY CONDUCT A BACKGROUND CHECK
Negligent Hiring
An employer generally is not liable for the intentional tort of its
employee unless the employee is acting within the scope of his or
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her duties and in furtherance of the employer’s business. However,
even where the employer is not vicariously liable for the torts of its
employees, it may be directly liable under the theory of negligent hiring
and/or retention. Most states’ law recognize claims against an employer
that hires an employee with dangerous tendencies who injures
someone—i.e., a coworker, client, vendor—at work.2 An employer may
be liable for negligent hiring if it knew, or should have known, that
the employee posed a threat to others. Moreover, an employer may be
liable for negligent retention when it continues to employ an individual
despite knowing his or her dangerous propensities.3
In addition, when an employer hires an employee who will have a
unique opportunity to commit a crime in the performance of his or her
duties, the employer may have a duty to exercise reasonable care in
hiring the employee, and a continuing duty to exercise reasonable care
in retaining the employee.4 Courts have found the employer to have
breached its duty when it failed to inquire adequately about the employee’s criminal history.5 However, the employer may not be negligent
where it conducts a reasonable background investigation and where
the wrong committed was not foreseeable based on the nature of any
previous criminal conduct by the employee.6
To prove negligent hiring, the injured third person must prove
that:
•
The injury was caused by the tortious conduct of a coworker;
•
The employer knew or should have known by the exercise of
diligence and reasonable care that the coworker was capable
of inflicting harm of some type;
•
The employer failed to use proper care in selecting, supervising, or retaining that employee; and
•
The employer’s breach of its duty was the proximate cause of
the plaintiff’s injuries.7
The injured third party also must prove that, although negligent in
hiring or retention, the employer’s negligence makes it liable for the
tort actually committed by its employee.8 For example, the failure of
the employer to discover that its employee had a conviction for stealing
checks in the mail does not extend to the employee’s crime of arson,
and the failure to discover that an employee pleaded guilty to theft, does
not extend to sexual assault.9
Safety of Employees and Clients
Concomitant with the possibility of being liable in a negligent hiring/
retention lawsuit, an employer must consider the safety and security of
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its employees. Indeed, in view of the fact that most employees spend at
least one third of their day at the workplace, there naturally is a need for
employees to feel safe, and not concerned that one of their coworkers
may act out in a violent manner.
There are a variety of federal and state laws that govern the safety
of the workplace of which employers must be aware. For example,
Section 5(a)(1) of the federal Occupational Safety and Health Act
(OSHA), sometimes called the “General Duty Clause,” requires that
“each employer shall furnish to each of his employees employment and
a place of employment which are free from recognized hazards that
are causing or are likely to cause death or serious physical harm to his
employees.” In two Opinion Letters, OSHA has opined that failure to
provide a violence-free workplace, or to take acts designed to minimize
the possibility of violence in the workplace, could subject an employer
to citation under the General Duty Clause.10 Therefore, employers that
fail to conduct background investigations may face exposure for failing
to comply with this requirement.
Similarly, employers subject to the Federal Employer’s Liability Act
(FELA) or the Jones Act may face liability for injuries to employees
caused in whole or in part by the negligence of the injured employee’s
coworker. Under FELA, Congress created a statutory means for employees in certain industries, most notably the railroad industry, to obtain
relief for injuries caused by their employers’ negligence. Although specific standards of care are not indicated in the statute, certain employer
duties have become integral parts of FELA, including the duty to provide
a reasonably safe place to work11 and the duty to protect an employee
from intentional torts committed by another employee.12
The Jones Act, which provides a cause of action in negligence for any
seaman injured in the course of his employment,13 applies the standard
of liability provided by the FELA.14 Thus, a ship owner may become
liable for injuries to a seaman resulting in whole or in part from the
negligence of another employee.
Although it is possible that no amount of investigation into some
candidates’ backgrounds would reveal a propensity to violence, a
thorough investigation is likely to reveal questionable aspects of a
candidate’s background that may indicate a problem in hiring that
candidate for a certain position, or placing that candidate in a certain
setting. The awareness of employees that their employer is conducting
background checks may help to assure employees that their workplace is safe.
Similarly, clients may be less inclined to initiate or continue a business
relationship with a company if the client is aware of prior criminal or
intentional tortious conduct that has occurred at the company’s workplace. In some businesses, conducting a sufficient screening of employees may be a business development tool for generating and maintaining
clients.
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Well-Being of the Company
Aside from the employees’ security, the well-being of a company
or organization may hinge upon conducting adequate background
checks. Although insurance coverage is available for employee theft,
and torts committed by employees, many companies are uninsured or
underinsured such that a company could become financially inoperable due to the criminal or tortious conduct of one of its employees.
Thus, spending a reasonable amount of resources to conduct a proper
investigation of an applicant may prevent a company from later being
exposed to an expensive lawsuit that may detrimentally affect the financial viability of the company.
Employers should be aware that fidelity insurance policies—which
generally provide coverage for employers for employee theft, dishonest
or fraudulent acts by a disclosed agent, malicious destruction of property,
and forgery or alteration of negotiable instruments—usually provide
that the policy terminates as to acts by a particular employee as soon
as the employer learns of any dishonest or fraudulent act committed by
that employee. Thus, in the event that an employer becomes aware of
criminal or dishonest acts by one of its employees, it should consider
how that knowledge may impact its insurance coverage.
HOW TO CONDUCT A PROPER BACKGROUND CHECK
Employment Application
A well-devised and detailed employment application can provide
an abundance of information about an applicant and the applicant’s
employment history. Gaining not only information as to the applicant’s
qualifications, an application can expose suspicious gaps in employment
and questionable short-term positions that may have been the result of a
termination for cause. An employer, however, must be aware that there
are inquiries into an applicant’s personal life that are not permissible
under state and federal law.
For example, although it is not unlawful for employers to obtain
information on an applicant’s criminal background, under federal
and most state laws it is unlawful to inquire about an applicant’s
arrest record.15 In the Equal Employment Opportunity Commission’s
(EEOC) compliance manual, it advises that using arrest or conviction records as an absolute bar to employment disproportionately
excludes certain racial groups. Thus, unless there is a business need
for their use, these records should not be used in pre-employment
screening. Unlike a conviction, an arrest is not reliable evidence that
an applicant has committed a crime. As such, an exclusion based
upon an arrest record is justified only if it appears that the conduct
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is job-related and relatively recent, and where the applicant or
employee actually engaged in the conduct for which he or she was
arrested.
State laws vary with respect to the type of criminal information that
can be obtained. The EEOC advises that, where job-related, an inquiry
may be made into felony convictions, and some states limit criminal
record checks to felony convictions only.16 Most states require that
conviction records not preclude an applicant from employment unless
the conviction is job-related.17 Thus, if an applicant was applying for a
job as a company’s treasurer, and the applicant had a prior conviction
involving monetary theft, the conviction likely would be viewed as a
job-related conviction and serve as the basis for disqualifying the applicant from consideration.
Many states require that a disclaimer be placed on the employment
application to advise the applicant that a criminal record will not necessarily preclude employment. Most states also require the employer
to consider a number of factors before excluding an applicant on the
basis of a conviction. These factors include the nature of the conviction
relative to the job applied for, the age of the applicant at the time of
the conviction, how much time has elapsed since the conviction, and
what the individual has done since the conviction as to counseling and
rehabilitation.
No matter how thorough and inquisitive an application may be, it is
only as good as the veracity of the individual completing it. As such, the
necessity of conducting an interview and checking references cannot be
overemphasized in most situations.
Interview
Conducting a face-to-face interview of the candidate, or at least a
telephone interview, is an opportune time to inquire about any peculiarities in the candidate’s application or résumé, and listen to the applicant’s explanation for any necessary follow-up questions. In addition,
having a candid dialogue (on permissible areas of inquiry) with the
applicant may provide an employer with a sense of the candidate’s
veracity.
During the interviewing phase, an employer must be careful not to
violate provisions of relevant anti-discrimination laws with respect to
questions asked of the candidate, particularly as they pertain to a candidate’s potential protected classification.
For example, before making an offer of employment, an employer
may not ask applicants about the existence, nature, or severity of a
disability. Candidates may be asked about their ability to perform job
functions, and an employment offer may be conditioned on the results
of a medical examination, but only if the examination is required for all
employees in the same job category. In addition, medical examinations
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of employees must be job-related and consistent with business
necessity.
The EEOC has advised that certain questions may not be asked with
regard to a candidate’s possible disability:
•
Have you ever had or been treated for any of the following
conditions or diseases? (Note: this question would be followed
by a list of specific diseases.)
•
Have you ever been hospitalized? If so, for what conditions?
•
Have you ever been treated by a psychiatrist or psychologist?
If so, for what condition?
•
Is there any health-related reason you may not be able to perform the job for which you are applying?
•
Have you had a major illness in the last five years?
•
How many days were you absent from work because of illness
last year? (Note: pre-employment questions regarding illness
may not be asked because they may reveal the existence of a
disability; however, an employer may provide information on
its attendance requirements and inquire whether an applicant
can meet these requirements.)
•
Do you have any disabilities or impairments that may affect your
performance in the position for which you are applying? (Note:
the candidate may be asked about the ability to perform specific
job functions, with or without a reasonable accommodation.)
•
Are you taking prescription drugs?
•
Have you ever been treated for drug addiction or alcoholism?
•
Have you ever filed for workers’ compensation insurance?
As in most situations in dealing with employees, common sense
should prevail, and questions that directly or indirectly are meant
to discover information about a candidate’s age, race, creed, color,
national origin, sex, disability, martial status, sexual orientation, alienage, or citizen status should be avoided. An employer should focus on
the candidate’s ability to perform the job, not on the possibility that
the candidate is in a protected class. Anti-discrimination statutes are not
designed to prevent spontaneous, free-flowing conversations between
an employer and a candidate. However, it is important to avoid any
specific inquiries in the interviewing process that may establish a
discriminatory intent.
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References
By contacting former employers and other references, potential
employers may gain valuable insight into an applicant’s personality,
work ethic, communications skills, and ability to cooperate with others.
Contacting these individuals also may enable employers to discover discrepancies on employment applications and resumes. If discrepancies
or other suspicious notations are found on an applicant’s employment
application or resume, the employer should seek an explanation from
the applicant as to these items.
In addition, conducting reference checks can give an employer
valuable insight into an applicant’s abilities, and may help to shield
the employer from possible claims of negligent hiring.18 Even if the
applicant’s former employer refuses to provide any information, merely
documenting that the prospective employer has attempted to check the
applicant’s prior work history may be helpful. The failure to perform a
background investigation for an applicant may serve as the basis for a
negligent hiring claim.19
For an employer to have the greatest chance of gaining valuable and
useful information, potential employers should consider (a) contacting
the applicant’s former supervisor directly, and (b) obtaining a signed
authorization and release from the applicant. Employers may obtain an
authorization and release more easily by attaching the form to employment applications.
A potential problem with gathering references is that companies called
upon to provide references for former employees may fear lawsuits for
slander, defamation, or other civil claims and, therefore, an applicant’s
prior employer may be hesitant to disclose more than the applicant’s previous job title and employment dates. A cause of action for defamation may
be made simply by alleging that a false statement was made to a prospective employer, and that the statement likely would harm the applicant’s
reputation or deter other persons from hiring the applicant.20 In addition,
the prospective employer or third parties may raise claims of misrepresentation or negligent referral if accurate information is not provided.
Other potential claims include invasion of privacy under two theories:
(a) the former employer placed the applicant in a “false light” before the
public; and (b) the former employer disclosed private information about
the applicant. Actionable misrepresentation can be either negligent or intentional. Interference with prospective employment arises when an employer
intentionally interferes with a former employee’s right to employment by
giving false information to prospective employers, resulting in the loss of
an employment opportunity. Moreover, the anti-retaliation statutes of Title
VII and many state statutes prohibit employers from retaliating against
former employees who complain about discrimination.
Additionally, in some states, such as California, employers can face
statutory liability for “blacklisting” a former employee. Under California
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Labor Code Section 1050, it is a misdemeanor for any person who, after
having discharged an employee or after the employee has voluntarily
left employment, prevents or attempts to prevent the former employee
from obtaining employment by any misrepresentation. Treble damages
are also available in a civil action based on such misrepresentation.21
Although employers are not liable for truthful statements about the
reason for an employee’s termination or the quality of an employee’s
work, it can be difficult to establish the truth of a subjective opinion
about the applicant’s abilities. Many states, however, recognize a “qualified privilege” with respect to employment references.22
With any inquiry involving an employee, but particularly with checking references, the key phrase is job-relatedness. When contacting references, to gain the maximum relevant information about an applicant
without creating liability for invasion of privacy, it is important to limit
the questions to elicit information related directly to job performance.
Internet Search
One often overlooked research tool is the Internet. With the advances
in technology of most major search engines, and the plethora of publications and other information that are posted on the Internet, it is likely
that a search of the candidate’s name will reveal useful information
about his history. Although an employer should be cautious about relying on information located on the Internet because of the possibility that
it could pertain to another individual or simply be false, many sites—in
particular newspaper Web sites, organization Web sites, government
agency Web sites, and company Web sites—offer information that is reliable and useful in shedding light about an applicant’s background.
Similarly, increasing numbers of applicants have profiles on Facebook
and MySpace. Employers are able to obtain useful information from
these sites, but naturally should be wary of using anything they uncover
to discriminate against applicants—i.e., refusing to hire an applicant
after learning that she is pregnant from her Facebook or MySpace profile. Employers also may wish to utilize the Internet Archive to obtain
previous versions of Web pages in order to learn if applicants recently
removed information from their MySpace or Facebook profiles just prior
to applying for the job. In the event questionable information is located
about a candidate, an employer should consider raising this in the interview to obtain an explanation from the candidate.
Candidate Investigation
For many employment positions, simply relying on an application,
interview, and reference checks will not be sufficient, and it may be
necessary to conduct a more thorough investigation of the candidate,
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perhaps even using an outside vendor or private investigator to conduct the research. In fact, for some employment positions, it may be
mandatory to perform such an investigation to ensure the safety of
children, elderly, or other individuals who may be at a greater risk of
exposure to criminal conduct. In some states, employers are required
to do specific reference, criminal, or background checks depending on
the position involved; for example, positions that involve working with
children or the elderly, positions in correctional facilities, and certain
banking industry positions.23 Failure to conduct a proper investigation
could result in legal liability and, therefore, employers must balance
the benefits and risks involved in the use of pre-employment investigations and background checks, mandatory requirements based upon
the nature of the position, and the risks in failing to screen applicants
properly.
Criminal Conduct
In view of growing concerns about negligent hiring claims and other
tort claims, many employers are reluctant to hire an individual with a
criminal record, or simply prohibited to do so. The apprehension shared
by employers in this regard must be balanced against certain societal
concerns, like rehabilitating individuals with criminal records so they
may productively re-enter society by becoming gainfully employed.
Thus, employers should be cautious when considering the hiring or
rejection of an individual with a criminal record.
Nevertheless, employers should consider investigating an applicant’s
criminal record. As shown above, employers may question applicants
about convictions, but not about arrests, as courts have found that mere
arrests do not carry the same indications of reliability as do convictions.
Also, rejecting applicants merely because they have been arrested has
been shown to have an adverse impact on some minority groups, an
issue that particularly concerns the EEOC. Many jurisdictions mandate a
written guarantee to the applicant that a conviction will not be an absolute bar to employment.
Criminal conviction information should be relied upon only to the
extent the information is job-related and consistent with business necessity. As such, considerations including the age and time of the offense,
the seriousness and nature of the violation, the relationship between the
conviction and the job, the nature and number of convictions, and rehabilitation, should be considered when making the employment decision.
All background checks should be authorized by a written consent
signed by the prospective employee. Some states have laws that provide that an employer conducting a background check of an employee
or prospective employee after having obtained his written consent is
immune from civil liability for claims arising out of the disclosure of the
background information. The immunity extends to liability for failure to
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hire, wrongful termination, invasion of privacy, as well as to claims of
third persons for negligent hiring or negligent retention. Consequently,
employers should capitalize on the broad immunity accorded by these
statutes and obtain consent from all employees and prospective employees to perform a background check, and conduct and document a background check for each, regardless of how cursory.
Financial and Other Concerns
Some employers also may want to investigate financial problems
and credit worthiness of an applicant, or obtain information relating
to general reputation, lifestyle, and character and, therefore, may
commission an investigative consumer report. Such a report might
be relevant to the appointment of a top executive, the hiring of
sensitive security personnel for dignitaries, or government officials,
or for a corporate spokesperson whose background must be above
reproach.
However, employers should be aware that rejecting an applicant
based solely on certain financial or lifestyle information, like a credit
rating, may have an adverse impact on certain minority groups and,
therefore, could be held unlawful.24 Accordingly, employers must have
a valid business necessity for using a poor credit rating to reject an
applicant.
In addition, an applicant may not be discriminated against because he
has filed for bankruptcy.25 If an employer obtains an applicant’s credit
report that reflects a bankruptcy filing, the employer will need to have
an independent basis for any adverse employment decision. Additionally,
depending upon the nature of the inquiries regarding an applicant’s
background and credit, the FCRA, discussed in more detail below, may
apply.
Motor Vehicle Record
For some employment positions, a clean driving record may be a
valid prerequisite to employment. In such a case, an employer should
strongly consider obtaining information about the applicant’s motor
vehicle record to ensure that he has a valid driver’s license, and there
are not other problems with his driving history that may make him
unsuitable for the position.26
But employers must be cautious when seeking and using information
contained in motor vehicle records. These records contain a significant
amount of information, including an applicant’s full name, date of birth,
Social Security number, physical description, and information about
medical conditions that affect an individual’s driving license or status.
Much of this information is deemed private and/or confidential under
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the federal Driver’s Privacy Protection Act of 1994, which provides that,
with certain exceptions, a state department of motor vehicles “shall not
knowingly disclose or otherwise make available” personal information
contained in motor vehicle records.27
POTENTIAL LIABILITIES FOR AN IMPROPER BACKGROUND
CHECK, OR IMPERMISSIBLE USE OF A PROPER
BACKGROUND CHECK
Fair Credit Reporting Act
In conducting a background check on a candidate or current
employee, employers must be aware of the Fair Credit Reporting Act
(FCRA),28 and any state law equivalents. Indeed, in enacting FCRA,
Congress determined that “consumer reporting agencies have assumed
a vital role in assembling and evaluating consumer credit and other
information on consumer,” and that there “is a need to insure that
consumer reporting agencies exercise their grave responsibilities
with fairness, impartiality, and a respect for the consumer’s right to
privacy.”29
Generally, FCRA defines a background check as a “consumer report.”
Before an employer may obtain a consumer report for employment
purposes, it must notify the candidate in writing and get written authorization to obtain the report. If an employer decides not to hire the candidate because of this report, it must provide a pre-adverse action disclosure which includes a copy of the report and a copy of the candidate’s
rights. The employer also must provide notice that it has decided not to
hire the candidate, and include the name and address of the consumer
reporting agency and information on the candidate’s right to dispute
the report.
Although it may appear that FCRA applies only to credit reports and
credit reporting agencies (CRAs), it certainly applies to background
checks that an employer conducts on an applicant, and even independent contractors.30 In fact, a “consumer report” is broadly defined
to include written, oral, or other communication of any information
pertaining to an individual’s credit worthiness, credit standing, credit
capacity, character, general reputation, personal characteristics, or mode
of living. Thus, FCRA governs such reports as driving records, criminal
history checks, and credit reports.
FCRA, which is primarily enforced by the Federal Trade Commission
(FTC), generally allows employers to obtain information on prospective employees; however, it imposes requirements on how an employer
proceeds in obtaining such information, and what an employer must do
if an adverse action is taken—i.e., a denial of employment or any other
decision for employment purposes that adversely affects any current or
prospective employee.
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Reports and Entities Covered by FCRA
As suggested in FCRA’s statement of purpose, it is designed to promote accuracy, fairness, and privacy of information in the files of every
CRA. FCRA defines CRAs as entities and persons that regularly engage in
the practice of assembling or evaluating consumer credit information to
provide to third parties. Thus, most CRAs are credit bureaus that gather
and sell information about individuals to creditors, employers, landlords,
and other businesses (e.g., credit scores, timeliness of bill payments,
or bankruptcies). FCRA provides candidates with specific rights, and
regulates employers’ procurement and use of “consumer reports” and
“investigative consumer reports.”
It is important to note that consumer reports are not limited to those
involving credit information, but as indicated above include reports in
which information on an individual’s character, reputation, and characteristics is obtained through personal interviews with neighbors, friends,
or associates of the individual being reported on, which is used or
expected to be used or collected in whole or in part for the purpose
of serving as a factor in establishing the consumer’s eligibility “for . . .
personal, family, . . . [or] employment purposes.”31 As such, the more
frequent types of consumer reports are motor vehicle record checks,
criminal background checks, educational records checks, previous
employment record checks, and credit history checks.32 An employer
should expect that a report containing any information that a candidate
likely would consider personal, private, or confidential and is obtained
from a consumer reporting agency, will be a consumer report, although
it appears that it does not include drug tests. In addition, employers
should be aware that, if an outside organization performs a harassment
investigation for an employer, it may be considered an “investigative
consumer report” within the meaning of FCRA, and would be subject to
disclosure obligations to the employee.33
Reports May Be Used for Employment Purposes
Consumer reports may be used by employers only in certain situations, such as to determine whether to hire or fire employees, or for
other “employment purposes” such as reassignment, or promotion.34
With respect to using a report for an employment purpose, the report
must relate to a decision about a prospective or current employee.
Disclosure Requirements
FCRA Section 1681b delineates the permissible uses of consumer
reports, and in particular creates conditions that must be satisfied before
consumer reporting agencies may provide such reports for employment
purposes. There essentially are three separate disclosures to consider,
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including a disclosure that a consumer report may be requested, a disclosure regarding the nature and scope of the investigation requested, and
a disclosure that the consumer report may be obtained for employment
purposes. In addition, there is a requirement to obtain authorization
from employees or potential employees prior to procuring consumer
reports.35
A consumer report cannot be obtained for employment purposes
unless a “clear and conspicuous disclaimer” is made to the candidate
before it is obtained. The disclaimer must be made in a document that
consists solely of the disclosure (i.e., having it in the application is not
sufficient), and must advise the candidate that the consumer report may
be obtained for employment purposes.36 A disclosure advising that a
consumer report may be requested, as well as the nature and scope of
the investigation, is permissible. For example:
•
A consumer report may be obtained on you for employment
purposes. It may be an “investigative consumer report” that
includes information as to your character, general reputation,
personal characteristics and mode of living. You have a right
to request disclosure of the nature and scope of the report,
which involves personal interviews with sources such as your
neighbors, friends, or associates.
•
Although a disclosure notice may be combined with an
authorization obtaining the applicant’s permission to obtain
the report, it may not include a waiver of the applicant’s rights
under FCRA.37
•
The candidate must provide authorization in writing for the
report to be obtained. In the event that the candidate refuses
to provide authorization, the employer is not prohibited from
declining to hire the candidate on that basis.
•
Finally, the employer must certify to the consumer reporting
agency that the disclosure to the candidate has been made,
consent has been received, and the report will not be used for
an illegal purpose.
Disclosure to Candidate Regarding Denial of Employment
Where an employer abides by FCRA’s requirements, and uses the
report as grounds to take an adverse action against the candidate, the
employer must provide advance notice to the employee about the action
before taking such action, and supply a copy of the report and a summary of the candidate’s rights under FCRA.38
FCRA does not indicate if an employer must delay the adverse action
after providing the required information to the candidate; however, the
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purpose of the advance notice requirement is to permit the candidate to
discuss the report before action is taken. An exception to the pre-action
notice rule is where an employer’s contact with the candidate is only
by mail, telephone, or electronic means. Here an employer may deny
employment based upon information in a report without the pre-action
notice, but must mail the notice to the candidate within three days.
Irrespective of whether the notice must be provided in advance of the
denial of employment, or within three days, the notice must provide the
following information:
•
The denial of employment was based upon a report received
from a consumer reporting agency;
•
The name, address, and telephone number of the CRA;
•
That the agency did not make the decision to deny employment, and cannot provide the candidate with the specific reasons why employment was denied; and
•
That the candidate may request a free copy of the report and
dispute the accuracy or completeness of any information in the
report.39
Remedial Measures for FCRA Violations
As set forth in FCRA, an employer can be liable for negligent and/
or willful violations. If a violation is negligent, the employer may be
required to pay any actual damages caused by the violation, as well as
the plaintiff’s attorneys’ fees and court costs. For willful violations, the
penalties essentially are the same, but a $1,000 statutory penalty also
may be awarded if actual damages in excess of that amount cannot be
demonstrated. In addition, punitive damages can be awarded when
there has been a “conscious disregard for a consumer’s rights,” and it is
not necessary to prove actual malice or evil motive.
Discrimination
Irrespective of the nature and extent of the investigation into the
applicant’s background, the employer should ensure that any investigations are uniformly applied to all applicants. An employer may invite a
charge of discrimination if applicants with protected classifications are
investigated more thoroughly, or otherwise differently, than others.
Although it may seem sensible to apply a blanket prohibition against
hiring applicants who have been arrested or convicted for criminal
offenses for positions with substantial authority, such a policy generally
will violate federal law (Title VII), as well as many state laws. Such a
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hiring policy may constitute a disparate impact on those groups that are
disproportionately the subject of reported criminal conduct. Thus, it is
the employer’s burden to establish a connection between the policy in
question and job performance.
In the case of a policy that excludes applicants solely on the basis of
an arrest record, a nexus to job performance can be difficult to establish,
particularly because arrests (in the absence of a conviction) generally
are considered to have little, if any, probative value in demonstrating that the candidate has engaged in any misconduct. The denial of
employment based on prior arrests generally will not survive a challenge
under Title VII.
However, the actual conduct giving rise to the arrest may justify a denial
of employment where the employer obtains sufficient information regarding the conduct, and the conduct is sufficiently job-related. It can be difficult to determine whether sufficient grounds exist to determine that the
candidate engaged in such conduct to support the denial of employment.
Nevertheless, an employer does not need to perform an extensive investigation to determine a candidate’s guilt or innocence; however, the employer
must allow the candidate to have a meaningful opportunity to explain the
situation involving the arrest, and make a reasonable effort to determine
whether the explanation is credible before denying employment.
Blanket policies excluding all candidates who have been convicted
of crimes also will not survive scrutiny under Title VII unless there is
a showing of business necessity. Although the mere fact of a criminal
arrest may not be used to reject a candidate, prior criminal convictions
may support a denial of employment. The legitimacy of such hiring
policies generally turn on the question of job-relatedness, as well as
the nature and character of the criminal offense, the job requirements
and responsibilities, and the amount of time that has passed since the
criminal conduct. The greater the level of trust and confidence required
by the position, and the more serious the criminal conduct, the more
likely it is that an employer can demonstrate that the hiring policy in
question is related to job performance. Moreover, the similarity of the
nature of offense with the job requirements must be considered.
A denial of employment which is based upon a prior criminal conviction must be considered on a case-by-case basis, assessing the relevance
of the criminal conduct and the requirements of the job at issue. For
example, if the position sought by an applicant is security sensitive,
especially if it involves law enforcement or crime prevention, a court
will be more understanding of a denial of employment due to evidence
of prior criminal conduct.
Negligent Hiring
As indicated above, a primary basis to conduct a background check
is because of the potential for employer liability if someone is injured
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as a result of workplace violence or other tortious conduct. Victims may
assert claims against the employer for negligent hiring, negligent retention, and failure to warn.
A claim for negligent hiring is based upon the principle that an
employer that conducts its activity through its employees is subject to
liability for harm resulting from the employee’s conduct if the employer
is negligent in the hiring of an improper candidate, thereby creating
an unreasonable risk of harm to others. Liability is based upon the
employer’s negligence in placing a candidate—with known propensities, or propensities that should have been known through a reasonable investigation—in an employment position in which, due to the
circumstances of the position, it should have been foreseeable that the
candidate would pose a threat of injury to others.
Thus, the employer’s duty to exercise reasonable care in making a
decision to hire a candidate includes the obligation to conduct a reasonable investigation into his or her work experience, background,
character, and qualifications. An employer’s liability hinges on whether
the employer exercised reasonable care considering the totality of circumstances involving the hiring decision. The existence of this duty
depends upon whether the risk of harm from a candidate to a third
person, such as a coworker or client, was reasonably foreseeable as a
result of the employment; that is, in the exercise of ordinary care, where
an employer knew or should have known that the candidate may have a
propensity towards violence, or has destructive or dishonest tendencies.
However, where there is no evidence that the candidate had any propensity toward violence, or that the employer knew of that propensity,
the employer should not be liable.
Invasion of Privacy
Where an employer conducts a background check of a candidate and
it results in the denial of employment, it is possible that the candidate
may claim that the employer invaded his or her privacy by investigating
the candidate’s background.40 Thus, it must be emphasized that employers should have the applicant execute a release (preferably notarized)
in which the applicant: (a) authorizes any individual with information
about, or access to records relating to, the applicant to provide that
information and/or those records to the employer; (b) waives any and
all rights to privacy or confidentiality for the purpose of this authorization; and (c) releases all individuals who provide such information and/
or records from any and all liability.41
If conducting a background check is not feasible for some reason,
one alternative is to have the applicant provide certified records, such as
transcripts or military documents, or specific information, such as a pay
stub, termination agreement, or a recent evaluation. However, a release
should still be obtained so that the employer may follow up with prior
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employers or educational institutions on any documentation provided
by the applicant. Indeed, an applicant who would misrepresent facts in
an employment application is equally capable of forging documents.
SUMMARY AND PRACTICE TIPS
To avoid the significant potential for workplace calamities involving
violence, theft, fraud, or other criminal or tortious conduct, an employer
must be vigilant in the hiring process and adhere to a strict practice of
fully evaluating candidates for employment.
In the employment application, be sure to obtain the following
information:
•
Whether the candidate is over age 18;
•
Whether the candidate can provide verification of his legal
right to work in the United States;
•
The full name of schools attended, major, number of years
attended, diploma, or degree earned;
•
Prior and/or current employer contact information, name of
supervisor, position held, dates of employment, starting and
ending salary, and reason for leaving last five jobs or last ten
years of work history, whichever is longer;
•
Whether the candidate has been convicted of a felony, and
if so, obtain details, but advise the candidate that a felony
conviction or pending criminal charges will not necessarily
disqualify him or her from employment;
•
Whether the candidate, with or without reasonable accommodation, can perform the essential functions of the job applied
for; and
•
Signature certifying that the information is true and correct and
that any misrepresentation, falsification, or material omission
may result in failure to receive an offer of employment or, if
hired, in dismissal from employment.
Along with the application, be sure to have the candidate sign a consent form permitting a reference check and releasing both the hiring
employer and former employers from liability resulting from the ensuing exchange of information. (The release should be drafted broadly so
that it includes not only those references listed in the application, but
all pertinent contacts.)
When checking references, advise the reference of any applicable
immunity statutes, particularly now that many states have enacted
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reference-checking immunity laws protecting employers from civil liability when giving references in good faith. A reference will appreciate
knowing that he or she is protected from liability by providing honest
information regarding the candidate’s company history, and may be
more open and revealing with the information he or she provides about
the candidate.
During the reference-checking process, document all contacts and
attempts, even if unsuccessful. Always try to reach the direct supervisor
rather than the Human Resources (HR) department, but if the supervisor
is not available at least contact HR to verify factual information. When
speaking to the reference, sound conversational and not as though a
checklist is being followed, and take notes during the conversation, but
do not advise that you are doing so—the reference likely will be more
forthcoming if the conversation feels casual. Be sure to not ask about any
protected information, and always conclude by asking if there is anything
else the reference can share about the candidate’s work background.
When conducting a more comprehensive background check and using
a vendor to do so, be sure to obtain written consent from the candidate
and provide him or her with a clear and conspicuous written disclosure
that a background report may be requested. If a consumer report is generated and adverse action will be taken as a result of the contents of the
report, provide the candidate with a copy of the report and a statement
of his or her rights prepared by the FTC. If the candidate contends that
the report is inaccurate or incomplete, he or she has the opportunity to
contact the employer and the CRA to dispute or explain what is in the
report. If the adverse employment decision is final, send the candidate
a Notice of Adverse Action informing him or her that a final decision
has been made and containing information required by FRCA, including a copy of the report, a summary of his or her rights, and a cover
letter. After a reasonable period of time has expired (approximately one
week), the adverse decision may become final.
CONCLUSION
Although nothing can guarantee that an employee will not commit an
act of violence or other crime in the workplace, employers can substantially decrease the risk of such occurrences by methodically following a
lawful process that thoroughly screens all applicants, and by recognizing
warning signs indicating that a candidate is not an appropriate hire for
your workplace.
NOTES
1. In a 2002 Fact Sheet published by the US Department of Labor, Occupational Safety
and Health Administration, it indicated that approximately two million American workers
are victims of workplace violence each year.
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2. Oakley v. Flor-Shin, Inc.,964 S.W.2d 438 (Ky. Ct. App. 1998) (indicating that most
jurisdictions recognize the tort of negligent hiring).
3. See, e.g., Borden v. Capital Dist. Transp. Auth., 763 N.Y.S.2d 860 (N.Y. App. Div. 3d
Dep’t 2003) (liability for negligent hiring exists where the employer hired the employee
with knowledge of the propensity that caused the injured party’s harm (citing Detone v.
Bullit Courier Serv., Inc., 528 N.Y.S.2d 575 (N.Y. App. Div. 1st Dept. 1988)).
4. See, e.g., Welsh Mfg., Div. of Textron, Inc. v. Pinkerton’s, Inc., 474 A.2d 436 (R.I. 1984)
(employer had checked the employee’s criminal record before hiring him as a security
guard, but did not contact character references, thus the security company’s cursory
investigation provided it with little current information on him and could support an
inference of negligence in hiring for such a sensitive assignment as the guarding of
gold); Carlsen v. Wackenhut Corp., 868 P.2d 882 (1994) (denying summary judgment
to employer for claim by teen-age girl who was sexually assaulted by security guard
at rock concert because there was a material issue of fact as to the reasonableness of
employer’s conduct in failing to conduct any background investigation of applicant,
especially given the nature of employment position and incomplete and inconsistent
nature of his responses on job application).
5. Carlsen, 868 P.2d 882 (1994). See also Brown v. Youth Serv. of So. Dakota, Inc., 89 F.
Supp. 2d 1095 (D.S.D. 2000) (Although background check on employee did not reveal
any propensity for any type of child abuse or neglect, employer did know that employee
lacked any experience in counseling teenagers, and one of the references indicated that
she was not sure how employee would handle adolescents thereby triggering duty to
conduct a more thorough background check or other screening procedures to determine
whether employee had a propensity for child sex abuse).
6. See, e.g., Argonne Apartment House Co. v. Garrison, 42 F.2d 605 (C.A.D.C 1930) (The
fact that an investigation made by the police after the jewelry had been stolen showed
that the employee some time prior thereto had been convicted of intoxication does
not suggest that such a person was dishonest, and, even though the employer had
knowledge that an employee had been convicted of such a charge, that would not in
itself put the employer on notice as to the dishonesty of such employee.); Guillermo v.
Brennan, 691 F. Supp. 1151 (N.D. Ill. 1988) (plaintiff could not rely upon defendant’s
failure to look into employee’s criminal record to support negligent hiring claim because
nothing hinted that pre-hiring convictions substantially related to the circumstances of
his employment with defendant); Stubbs v. Panek, 829 S.W.2d 544 (Mo. App. Ct. 1992)
(no evidence to show that employer knew or should have known that employee was
possessed of dangerous proclivities which would make him a risk to abduct, assault and
murder, although there was evidence that employee had a charge of for petty larceny
and a conviction for illegal trash dumping).
7. See Bryant v. Better Bus. Bureau of Greater Md., Inc., 923 F. Supp. 720 (D. Md. 1996).
See also Shoemaker-Stephen v. Montgomery County Bd. of Comm’rs, 262 F. Supp. 2d 866
(S.D. Ohio 2003) (it is typically stated that the plaintiff must prove (1) the existence of
an employment relationship; (2) the employee’s incompetence; (3) the employer’s actual
or constructive knowledge of such incompetence; (4) the employee’s act or omission
causing the plaintiff’s injuries; and (5) the employer’s negligence in hiring or retaining [or
supervising, etc.] the employee as the proximate cause of plaintiff’s injuries).
8. See, e.g., Sea River Maritime, Inc. v. Indus. Med. Serv., Inc., 983 F. Supp. 1287 (N.D.
Cal. 1997) (court held that employer failed to use reasonable care to discover doctor’s
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unfitness to practice because it did not inquire into his qualifications and experience
before hiring him, did not personally interview him, did not check his references, did
not verify information in his curriculum vitae, and did not inquire into why he left a
residency program prematurely).
9. See, e.g., Argonne Apartment House Co. v. Garrison, 42 F.2d 605 (C.A.D.C 1930).
10. OSHA Standard Interpretation and Compliance Letters Dated May 13, 1992 and
December 10, 1992. In a letter dated December 18, 2003, OSHA explained the elements
for a violation of the General Duty Clause by indicating that employers can be cited for
violation of the Clause if a recognized serious hazard exists in their workplace and the
employer does not take reasonable steps to prevent or abate the hazard, and setting forth
the following elements: (a) the employer failed to keep the workplace free of a hazard to
which employees of that employer were exposed; (b) the hazard was recognized; (c) the
hazard was causing or was likely to cause death or serious physical harm; and (d) there
was a feasible and useful method to correct the hazard.
11. See, e.g., Bailey v. Central V. R.R., 319 U.S. 350, 352–353 (1943).
12. See, e.g., Lancaster v. Norfolk & W. Ry., 773 F.2d 807, 818 (7th Cir. 1985).
13. 46 U.S.C. § 688(a).
14. See, e.g., Chandris, Inc. v. Latsis, 515 U.S. 347, 354 (1995).
15. For example, the following states have enacted laws pertaining to the procurement
and use of criminal record information:
(a) Colorado: Colo. Rev. Stat. § 24-72-308(3)(f)(I), indicating that an employer
cannot require an applicant to disclose any information contained in a sealed
criminal record, and an applicant does not need to provide a reference to, or
information concerning, the sealed information and may state that no such action
ever occurred. In addition, employment may not be denied solely because the
applicant refuses to disclose sealed information.
(b) Connecticut: Conn Gen. Stat. § 46a-79-81(b), and § 31-51i, which generally
provide that employers may not deny employment to an applicant solely on the
basis that the individual has a conviction for which the records have been legally
erased, nor may an employer require such conviction to be disclosed.
(c) Massachusetts: Mass Gen. Laws ch. 151B § 4(9); ch. 276 § 100A, which provide
that an employer or its agent cannot seek information in connection with an
employment application (or the terms, conditions, or privileges of employment,
or the transfer, promotion, bonding, discharge, or any other matter relating to the
employment of any person) regarding:
1. An arrest, detention, or disposition regarding any violation of law in which no
conviction resulted;
2. A first conviction for certain misdemeanors, including drunkenness, simple
assault, speeding, minor traffic violations, affray, or disturbance of the peace; or
3. A misdemeanor conviction when the date of conviction or completion of any
resulting incarceration whichever date is later, occurred five or more years
before the date of the person’s employment application or the employer’s or
agent’s request for information.
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In addition, an employer or its agent cannot request or keep a record of
the information, use an application form requesting the information, or
exclude, limit, or otherwise discriminate against any person because of the
applicant’s failure to furnish the information through written application,
oral inquiry, or otherwise. An application for employment that seeks
information concerning prior arrests or convictions of the applicant must
include a statement that an applicant with a sealed record may answer “no
record” with respect to an inquiry relative to prior arrest, criminal court
appearances, or convictions.
Finally, an employer may not ask about or make employment decisions based on:
1. First conviction for misdemeanors for drunkenness, simple assault, speeding,
minor traffic violations (does not include reckless driving, driving to endanger
or motor vehicle homicide), or affray or disturbance of the peace;
2. Convictions more than five years old, if no subsequent convictions within
those five years;
3. Any record sealed under state law;
4. Any information pertaining to a juvenile record, including delinquency and
child in need of services complaints, unless juvenile was tried as an adult in
Superior Court.
(d) Michigan: Mich. Comp. Laws Ann. § 37.2205a(1), provides that an employer
other than a public law enforcement agency, with respect to an application
for employment or in connection with the terms, conditions, or privileges of
employment, cannot request, make, or maintain a record of information regarding
an arrest, detention, or disposition of a violation of law in which a conviction did
not result
(e) New York: N.Y. Exec. Law § 296(15)-(16), providing that, unless specifically
required or permitted by statute, no person, agent, bureau, corporation, or
association, including the state and any of its political subdivisions, can ask an
applicant for employment or a license about, or act on adversely to an individual,
their prior arrests, youthful offender adjudications, sealed convictions, and not
currently pending criminal accusations against them, where they were followed by
terminations favorable to them. These provisions do not apply to an application
for employment or membership in any law enforcement agency.
The N.Y. Correct. Law § 752 prohibits the denial of employment on the basis
of an applicant’s criminal conviction record unless there is a direct relationship
between a specific offense and the employment sought, or unless the granting of
employment would pose an unreasonable risk to property or human safety.
(f) Virginia: Va. Code Ann. § 2.1-716; § 19.2-392.4(A).
16. See, e.g., Cal. Labor Code § 432.7: (a) No employer, whether a public agency or
private individual or corporation, shall ask an applicant for employment to disclose,
through any written form or verbally, information concerning an arrest or detention that
did not result in conviction, or information concerning a referral to, and participation
in, any pretrial or posttrial diversion program, nor shall any employer seek from any
source whatsoever, or utilize, as a factor in determining any condition of employment
including hiring, promotion, termination, or any apprenticeship training program or any
other training program leading to employment, any record of arrest or detention that did
not result in conviction, or any record regarding a referral to, and participation in, any
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pretrial or post-trial diversion program. As used in this section, a conviction shall include
a plea, verdict, or finding of guilt regardless of whether sentence is imposed by the court.
Nothing in this section shall prevent an employer from asking an employee or applicant
for employment about an arrest for which the employee or applicant is out on bail or on
his or her own recognizance pending trial.
17. See, e.g., El v. Southeastern Pa. Transp. Auth., 297 F. Supp. 2d 758 (E.D. Pa. 2003)
(Under the Pennsylvania Constitution and the Pennsylvania Criminal History Record
Information Act (18 Pa. C.S.A. § 9125(b)), it is against public policy to summarily reject an
individual for employment on the ground that the individual has a prior criminal record
unless in doing so the employer is furthering a legitimate public objective.).
18. See, e.g., Scott v. Blanchet High Sch., 747 P.2d 1124 (1987) (finding that the hiring
process employed by the school suggests it took reasonable care in hiring teacher who
subsequently was accused of becoming sexually involved with a student; the employer
contacted the teacher’s previous employers and conducted two personal interviews with
the applicant prior to hiring him).
19. See, e.g., Ponticas v. K.M.S. Inv., 331 N.W.2d 907 (Minn. 1983) (Tenant who was
raped by manager of apartment complex brought action against owner and operator of
apartment complex alleging negligence in hiring of manager despite his criminal record,
held that: (1) employer has duty to exercise reasonable care in hiring individuals who,
because of nature of employment, may pose threat of injury to members of public;
(2) evidence supported finding that owner and operator of apartment complex were
negligent in failing to make reasonable investigation of apartment manager’s background;
and (3) negligence was proximate cause of injuries to tenants.).
20. See, e.g., Gibson v. Overnite Transp. Co., 671 N.W.2d 388 (2003) (former employee
was awarded $283,000 in damages in his defamation claim against his former employer
after manager there made negative statements to a firm doing a background check on
him because the court found that the former manager’s negative statements were made
from spite or ill will). See also Socorro v. IMI Data Search, Inc., 2003 U.S. Dist. LEXIS
7400 (N.D. Ill. 2003) (candidate indicated on the application form that he had never
been convicted of a felony or misdemeanor, and employer’s investigator mistakenly
reported that the candidate had been convicted of a misdemeanor and had served six
months in jail, thus court held that the plaintiff could proceed with his defamation claim
against employer and investigator because both companies suggested that he committed
a criminal offense, which was actionable as per se defamation).
21. See, e.g., Cal. Lab. Code § 1054. See also Marshall v. Brown, 141 Cal. App. 3d 408 (1983).
22. For example, in California, Civil Code § 47(c) entitles a current or former employer
to communicate to a prospective employer the job performance or qualifications of an
applicant for employment, based upon credible evidence, made without malice, upon
the request of the prospective employer. The statute provides that “a communication
concerning the job performance or qualifications of an applicant for employment, based
upon credible evidence, made without malice, by a current or former employer of the
applicant to, and upon request of, the prospective employer” is privileged. An employer
may still be sued for an untruthful statement or for disclosure of private facts if the
response was prompted by malice. Moreover, the qualified privilege does not apply if
the reference reflects an intentional misrepresentation or a misleading omission.
In Hawaii, Haw. Rev. Stat. Ann. § 663-1.95 (employers’ job reference immunity), provides
that (a) an employer that provides to a prospective employer information or opinion
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about a current or former employee’s job performance is presumed to be acting in good
faith and shall have a qualified immunity from civil liability for disclosing the information
and for the consequences of the disclosure; (b) the good faith presumption shall be
rebuttable upon a showing by a preponderance of the evidence that the information or
opinion disclosed was knowingly false, or knowingly misleading.
The Illinois Employment Record Disclosure may preclude civil litigation against an
employer who provides truthful, performance-related information about an employee
or former employee in response to a reference check. All Illinois employers are covered
by the law, which creates a presumption that the employer (or someone acting on the
employer’s behalf) was acting in good faith provided that the information (a) was given
in response to an inquiry from a prospective employer, (b) is truthful (or believed, in
good faith, to be so), and (c) concerns only the employee’s job performance.
In Louisiana, La. Rev. Stat. Ann. § 23:291, provides that any employer that, upon
request by a prospective employer or a current or former employee, provides accurate
information about a current or former employee’s job performance or reasons for
separation shall be immune from civil liability and other consequences of such disclosure
provided such employer is not acting in bad faith. An employer shall be considered to
be acting in bad faith only if it can be shown by a preponderance of the evidence that
the information disclosed was knowingly false and deliberately misleading. Also, any
prospective employer who reasonably relies on information pertaining to an employee’s
job performance or reasons for separation, disclosed by a former employer, shall be
immune from civil liability including liability for negligent hiring, negligent retention,
and other causes of action related to the hiring of said employee, based upon such
reasonable reliance, unless further investigation, including but not limited to a criminal
background check, is required by law.
23. For example, in Pennsylvania, the Child Protective Services Law explicitly permits
an inquiry into the criminal history of applicants for jobs in any child care facilities, or
juvenile detention centers or children’s drug or alcohol rehabilitation programs, and
allows the employer to refuse to hire someone convicted of certain crimes within the
last five years. See 18 Pa. Stat. Ann. § 9125(b)(c); 23 Pa. Stat. Ann. § 6344. In addition,
the Older Adults Protective Services Act prohibits employment in elder-care facilities
by those convicted of certain criminal offenses. 35 Pa. Stat. Ann. § 10225.503. However,
a court has held that this provision violated the state constitutional protection of right
to work, in that it was arbitrary and bore no rational relationship to the governmental
purpose of providing protection to older adults. See Nixon v. Commonwealth, 29 A.2d
376 (2001).
24. Good credit requirements have been challenged under the job discrimination laws
mainly on an adverse impact theory. Thus, an employer’s requirement that applicants
and employees have a good credit record may have to be justified by business necessity
if it is challenged by minority employees. See, e.g., Robinson v. City of Dallas, 514 F.2d
1271 (5th Cir. 1975).
25. Individuals who seek the protection of bankruptcy laws are protected from job
discrimination. The federal Bankruptcy Code prohibits both public and private employers
from discriminating against an individual in employment solely because that person is
or has been a bankrupt or a debtor in bankruptcy, or has been associated with such a
bankrupt or debtor. 11 U.S.C. § 525. See also Anderson v. Weinberger (In re Bruce C.
Anderson), 84 B.R. 426 (Bankr. E.D. Va. 1988) (Court did not find improper the Marine
Corps’ consideration of the circumstances that led to the debtor’s bankruptcy petition
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when arriving at future promotion or retention decisions, because it found analogous
case law involving the hiring and firing of police officers which had concluded that, for
police jobs, consideration of the fact of prior bankruptcy was lawful.); Marshall v. District
of Columbia Gov’t, 559 F.2d 726, 729 (D.C. Cir. 1977) (court held that Bankruptcy Act
does not prohibit employers from using the fact of bankruptcy in considering whether
the past record of a job applicant merits his consideration for employment); Detz v.
Hoover, 539 F. Supp. 532 (E.D. Pa. 1982) (in deciding whether to hire police officer, local
governments may properly consider the fact that an applicant, who has sought protection
under Bankruptcy Act, has been unable to manage his financial affairs); White v.
Kentuckiana Livestock Market, Inc., 397 F.3d 420 (6th Cir. 2005) (cause of action exists if
employee’s bankruptcy filing was only reason for adverse employment action, and not
if other factors also played role in employer’s decision, but here the employer had not
terminated employee from position as secretary-treasurer based solely on his Chapter 7
filing).
26. For example, the California Vehicle Code § 1808.1 provides that employers face
criminal penalties for employing as a driver any individual who has lost his or her driving
privilege or any required driver’s certificate. Employers whose employees operate motor
vehicles requiring certain types of licenses and special certificates must participate in the
“pull notice” program administered by the DMV, under which the Department provides
the employer with the employee’s driving record. Similarly, the California Information
Practices Act governs the disclosure by governmental agencies of “personal information,”
including, but not limited to, an individual’s “name, social security number, physical
description, home address, home telephone number, education, financial matters, and
medical or employment history.” The California legislature has also specifically prohibited
the disclosure of social security numbers, home addresses, and medical disability
information contained in motor vehicle records. Veh. Code §§ 1653.5, 1808.21, 1808.5.
27. 18 U.S.C. § 2721(a).
28. 15 U.S.C. §§ 1681-1681u.
29. 15 U.S.C. § 1681a(3)-(4).
30. See, e.g., opinion letter dated Feb. 23, 1998, from the Federal Trade Commission
(FTC), Division of Credit Practices, Bureau of Consumer Protection.
31. 15 U.S.C. § 1681a(d)(1).
32. See, e.g., FTC opinion letters dated June 9, 1998, and March 25, 1999, advising that
consumer reports includes criminal histories, education, and licenses held by consumers,
as well as reference checks.
33. See FTC opinion letter dated Apr. 5, 1999.
34. See 15 U.S.C. § 1681b(a)(3)(B). See also Wiggins v. Philip Morris, Inc., 853 F. Supp.
470 (D.D.C. 1994).
35. See, e.g., Kelcher v. Sycamore Manor Health Ctr., 305 F. Supp. 2d 429 (M.D. Pa. 2004).
36. See FTC opinion letter dated March 25, 1999.
37. See FTC opinion letter dated June 12, 1998.
38. 15 U.S.C. § 1681b(b)(3)(A).
39. 15 U.S.C. § 1681b(b)(3)(B). See also FTC opinion letter dated Feb. 14, 2000.
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Smart Hiring and Proper Background Checks
40. See., e.g., Jensen v. Prudential Fin., 130 Fed. Appx. 914 (9th Cir. 2005) (employer did
not commit an unauthorized intrusion into plaintiff’s privacy by completing a background
check prior to hiring him as a life insurance salesman, because he authorized the
background check and released employer from any and all liabilities, claims, or lawsuits
with regard to the information obtained).
41. See, e.g., Bardin v. Lockheed Aeronautical Sys. Co., 82 Cal. Rptr. 2d 726 (Cal.
Ct. App. 1999) (in former employee’s action for tort and breach of contract against
former employer, the employer had absolute privilege shielding it from tort liability
for communications made to police, and contract claims were extinguished by release
signed by former employee in connection with grant of permission for police to
question previous employers); Ramos v. Equiserve, 146 Fed. Appx. 565 (3d Cir. 2005)
(court noted plaintiff’s acknowledgment that he consented to the background check
by EquiServe, he knew that EquiServe was required by law to conduct a criminal
background search because of the type of work he did for them, and he had authorized
EquiServe and Adecco’s exchange of information with each other regarding his criminal
background).
Reprinted from Employee Relations Law Journal Winter 2008, Volume 34,
Number 3, pages 46-71, with permission from Aspen Publishers, Inc.,
Wolters Kluwer Law & Business, New York, NY, 1-800-638-8437,
www.aspenpublishers.com
Vol. 34, No. 3, Winter 2008
26
Employee Relations Law Journal