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August 2003 Vol. 3, No. 8

Screening Resources (ESR) Newsletter and Legal Update

1. Major FCRA Legislation Passes Congressional Committee

2. New Tool for Employers-Multi-jurisdiction Database Search Covering Millions of Criminal Records

3. Illinois Federal Lawsuit Demonstrates What Employers Should NOT do When Hiring

4. Hiring Airport Screeners: ESR Featured in Workforce Magazine Article

1. Major
FCRA Legislation Passes Congressional Committee

As reported in previous editions
of the ESR Newsletter, Congress is taking up crucial issues this year
concerning the federal Fair Credit Reporting Act (FCRA).

On July 24, 2003, the Financial Services Committee of the
House of Representatives passed HR 2622, the Fair and Accurate Credit Transactions Act of 2003, dated June
26. This bill marks significant
additions to the FCRA. The bill is
expected to be considered by the full House in September of 2003.

Altogether the bill is still subject to changes as it
continues through the legislative process, it has three major thrusts:

  1. The
    bill “reauthorized” the FCRA so that a nationwide standard will remain in
    effect, preventing states from passing their own laws affecting certain
    credit and financial information rules. Advocates of the bill argued that a nationwide standard was needed.
  2. The bill adds significant new identity
  3. The
    bill allows employers to hire third parties to investigate claims of
    employee misconduct by current employees, without being handicapped by all
    of the notice and procedure rules of the FCRA. This was in response to the FTC “Vail” letter that interpreted the FCRA as applying
    third-party investigations of current employees.

The bill can be viewed at

>ESR will continue to follow and report on the progress of
the proposed legislation, as well as provide analysis on the practical effect
of this bill on employers


2. New Tool for
Employers-Multi-jurisdiction Database Search Covering Millions of Criminal

New technology has given employers a valuable new tool for
safe hiring. Employers now have access
to a high-speed, multi-jurisdictional search of state and county
criminal records databases, which currently includes data from 36
(over 76 million offense records.) These searches quickly
return offender information in a condensed and easy to comprehend format.
Searching is based upon matching last name, the date of birth and the first
three letters of the first name.

Here are the Pros and Cons: The advantage of these new searches is that
they cover a much larger geographical area then traditional county-level
searches. It allows employers to search
across multiple jurisdictions and can pick up possible records that a county
search can miss if a particular court is not searched.

However, it is critical to understand that statewide
database searches are a research tool only, and under no circumstance
is a substitute for a hands-on search at the county level
. Not
all states have a database that is available to employers. Databases in
each state are compiled differently. There are a number of reasons that
database information may not be accurate, timely 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
they are 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.
Contact ESR for more information on these new searches. For more details, see

3. Illinois
Federal Lawsuit Demonstrates What Employers Should NOT do When Hiring

An opinion recently issued by the US District Court in the
Northern District of Illinois provides a case study on why employers need to be
concerned about the legal aspects of safe hiring. (Socorro vs. IMI Data
Search and Hilton Hotel Corp
, No. 02 C 8120 (April 28, 2003)). The case alleged violations of the FCRA and
Illinois state laws. The case was before the court to determine what state
claims could be brought in federal court.

According to the plaintiff’s allegations filed in the case,
the plaintiff was contacted by Hilton Hotels and offered a position. On his
first day, he completed several forms, including an employment application
where he truthfully stated he had no criminal record. The application contained
an authorization for a background check that the plaintiff did not initial.
There was no indication in the court’s summary that any separate disclosure was
provided as required by the FCRA.

After employment began, Hilton hired a screening firm to do
a background check. The screening firm mistakenly reported that the plaintiff
had been convicted of a misdemeanor and served six months in jail. The
plaintiff denied having a criminal conviction. Hilton did not do further
investigation, and the plaintiff was terminated.

To make matters worse, the plaintiff alleged that after he was fired Hilton
told third parties that he was fired because he lied on his application and
spent time in jail. The plaintiff eventually found a new job, but at
substantially lower compensation.

Assuming the facts alleged by the
plaintiff were true, how many mistakes did the employer and the background firm
arguably make? Here are some of

  1. Failed
    to provide a separate Disclosure for the background check under the FCRA
    and written authorization.
  2. Failed
    to comply with the adverse action notice rules under the FCRA.
  3. Failed
    to re-investigate when told information was wrong.
  4. Although
    the reasons for the mistaken criminal records were not clear, the question
    arises if reasonable procedures were used in obtaining the background

The case demonstrates the
importance of understanding the legal requirements for a screening
program. To determine if an employer is
legally compliant, contact ESR for an audit of your program, or see the ESR
Safe Hiring Audit at
Also, see an article by ESR
called, The FCRA in Four Easy Steps for Employers at

4. Hiring Airport Screeners: ESR Featured
in Workforce Magazine Article

Virtually overnight, the Transportation Security Administration had to hire
more than 55,000 workers. Its problems with mishires and layoffs illustrate the
issues inherent in fast large-scale hires. This article by Workforce Magazine discusses the issues in depth,
and quotes ESR President Lester S. Rosen on the inherent problems in locating
criminal records, and the need for using multiple approaches in a
pre-employment screening program. An
additional article asks industry experts how they would have hired 55,000
airport screeners, also quoting ESR.


opportunities where ESR is participating include:

November 10, 2003- Tampa, FL-National Convention of Background Screening
Firms-“Legal Update– What Every Background Firm Needs To Know
About the FCRA and Laws Effecting Pre-Employment Screening.
” (For
background firms and record retrievers only). Details to be announced.

October 21-23, 2003–Chicago, Illinois and Detroit,
Michigan–Pre-employment Screening, Safe Hiring and Homeland
Full-day seminars on safe hiring and due
diligence by ESR in conjunction with the HR Screener,
a new national publication on pre-employment screening and safe hiring for HR professionals.
October 21 in Chicago, and October 23 in Detroit. See the HR Screener>>>.

October 10, 2003-Dallas-Ft. Worth, TX-The FCRA: Avoiding the
” Presented at the HRSouthwest Annual Conference.

September 30, 2003–Oakland, CA– “Safe Hiring
Audit-Implementing and Measuring Due Diligence in Your Hiring.”
Northern California Human Resources Association (NCHRA) Annual Conference.

September 18, 2003–Los Angeles, CA.–“Safe Hiring
Audit-Implementing and Measuring Due Diligence.”
Professionals in Human Resources Association (PIHRA) Annual Conference.

August/September, 2003“Pre-employment Screening and Safe
Full-day seminars on safe hiring and due diligence
by ESR in conjunction with Lorman Educational Services at five
locations in California: 8/22 San Diego; 8/27 Santa
; 9/5 San Francisco; 9/23 Sacramento and 9/26 Stockton. Contact ESR for
further details.

Please feel free to
contact Jared Callahan at ESR at 415-898-0044
or [email protected] 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.

Screening Resources (ESR)



Grant Avenue, Suite 7

Novato, CA 94945


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