Yearly Archives: 2008

New York Passes Four New Rules Affecting Background Checks to Help Ex-Offenders Have a Second Chance

Effective February 1, 2009, three (3) new rules go into effect in the State of New York designed to give ex-offenders a second chance of entering the workforce.  These rules affect both employers and background firms.  A fourth law, effective September, 2008, gives employers some additional protections against lawsuits for negligent hiring if they can show that an applicant with a criminal record was hired after good faith consideration of the rules affecting the use of criminal convictions.

Under existing New York law (Correctional Law Article 23-A), an employer is required to consider and balance various factors where an applicant has a criminal record (unless, of course, there is a statute that prohibits the employment of a person with certain convictions).  The factors are set out in New York Corrections law section 753 found at:

The factors enumerated in section 753 of Article 23-A include such things as:

  1. The duties of the job
  2. The relationship between the criminal offense and the job
  3. How long ago the conviction occurred
  4. The applicant’s age at time of the crime
  5. How serious the offense was
  6. Information produced regarding the applicant’s rehabilitation and good conduct.

In passing some of these laws, the New York legislature cited a 2007 study that found that New York employees were largely not familiar with New York laws on utilizing past convictions, or that a criminal record poses a significant barrier to employment.

In response, the three new laws require the following effective February 1, 2009:

1.    Provide a copy of Article 23-A:  An employer must provide a copy of Article 23-A to all job applicants undergoing a background check.  An employer may want to provide that notice at the same time the applicant signs a consent form and receives a disclosure form.  A technical reading of the statute may suggest such a requirement is limited only to a situation where an employer is requesting a special type of background report called an ‘Investigative Consumer Report,’  where information is obtained through interviews.  However, the legislature in New York, based upon the legislative history, clearly intended this to apply to all consumer reports.  As a best practice, employers should consider providing this notice regardless of the type of background report being conducted. 

2.    Posting a copy of Article 23-A:  An employer must also post a copy of Article 23-A in ‘a place accessible to his or her employees and in a visually conspicuous manner.’  Employers can simply download the copy of 23-A linked in this article.  The required notice will likely be included in commercial labor posters that come out in 2009 for the state of New York.

3.    Provide additional copy of Article 23-A if a criminal record is found:  Where a background report on an applicant contains information on a criminal conviction, the employer must again provide a copy of Article 23-A to the applicant. 

As part of the legislative approach, New York employers that follow Article 23-A now have increased protection from lawsuits for negligent hiring. This protection applies where an employer hires someone that has a conviction history but the employer has made a reasonable and good faith determination that, due to the factors in Article 23-A, the applicant should still be hired. In that situation, there is a ‘rebuttable presumption’ that evidence of the employee’s past criminal record cannot be admitted into evidence and be used against the employer. 

A ‘rebuttable presumption’ is an assumption of fact accepted by the court until disproved by the other side.  For example, evidence of the employee’s past criminal record can only be used in a negligent hiring case if the plaintiff can overcome the presumption by showing that there was not a reasonable and good faith determination by the employer under article 23-A.  This new protection can potentially provide employers that do hire applicants with a criminal record protection from a lawsuit as long as the employer can document  that the employer discovered the criminal record and then applied the criteria in Article 23-A in a reasonable and good faith manner.

ESR clients will receive a detailed memorandum and training in January on the details of these new laws in New York as well as some other ‘only in New York’ rules. This also raises issues on how employers that are not in New York need to deal with New York applicants or applicants that formerly lived in New York. 

The Story Behind the Story-Why States and Cities are Concerned about Second Chances for Ex-Offenders

There is an increasing awareness in the United States that ex-offenders are having difficulty obtaining jobs due to their criminal records.  Although employers have a duty to exercise due diligence to promote a safe workplace, civil rights laws also do not permit employers to automatically disqualify someone with a criminal record before considering if there is a business justification based upon the nature and gravity of the crime, the nature of the job and how long ago the job occurred.  As noted above, New York has added additional factors that can be considered.

As reported in past ESR newsletters, there have been efforts made to help ex-offenders obtain jobs. In its January, 2007 newsletter, ESR reported that a number of municipalities were not asking about past criminal records on the initial application. The short-hand name is “ban the box,” referring to the box on an application asking about past criminal conduct. The logic behind theses law is to ensure that applicants are considered for jobs based upon their qualifications and experience before the employer searches for criminal records. In addition, such protection also encourages ex-offenders to apply in the first place. Cities are concerned about the burden placed on them by large numbers of un-employed ex-offenders.  See:

In March, 2008, the ESR newsletter discussed a meeting of the Conference of Mayors in New York City on the same topic. According to a press release from the Conference;

“With 1 in 31 American adults in prison, jail, on parole or probation, the US prison system is in crisis. Hundreds of prisons nationwide are overcrowded to the breaking point, and high recidivism rates are largely to blame: 39 percent of prisoners have served three or more sentences. This cycling in and out of prisons is taking a devastating economic toll on already-vulnerable urban communities. At this critical moment, policymakers and experts are determined to come together and develop concrete solutions to making sure that people who leave prison do not reoffend and go back.”


In the September, 2006, edition, ESR reported on lawsuits for discrimination based upon ex-offenders denied employment.

In passing the new laws in New York, the New York legislature gave as a justification that up to 60% of ex-offenders are unemployed one year after release and there is a strong correlation between unemployment and recidivism.  The legislature cites statistics that, in New York State, eighty-three (83%) of individuals who are in violation of the terms of their probation are unemployed.  See (legislative justification contained in New York A07847)

The bottom-line: As a society, we do not want to risk the lives and property of people by bad hiring decisions. Employers who fail to exercise due diligence can be sued, and innocent consumers, co-workers and members of the public can be the victims of workplace violence, theft or other wrongdoing.     

On the other hand, our society does not want to create a permanent class of unemployable ex-offenders who can never re-enter society and be productive. Automatic rejection of any applicant with a criminal record makes it very difficult for an ex-offender to get back into the workforce. Given that, on the average, it costs over $30,000 a year to incarcerate a prisoner in the United States, and that without a job it is very difficult for an ex-offender to become a law abiding tax paying citizen, it is critical that society gives everyone an opportunity to work. Unless ex-offenders can get a second chance, our society will spend more time and resources building prisons instead of schools, hospitals and roads.

The key is to understand that there is a job for everyone, although not everyone is qualified for every job. Employers should not overreact or react automatically because an otherwise qualified applicant has had difficulty in the past unless there is a business justification to reject the applicant. However, this pre-supposes that employers are doing proper screening and practice due diligence in their hiring.

It is also important for our society to help with the re-entry of ex-offenders by supporting programs and opportunities. In fact, the National Association of Professional Background Screeners ( has donated money to such programs.

Background screening firms are often caught in the middle of this debate.  Although a screening firm does not make the hiring decision, screening firms are retained by employers to research potential criminal records.  A background screening firm should clearly advise employers that there are limitations on the use of criminal records.

How a Simple Background Check Could Have Saved Investors $340 Million

A shocking story in the December 7, 2008, San Francisco Chronicle recounts how investors lost $340 million, over one-third of a billion dollars, invested in a start-up firm that went bankrupt due to a dysfunctional CEO named John P. Rogers that was only minimally background checked.

The firm was developing “pay by touch” machines for biometric payment at checkout stands. “Pay By Touch” lost $137 million on $600,000 in revenues in 2007, according to the news story, and the firm was in total disarray.  According to news reports, the CEO engaged in drug abuse, partying and other excesses, such as instructing his staff to give jobs and shares of stock to women he met.

Smart investors, including two billionaires and Venture Capitalists, were among the people hoodwinked into investing millions of dollars.  A nationally known wealth management investment firm, according to the new story, continued to ensnare investors, including NFL players, even after the firm was in trouble and even though it did not do a background check.

According to the article, there was plenty in Roger’s past that would have demonstrated that no sensible person would have invested in this endeavor.  The Chronicle uncovered civil judgments and other run-ins that would have been big red flags for rational investors.  The matter is now in litigation.  The full incredible story is available at

What is even more incredible is that the cost of doing a due diligence check on a CEO, partner, joint venture or other investment is de minimis.  There are numerous sources of information available to professionals that could have potentially saved investors from this type of debacle for less than some of these investors may spend for a nice dinner.

ESR offers a service called an “Integrity Check,” designed to conduct due diligence in critical business relationships, such as appointing members to a board of directors, entering into a joint venture or other business relationship, acquiring a business, investing in a business or numerous other situations where the integrity of who you are dealing with is critical.   For more information on in-depth integrity checks when it comes to investment and business dealings, see:

Everyone at ESR wishes you a Happy Holiday Season.

ESR will be closed this year the days after Thanksgiving (11/27 and 28), Christmas (12/25 and 26) and New Years (1/1 and 2) in Observation of those holidays. Please contact Customer Service if you have any questions.

New Group Forms to Promote Privacy Protection by Agreeing not to Send Data Offshore

An important issue for employers in working with a background screening firm is knowing exactly where the screening firm is sending an applicant’s personal and identifiable information, or PII. Identity theft is a significant issue for Americans, and if an identity is stolen, it can take years to clean up the mess, cost a great deal of money and cause untold grief.

However, there are some background screening firms that seek to lower their costs by off-shoring screening functions to countries outside of the United States.  One of the problems with off-shoring is that once data leaves the United States, the data is beyond the reach of U.S. privacy laws.

To address this issue, a number of background firms have banded together and have voluntarily adopted a standard that they do not off-shore domestic verifications, and precautions are even taken with international verifications to protect PII.  See ESR is a subscriber to the no off-shoring standard. If a firm is not listed on that site, an employer is well advised to inquire if any data is sent offshore and, if so, what protections are in place.

The Story Behind the News: ABC News Reports Dozens of Lawsuits over Inaccurate Criminal Reports Stemming from Database Searches

According to a story from ABC News on October 13, 2008, there have been dozens of lawsuits in the past two years alleging that background checks have cost people jobs because they were inaccurately identified as criminals when in fact they were not.  The story focused on the use of massive criminal databases, where private firms have aggregated millions of records that are not always accurate.  See:

The inaccuracies come in two varieties:

  1. The criterion used in the database is “name match only” and reports a criminal record that in fact belongs to someone else.  That is because such database searches may not always contain identification data, such as date of birth.
  2. The database contains criminal records that are outdated and should not be considered by employers, because something occurred after the data was obtained which makes the record non-reportable, such as a deferred adjudication, expungement, a judge’s order that records be sealed or some sort of judicial “set aside” under state law.

Here is why these errors occur; Under the federal law that regulates pre-employment screening, the Fair Credit Reporting Act (FCRA), a screening firm has two options when it comes to the use of these private databases.  Under Section 613 of the FCRA, a screening firm can either re-verify the criminal database records at the courthouse to ensure it is current and up-to-date OR send a contemporaneous notice to the applicant advising them that a criminal record is being reported about them.

The problem arises in situations where a screening firm chooses to utilize the “notice” option and does not go to the courthouse to ensure the record applies to the applicant and is proper to report.  Although that is a legal practice under the FCRA, it is also a reason that some background reports contain information that does not relate to the applicant or should not have been reported, sometimes referred to as a “false positive.”

It should be noted that this is NOT an issue in California, since that is the one state that specifically requires a screening firm to ensure that public records are current and up-to-date.  California law does not permit a screening firm to simply report what is in a database and send a notice to the applicant.

It is also critical to note that such databases can also contain “false negatives,” which means that person with a criminal record is falsely identified as being clear.  This can happen because these private databases are a crazy quilt patchwork of data from a number of sources, with wide variations in accuracy, completeness and timeliness.  Also, a number of jurisdictions do not report any data at all to these databases.  For example, such a database is of little use in some large states like California or New York where little data is reported or identifiers are not provided.  Although such databases can be valuable because they contains millions of records, they are best used as a pointer or lead generator for places to look for records, and should not replace court searches of counties where a person has lived or worked unless the database contains the same information that is available at the courthouse.

In response to these concerns, a number of screening firms, including ESR, have adopted standards that would prevent inaccurate criminal records from databases.  This is also part of the Concerned CRA standards at:

The Concerned CRA standards are as follows;

A CRA that chooses to display the “Responsible Criminal Databases” seal is self-certifying that they subscribe to the following standards when using criminal records in databases in the context of employment-related screening, exclusive of the screening of volunteers, tenants, and other non-employment relationships:

  1. Criminal records databases compiled by non-government entities will only be used as indicators of possible records. Prior to making any report about a potential or current employee to an employer about a criminal record from a database, the CRA will verify the information directly with the reporting jurisdiction. This ensures that employers make decisions based on accurate and up-to-date information.
  2. When using these databases it is important that current or prospective employer clients are provided information about the limited nature of criminal records databases and the importance of researching each applicant’s criminal history in the jurisdictions in which the applicant currently or previously has lived or worked.

For more information, contact Jared Callahan at ESR at or by phone at 415-898-0044.

Recruiters and Background Checks – How to Speed up the Process

The life cycle of a background check is often in conflict with a recruiter’s time constraints to fill a position.  This blog explores how recruiters can help speed up the process.

Part of the on boarding process for most in-house recruiters is the completion of the pre-employment background check.On the other hand, it is mission critical that employers exercise due diligence in their hiring. If an employer hires someone who turns out to be dangerous, unfit or unqualified, and some harm occurs where it was foreseeable that a bad hire could cause damage, then the firm can be on the hook for a negligent hiring lawsuit, not to mention all of the other costs, workplace problems, and negative publicity associated with a bad hire. Of course, a bad hire does not reflect well on a recruiter either.

The challenge for recruiters  is that they are typically under intense time pressure to complete the hiring process quickly and to get the new person started. In a perfect world, a recruiter would like to be able to go to a website such as to get an immediate “thumbs up” or “thumbs down.” However, no such site exists because much of the data needed to do a background check is simply not gathered ahead of time and data based in such a neat and tidy way. There is not even a comprehensive national criminal database that reveals an accurate criminal history. Most private employers do not have access to the FBI criminal database, and even the FBI database is subject to numerous sources of errors.

As a result, background checks are conducted by actually calling up schools and past employers and going to courthouses. A background check will typically take three days, and that is assuming the universe is cooperating. Of course, there will be delays if an employer has gone out of business or refuses to call back, or a school is closed for a holiday or requires a release or check sent by mail. If a high school degree needs to be verified, there are almost always substantial delays since each high school does things completely differently.  If the applcaint has a GED, the delays can be very long.  If an international background check is requested, there can be a substantial delay.  Further delays can occur if there are potential criminal record matches, and the court clerk delays producing the file that would help determine whether the case can even be reported under complex federal and state rules.

The end result is that the  life cycle of a background check is often in conflict with a recruiter’s time constraints to fill a position. The good news is that a recruiter can be pro-active in speeding up background checks in several ways.

Creating an Efficient Background Check Timeline

1. Recruiters must understand the process can be delayed if screening firms are sent incomplete information, or supplied with forms that are illegible or incomplete.

For example, screening firms often face difficulty in deciphering an applicant’s past employers or social security number. Since a screening firm is not expected to read hieroglyphics or be a “mind reader,” the screening firm has to contact the recruiter to clarify the information. Some screening firms will make their best guess and if they are wrong, the report is delayed even further, proving the old adage that “no good deed goes unpunished.”

Recruiters who review all applications for completeness, legibility and accuracy with the candidates before sending the applications to a screening firm will find their work is completed much faster.

2. An in-house recruiter needs to communicate with hiring managers to eliminate unrealistic expectations. A hiring manager may not understand, for example, that criminal records are searched at each relevant courthouse, or that delays can occur if there is a potential match and the court needs to bring files from storage.

Hiring managers must also be advised that employment and education verifications can be delayed for a number of reasons, such as schools that are on vacation or that require a check or release to be mailed, or employers that are closed, merged or refuse to cooperate. If there is a delay in receiving a completed screening report, the recruiter should examine the source of the delay.

3. If a recruiter is working with a screening firm that has an online ordering system, the process is considerably faster. Not only does this ensure accuracy, which makes the process faster, but it also avoids delays caused by sending a request to a screening firm and waiting for the firm to do manual data entry.

4. Finally, there are times when a recruiter should determine that even though the screening firm has not been successful in obtaining all of the information, enough data is available to make a hiring decision. This typically happens in the area of verifying previous employment. When conducting employment verifications, often times the earliest employment is the most difficult to obtain. However, it may also be the least relevant. If the applicant, for example, worked in a fast food restaurant six years ago after getting out of school and the fast food place will not call back, then there may be no reason to delay the hiring decision, especially if the screening firm has obtained the most recent, and presumably more relevant, job verifications.

5.  It is also important to understand there is a difference between screening and investigation.  Screening is a high volume process, typically done at a low price point so large numbers of people can be reviewed, typically within 3-4 business days.  Investigation on the other hand is much more intense and in-depth endeavor, where each applicant is the subject of increased focus.  However, it much more expensive.   A recruiter or employer cannot reasonably expect to receive investigative level services at screening prices. 

Experienced recruiters understand that background checks are not only a critical part of the hiring process, but are a great deal more complicated than merely putting a name in a database. A competent background checking process requires specialized knowledge, resources and experience. This is particularly true since employment screening is a highly regulated area. The best way to speed up the process is to understand exactly what is involved in facilitating the smooth flow of accurate data.

New Identity Theft Rules Effective November 1, 2008 Unlikely to Have Substantial Impact on Employers

New rules cornering address discrepancies in consumer credit reports that could help to prevent identity theft go into effect November 1, 2008.  Beyond potentially creating some additional hoops to jump through,  the new rules are not likely as a practical matter to have a great deal of impact on employers and may even help employers avoid hiring someone operating with a stolen identification.

The new rules were written by various federal agencies as a result of provisions in the 2003 Fair and Accurate Credit Transactions Act of 2003 (FACTA), designed to combat identity theft when “Red Flags” were raised in credit reports.  Although employers are affected, the rules go well beyond employment and also regulate financial institutions and creditors.

Since the regulations are new, it is not yet entirely clear how they will be implemented.  However, employers would be impacted if they request a credit report from a background screening firm as part of a background report.  The credit reports are supplied to background firms by one of the three national credit bureaus, which are Experian, Trans Union or Equifax.

It also important to keep in mind that for employment purposes, these regulations only apply to information from a national credit bureau, which will mean as a practical matter it is limited to only those applicants where an employer requests a credit report.  Other types of background reports, such as criminal records, driving records, past employment or educational verification are not impacted.

If the credit bureau finds an address discrepancy which raises a “Red Flag,” the employer would receive a notice from the credit bureaus.  This could occur if the applicant submits an address that the credit bureaus do not find in their records, or it appears that there is a “substantial difference” between the applicant’s address and what the credit bureau has on file.

An employer that utilizes credit reports will need to establish a policy on how it will verify the applicant’s identity through reasonable means, such as confirming information directly with the applicant, using third party sources or utilizing other materials, such as employment application forms.

Once the address and identity of the applicant is clarified, an employer also under certain circumstances must then send back the newly confirmed address to the credit bureaus.  Although there will need to be some clarification in the near future on how this will work exactly,  it would appear reasonable that the background firm providing the credit report may be able to act as the go-between for the employer and the national credit bureau in the administration of this rule.

The important point for employers is that the address discrepancy notices are not likely to be a significant burden on employers or Human Resources professionals. Employers would expect to receive such notices primarily in two situations; First, if an applicant has moved to a new address that has not been picked up by credit bureaus, such a notice may be generated.  Secondly, an employer may get a notice where there is a case of identity theft with an applicant impersonating someone else.  In that event, employers will benefit from the new rules.

Once the actual operations of the regulations become clearer, ESR will provide its clients with a sample policy and will assist clients if and when such a notice is received. ESR will also provide training to all clients that request credit reports as part of their background checking protocol.

Governor Vetoes Two California Bills that Would Have Affected Background Checks

In the September, 2008 issue of the ESR Newsletter, readers were alerted to two bills in California that would have affected background checks.  Both bills were vetoed by Governor Schwarzenegger.

  • AB 2918 would have severely restricted the use of employment credit reports.
  • AB 3063 would have amended California law on the usage of criminal records.

For a copy of the Governor’s veto message, please contact Jared Callahan at 415-898-0044 or by e-mail at

Four Years Later, the Texas Statewide Criminal Database is Still Full of Holes

Four years ago, ESR reported an investigation by the Dallas News concerning inadequacies in the statewide criminal database maintained by the Texas Department of Public Safety (TDPS).  That database is widely use by law enforcement, employers and consumers, among others, and is also used to perform screenings on teachers, volunteers and caregivers that work with children, the sick and the frail.  The original article can be found in the ESR newsletter archives at:

In that article, ESR reported that according to the newspaper article, the Texas database was used over 3 million times a year, but it only had 69 percent of the complete criminal histories records for 2002.

The Dallas News revisited the story in August 2008 and found, essentially, that nothing had changed. For 2006, the database still only had 69% of the state’s criminal history. The story noted that only 106 out of Texas’ 254 counties reported electronically, and even then there appeared to be glitches or communication issues with various state law enforcement agencies.  Other problems had to do with keeping trained personnel or officials in smaller jurisdictions forgetting to report the status of a case. 

This story underscores a common issue for employers performing background checks.  Searches of criminal databases can be problematic.  ESR recommends that employers keep the following in mind when utilizing criminal databases;

1.  Database searches available to private employers are NOT FBI database searches. FBI records are only available to certain employers or industries where Congress or a state has granted access.  Searches offered by background firms are drawn from government data that is commercially available or has been made public.

2.  Although multi-jurisdictional and statewide databases searches can be extremely valuable because they cover a wide area and access millions of records, employers are well-advised to use them primarily as a research tool or lead-generator and not as a substitute for a hands-on search at the county level under any circumstances (or the functional equivalent of a county level search). The best use is to indicate additional places to search in case a record is found in a jurisdiction that was not searched at the county court level.

3.  In addition, not all states have a database that is available to employers.  In some instances, the databases that are available have limited information.  Therefore, the value of these searches may be very limited in some states. An employer should carefully review what information is available in their state and not merely depend upon a database search.

4.  Databases in each state are compiled from a number of sources.  There are a number of reasons that database information may not be accurate or complete. Because of the nature of databases, the appearance of a person’s name on a database is not an indication the person is criminal any more than the absence of a name shows he/she is not a criminal. Any positive match MUST be verified by reviewing the actual court records. Any lack of a match is not the same as a person being “cleared.” However, a database is a valuable tool in helping employers cover a wider area and know where to search for more information.

5.  The search is based upon matching the name and the date of birth in order to eliminate computer matches that are not applicable. Note: In some states, there is no, or limited, date of birth information.  The database description will indicate where the records do not contain a date of birth, which means a search of that state will have little or no value.

6.  The best practice is for all possible “hits” to be reconfirmed at the county court level to insure whether information is accurate, complete and up to date at the time it is reported, per FCRA Section 613. Also, keep in mind that a criminal record should not be used to automatically disqualify an applicant, without taking into account the EEOC rules as to what is a job-related criminal offense.

Legislative Alert for California: Two Bills Await the Governor’s Approval or Veto

There are currently two bills that have passed the state legislature in California that are awaiting a decision by the Governor.  AB 2918 radically changes the use of credit reports for employment purposes.  According to the California Legislative Counsel, “This bill would prohibit the user of a consumer credit report, with the exception of certain financial institutions, from obtaining a consumer credit report for employment purposes unless the information is (1) substantially job related, meaning that the information in the consumer credit report relates to the position for which the person who is the subject of the report is being evaluated because the position has one or more specified characteristics, is a highly compensated or managerial one, or (2) required by law to be disclosed to, or obtained by, the user of the report.”  There is no definition as to what “highly compensated or managerial positions” means.  This bill, if signed into law by the Governor, represents a growing trend to limit the use of credit reports for employment purposes.

It is important to note that an employment credit report does NOT contain a credit score, since that is not a valid predictor of job performance.  However, it does contain a credit history, such as late payments and amounts due to financial institutions.  In numerous articles, ESR has advised employers to approach credit reports with caution.  However, this bill may result in outlawing employers from running credit reports on bookkeepers or others that handle money or have access to assets.

A second bill that is currently at the Governor’s desk awaiting his approval or veto is AB 3063. According to the California Legislative Counsel, this law would clarify existing California law dealing with the technical rules on the use of criminal records by employers.  Currently, the regulations of the Department of Fair Employment and Housing prohibit certain criminal matters from being considered by employers.  This law would place those same restrictions in the Labor Code. This bill would have no impact on ESR clients since ESR already utilizes the criteria of the Department of Fair Employment and Housing Commission in determining if a criminal record should be reported.

ESR will immediately send a special newsletter to its clients if these bills are signed into law that will explain the practical impact.