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June 2010 Vol. 10, No. 6
1. New Case Demonstrates How the Details are Everything if Taking Adverse Action on a Current Employee Due to a Background Check
A new federal district court case demonstrates the importance of handling the adverse action process correctly when terminating an existing employee due to an unsatisfactory background check.
In the case decided on February 26, 2010 by the U.S. District Court for the Southern District of Ohio (2010 U.S. Dist. LEXIS 17373), an employer ran a credit check on all employees in the accounting department, including the plaintiff who had been working in the current location for seven years. For reasons not disclosed in the case, the employer decided to terminate the plaintiff due to the result of the credit report.
According to the plaintiff, a meeting was called on January 16, 2008 and she was told she would never work for the employer again, and to go home. Shortly thereafter, she received a copy of the report as well as a letter stating that the information in the report may or may not affect employment. On January 23, 2008, she received a second letter indicating that she was terminated.
The plaintiff sued on the basis that the federal Fair Credit Reporting Act (FCRA) requires that an employer provide a consumer with a copy of any consumer report and a statement of their rights BEFORE an adverse decision is made about employment. The plaintiff argued that she was both given the report and terminated all on the same day, so she did not receive a pre-adverse action notice.
The employer disputed that account, and argued that the first meeting did not constitute a termination, and that it only indicted an intention to terminate. In addition, the plaintiff was still paid for another week after the second letter and there was some discussion about trying to get her job back.
The court ruled that since there was a disputed issue of fact, it was up to the jury to decide what happened, and the employer's motion to dismiss was denied. In other words, if the jury accepted the plaintiff's version of the facts, then the jury could find an FCRA violation.
This case illustrates an important point for employers, especially when it comes to terminating current employees. Under the FCRA, when an employer receives a Consumer Report and decides not to hire the applicant based upon the report in any way, the applicant has certain rights. Before taking the adverse action, the employer must provide the following information to the applicant:
The purpose is to give an applicant the opportunity to see the report that contains the information that is being used against them. If the report is inaccurate or incomplete, the applicant then has the opportunity to contact the Consumer Reporting Agency to dispute or explain what is in the report. Otherwise, applicants may be denied employment without ever knowing they were the victims of inaccurate or incomplete data.
A second letter is required if the decision is to be made final. Although law does not dictate how much time should have between the pre-adverse and post-adverse action letters, employers should leave enough time for a consumer to meaningfully review the report and make known to the employer or the Consumer Reporting Agency any inaccurate or incomplete information in the Consumer Report. Most authorities suggest there be at least 5 business days between letters.
Where a consumer is a job applicant not yet on the job, the timing issue is much simpler because the employer can send the first letter, and follow up with a second letter without dealing with a worker that is actually on premises. In this case, where the consumer was already on the job, employers need to be much more careful. To avoid any misunderstandings, an employer should make it absolutely clear in writing (and with witnesses) that the first letter is NOT a final decision, and that the consumer has the opportunity to review the report and make his or her objections known. The difficulty in this case was that the employer allegedly made it clear that the termination was final all in the first meeting. Of course, the problem with an existing employee, especially one in a sensitive position such as accounting, is that an employer may not want them on premises if it turns out the decision becomes final.
In this case, the employer did send the plaintiff home with salary being paid, but allegedly made the mistake of making the termination final immediately as opposed to the required waiting period.
This case again underscores the fact that employment screening is a highly regulated area of employment law that requires specialized skills and knowledge.
For more information on the FCRA, see: The FCRA in Four Easy Steps at http://www.esrcheck.com/articles/Complying-with-the-Fair-Credit-Reporting-Act.php.
2. New Legislation Would Require Companies to Inform Customers When Applicant Info is Sent Offshore
Ever wonder if the customer service call center at the other end of your phone is located in the U.S., or what foreign country it is located in if outside of the U.S.?
Newly proposed legislation would make companies inform customers when their calls are being transferred outside the United States and charge companies for those transferred calls in an effort to maintain call center jobs currently in the United States and provide a reason for companies that have already outsourced call center jobs to bring them back.
According to a press release on Senator Charles E. Schumer's (D-NY) website, the new legislation would require companies that transfer calls to foreign call centers to disclose to the caller that their call is being transferred to a particular country. The disclosure requirement would also force companies to annually certify to the Federal Trade Commission (FTC) that they are fully complying with this requirement or otherwise be subject to civil penalties that the FTC would prescribe.
In addition, since 800 numbers are often transferred overseas without the caller's knowledge, the bill would impose a $0.25 excise tax on any customer service call placed inside the United States which is then transferred to an agent in a foreign location, with the fee being assessed on the company that transferred the call.
While the bill's major aim would be to reduce the outsourcing of U.S. jobs, another benefit could be greater protection against identity theft, since the personally identifying information (PII) of American consumers - such as names, birth dates, addresses, social security numbers, and financial information - would not be offshored as often to call centers in foreign countries beyond the reach of U.S. identity theft and privacy laws.
Employment Screening Resources (ESR) - a member of Concerned CRAs, a group of Consumer Reporting Agencies (CRA) concerned that certain data practices place the personal information of consumers at risk - does not outsource domestic background screening services outside of the U.S. in order to protect the PII contained in background screening reports. ESR believes that sending such personal information offshore places both applicants and employers at risk and should be avoided when possible. If PII is sent to countries outside the U.S., applicants and employers should be made aware of this practice.
For more information on personally identifiable information, offshoring, and identity theft, visit Employment Screening Resources (ESR) at http://www.esrcheck.com.
3. FBI Responds to New York Times Editorial Regarding "Flawed" Background Checks
The New York Times recently printed a letter from the Federal Bureau of Investigation (FBI) responding to an earlier Times editorial - 'Check It Again' - that discussed the accuracy of data the FBI relies on when performing criminal background checks. The text of the letter, titled 'Reliability of F.B.I. Data,' is as follows:
To the Editor:
The F.B.I. takes its role as a central repository for criminal justice information very seriously, but must rely on the voluntary submissions of criminal history records supplied by local, state, tribal and federal law enforcement agencies, and the courts, for the overwhelming majority of its information.
While the F.B.I. appreciates this support, vital data often fails to get to the bureau in a timely way because of the time lag in criminal prosecutions. To help find ways to capture this information more efficiently, the F.B.I. formed an interagency task force to identify problem areas in states' disposition reporting and methods to improve the system. The F.B.I. also oversees another task force to improve the flow of criminal history information from the courts to the state repositories and then to the F.B.I.
The F.B.I. is also working on internal improvements, including the Next Generation Identification program, an upgrade to the existing fingerprint identification system, which will improve disposition reporting, while a related initiative will enable efficient electronic updates.
Through advances in technology and the continued cooperation of our partners, the F.B.I. hopes to clear the way for additional improvements in the completeness of the background check information we provide.
Daniel D. Roberts
Assistant Director, Criminal Justice
Information Services Division, F.B.I.
Washington, June 2, 2010
The letter confirms that the FBI only gets what criminal background check information local jurisdictions and states will give it, and admits that "vital data often fails to get to the bureau in a timely way" meaning the criminal database is not completely accurate.
The accuracy of the FBI database used for criminal background checks has become a hot topic for job applicants, employers, and even politicians. Recently, the Chairman of the House Judiciary Subcommittee on Crime, Terrorism, and Homeland Security introduced a bill to strengthen the accuracy of FBI criminal background checks in response to a June 2006 report from the attorney general that showed nearly 50 percent of criminal records maintained in the FBI's National Crime Information Center (NCIC) database failed to note court decisions to dismiss arrests.
Since employers rely on the database to conduct background checks on potential hires, the '2010 Fairness and Accuracy in Employment Background Checks Act' (H.R. 5300) would strengthen the accuracy of the FBI's criminal database by requiring the U.S. Attorney General's Office to verify that crime data used for background checks is up to date, find out the outcome of arrests whenever an employer requests a background check, and update that record in the NCIC database.
For more information about background checks, and how some FBI background checks may use inaccurate or incomplete information, visit Employment Screening Resources (ESR) at http://www.esrcheck.com.
ESR Articles (click for more info)
The FCRA in 4 Easy Steps
Find out how to be in compliance with the FCRA
Criminal Records and Employment Applications
What questions should employers be asking?
10 Safe Hiring Tools
These tools don’t cost anything and promote a safe and profitable workplace
Negligent Hiring
What occurs when Due Diligence is not performed
Please feel free to contact Jared Callahan at ESR at 415-898-0044 or jcallahan@esrcheck.com if you have any questions or comments about the matters in this newsletter. Please note that ESR's statements about any legal matters are not given or intended as legal advice.
Employment Screening Resources (ESR)
www.ESRcheck.com
7110 Redwood Blvd., Suite C
Novato, CA 94945
415-898-0044
