Employment Laws Will Become More Fragmented as Cities and States Pass Hiring Laws in 2015

 Background Check Trends

Written By Attorney Lester Rosen, Founder & CEO of Employment Screening Resources (ESR)

Employment laws in the United States will become more fragmented as cities and states continue to pass their own laws on hiring in 2015. These new laws will cover a wide variety of areas within the employment screening process including “Ban the Box” laws for job applications, criminal records, privacy on social media, and credit checks. The trend toward localization – particularly on the local, county, or city level – can have the effect of discouraging employers from setting up operations or hiring in places that place an undue burden on doing business. This trend is number 3 on the Employment Screening Resources (ESR) 8th Annual ‘ESR Top Ten Background Check Trends for 2015.’ For a list of background check trends, visit http://www.esrcheck.com/ESR-Top-Ten-Background-Check-Trends.

This fragmentation of hiring laws on the city and state level can lead to problems in the hiring process including background checks. Larger enterprises that hire in more than one state need to spend time and resources trying to deal with a variety of different state laws, including compliance costs and complexity. However, the problem is more acute when employment laws are passed at the local or county level. For any employer that has employees or operations in more than one city, the cost of local compliance substantially increases the cost of doing business. A good analogy of these fragmented city and state laws would be to imagine having railroad tracks that are different sizes in each city and state so that a train traveling on these tracks can only go to certain city, county, or state borders and no further.  In other words, the train has to come to a screeching halt.

For example, in 2014 alone several cities and counties passed Ban the Box legislation that removes the box applicants are asked to check on job applications if they have a criminal history and delays that question until later in the hiring process, usually until after the initial interview. These cities and counties include: Atlanta, GA; Montgomery County, MD; Roanoke, VA; Rochester, NY; St. Louis, MO; St. Petersburg, FL; and Washington D.C. Many of these local laws then go on to also regulate what criminal matters an employer who hires in that City in that city or county can consider.  For example, in 2014 San Francisco, CA passed the Fair Chance Ordinance (FCO) for San Francisco City and County.  It not only included a typical Ban the Box rule but also created unique rules for what criminal matters an employer can even consider. This means that in California, 57 counties operate less than one set of rules while San Francisco has an entirely different set of rules.

Meanwhile, along with cities and counties, several states also joined the Ban the Box movement in some way in 2014. California put in place new job applications to comply with Assembly Bill 218 (AB 218) which took effect July 1, 2014. Illinois approved House Bill 5701, The Job Opportunities for Qualified Applicants Act that will take effect January 1, 2015. New Jersey passed (S2124) “The Opportunity to Compete Act” that will take effect March 1, 2015. Delaware passed House Bill 167. Some laws apply only to public employees in the states while other earlier laws apply to both public and private employees.

A further difficulty with local counties and cities passing their own laws is that unlike laws passed at the state level, a city or county cannot give employers any the of protections or safe harbor from lawsuits by following rules designed to give ex-offenders a second chance.  For example, New York Amendment 23-A requires employers to give New York residents additional rights when it comes to the use of criminal records.   At the same time, the state of New York also gives employers some additional protection from lawsuits for negligent hiring when he following the law.  When cities and counties decide to start pursuing their own social agenda and policies, it not only creates a crazy quilt patchwork of different laws, but there is no ability to provide employers incentives by protection from litigation.  Only a state legislature can do that. To learn more about New York 23-A visit http://www.esrcheck.com/wordpress/2008/12/16/ew-york-passes-four-new-rules-affecting-background-checks-to-help-ex-offenders-have-a-second-chance/.

In addition, going local does not have the same positive impact as a statewide or national rule.  Although it is true that it is easier for a determined group to pass legislation on the local level, the real battle is to pass laws that are effective statewide and that have to go through a process of approval by a much wider group. As reported in this column in recent years, it is also possible for localities to take it on themselves to pass laws that are more restrictive against broader employment. For example, a very difficult problem that was a trend in 2013 was that local cities were passing their own E-Verify laws clearly targeting workers newly arrived to the U.S.  If local groups with an agenda start to use local and county laws to advance their social agenda, it is just as likely or perhaps even more likely that laws aimed at hurting workers will be the prevalent national trend.  To read about this E-Verify trend visit http://www.esrcheck.com/wordpress/2012/12/18/new-e-verify-state-laws-for-2013-will-add-to-already-confusing-patchwork-of-regulations-for-employers/.

A number of new state laws regarding criminal records will likely impact background screening in 2015. The Tennessee Negligent and Retention Law that took effect July 1, 2014 provide protection to employers that hire employees with convictions. Effective July 1, 2014, an amended Indiana Code § 24-4-18-6 changes what criminal history information background check firms may report to employers. Georgia Senate Bill 365 (SB 365) helps employers to hire ex-offenders. And a California law that took effect January 1, 2014 – Senate Bill No. 530 (SB 530) – prohibits employers from asking about criminal convictions that were judicially set aside.

In addition, four states passed laws to protect the social media privacy of employees and applicants by prohibiting employers from asking for their passwords. In May 2014, Louisiana passed House Bill 340 (HB 340) the Personal Online Account Privacy Protection Act which took effect immediately. New Hampshire House Bill 1407 (HB 1407) took effect on September 30, 2014. Tennessee passed the “Employee Online Privacy Act of 2014” (S.B. 1808) which will take effect January 1, 2015. Rhode Island passed Employee Social Media Privacy Acts 2014-S 2095Aaa and 2014-H 7124Aaa.

With regard to credit checks, the New York City Council is considering legislation – Introductory Bill Number 261 (“Int. No. 261”) – to amend the administrative code of the city “in relation to prohibiting discrimination based on one’s consumer credit history” and prevent employers from using credit checks in employment decisions. Int. No. 261 would prohibit employers from basing employment decisions on the credit histories of applicants or employees and from requesting or using credit history information for employment purposes. In addition, ten states have laws restricting credit checks by employers.

The bottom line is that employers need to pay careful attention to legal compliance issues as the trend is clearly towards more state and local regulation.  Failure to understand and comply can result in expensive lawsuits, including class action litigation.  This trend underscores again that background screening is much more than data retrieval and the focus is more and more on legal compliance.

To help employers understand employment laws regarding background checks, Employment Screening Resources® (ESR) offers resources including a Ban the Box page at http://www.esrcheck.com/Ban-the-Box/, whitepapers on several subjects at http://www.esrcheck.com/Stay-Updated/Download/, blogs about social media background checks at http://www.esrcheck.com/wordpress/tag/social-media-background-check/, and an article about states with laws regulating credit reports for employment at http://www.esrcheck.com/Articles/States-with-Laws-Regulating-Credit-Reports-for-Employment/186/.

ESR TOP TEN BACKGROUND CHECK TRENDS FOR 2015 WEBINAR

Employment Screening Resources® (ESR) will present a complimentary webinar hosted by ESR Founder and CEO Attorney Lester Rosen titled ‘ESR Top Ten Background Check Trends for 2015’ on Wednesday, January 21, 2015 from 11:00 AM to 12:00 PM Noon Pacific Time. To register for this webinar, please visit the registration link at https://attendee.gotowebinar.com/register/3656006267617568513.