This newsletter is sent to clients of Employment Screening Resources (ESR) as well as employers, Human Resources and Security professionals, and law firms who have requested information on pre-employment screening, safe hiring, the FCRA and legal compliance. Please note that ESR’s statements about any legal matters are not given or intended as legal advice but only general industry information. For specific legal advice, employers should contact their attorney. If this was sent in error, you can be removed from this mailing by simply using the “remove” feature at the end of the newsletter and you will not receive any future newsletters.

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October 2007 Vol. 7, No. 10

Employment Screening Resources (ESR) Newsletter and Legal Update

1. Hot Off The Press: Ninth Circuit Ruling Vacating Previous Judgment Demonstrates Why Background Screening Requires Expertise

2. The Use of Military Records for Employment

3. Urban Myth: Courts Destroy Criminal Records That Have Been Set Aside or Expunged

4. ESR Featured In Two Human Resources Articles In National HR Publications

1. Hot Off The Press: Ninth Circuit Ruling Vacating Previous Judgment Demonstrates Why Background Screening Requires Expertise

On September 25, 2007, the federal Ninth Circuit Court of Appeals vacated and reversed a judgment in a case previously discussed in the May, 2007 ESR Newsletter. In the first ruling earlier this year, the Ninth Circuit ruled that a consumer reporting agency can reasonably rely upon court records, even if the court made a mistake. In Dennis v. BEH-1 and Experian Information Solutions, a consumer credit report showed that the plaintiff had a judgment against him in a civil case. In fact, the plaintiff had entered into a stipulation that as long as the plaintiff made payments on the debt, no judgment would be entered. However, a court clerk erroneously reported there was a judgment in both the court trial minutes and the Register of Actions. Consequently, the credit report from the credit bureau reported a civil judgment, even though no judgment was entered.

However, ESR also noted in the May Newsletter that, “Where the case became even more interesting was that when Experian sent a researcher to re-investigate the credit report, Experian found the stipulation that indicated there was no judgment.

Apparently, the Ninth Circuit also found that to be an interesting point, because on a petition for re-hearing, took the very unusual step of changing course and reversing itself. In the new ruling issued September 25, 2007, it withdrew the original first ruling and ruled that Experian was in fact liable. The Court noted that the trial court’s file very clearly indicated there was not a judgment. Therefore, reporting a judgment was factually wrong.

The Court further noted that when conducting a re-investigation, a credit agency “must exercise reasonable diligence in examining the court file to determine whether an adverse judgment has, in fact, been entered against the consumer.” Since the court file contained a paper that clearly indicated there was no judgment, the credit agency did not fulfill its obligations.

The Court also gave guidance to what it expected from credit agencies. The opinion stated that:

“This case illustrates how important it is for Experian, a company that traffics in the reputation of ordinary people, to train its employees to understand the legal significance of the documents they rely upon.”

This case once again underscores that background screening is simply not a data supply business. Screening is a professional service that requires substantial expertise and experience. ESR, for example, has all of its background specialists complete an intensive 30 hour training course in addition to periodic in-house training. Employers that select a screening service based just upon price are potentially placing themselves, as well as their workers, customers and the public, at grave risk.

For a copy of the court decision, contact Jared Callahan at 415-898-0044 or by e-mail at [email protected].

2. The Use of Military Records for Employment

Another record that some employers may want to verify is a military service record. With the national focus on the military with the events in Iraq and Afghanistan, it is likely that employers will receive applications from those with military experience. Many employers find that applicants with military service provide critical skills and training that are extremely valuable in the workforce.

The standard way to verify military records is to ask an applicant for a copy of his or her DD-214. This is the common term for the document given to all members of the military who are discharged from the U.S. Navy, Army, Air Force, Marine Corp, or Coast Guard. The “DD” stand for Department of Defense. The short name is “discharge papers.”

For employers who want more than a cursory confirmation of military service, the story goes much deeper. There are actually a number of different copies of the DD-214 with different pieces of information. A discharged service person receives copy 1, which has the least information. The copy with the codes that gives the nature of the discharge, i.e., General, Honorable, Dishonorable, etc. – and details of service is actually on copy 4. The codes characterize the service record of a veteran. The codes are known as SPD (Separation Program Designator), SPN (Separation Program Number) and RE (Re-Entry) codes. Other issues with access and use of the DD-214 are listed below.

  1. For a discharged service person to get copy 4, the person must actually ask for it.
  2. If a person did not ask for the copy 4, or wants to hide some embarrassing fact, then the person may only present copy 1 to an employer.
  3. If the employer wants copy 4 and the applicant does not have it, then there can be a problem acquiring and understanding the copy. The employer can have the applicant sign a Form 180 and send it to the National Personnel Records Center (NPRC) in St. Louis, Missouri. However, there can be a wait up to six months. Some records are no longer available due to a very destructive fire at the St. Louis facility in 1973. [footnote: Although the government has reconstructed some of the records by use of other military documents. For details about these military records, see]
  4. A note of caution. Even after getting a copy 4, there is the issue of translating the military codes. There are websites that provide a complete list of the codes and definitions. However, should civilian employers use these codes for hiring decisions, since the codes were meant for internal military use only? The various codes may represent items that have no foundation or were the result of clerical errors, or are simply not related to job performance.

When making hiring decisions, employers should be very careful before attempting to draw conclusions from various codes on the DD-214. Using the codes on the DD-214 to infer conduct in order to make hiring decisions could result in claims of discrimination, or decisions being made based upon irrelevant or unsubstantiated criteria. The situation can be further complicated if the employers insist that an applicant first obtains a complete DD-214 and then rejects the applicant. That record request could potentially be viewed as evidence of discrimination.

An employer should also exercise caution in using a discharge as a basis of an employment decision. There are four common types of military discharges: honorable, general, undesirable, and dishonorable. Of these, only a dishonorable discharge is given as a result of a factual adjudication equivalent to a criminal trial. In order to avoid potential EEOC claims, an employer should treat a dishonorable discharge in the same fashion as a criminal conviction, taking into account the various factors reviewed in Chapter 11. A general discharge or undesirable discharge may or may not have any bearing on employment and generally should not be the basis of an employment decision.

The best advice may be to use the basic DD-214 to confirm a person was in fact in the military, then ask for the names of references from their military service to obtain job-related information that would be relevant to an employment decision.

3. Urban Myth: Courts Destroy Criminal Records That Have Been Set Aside or Expunged

(This is the third story about Urban Myths and Employment. The first myth was that employers do not need to perform background checks on licensed professionals. The second myth was that credit scores are used by employers for hiring.)

An Urban Myth that can surprise job applicants is that after a judge vacates, expunges, sets aside, defers the adjudication or otherwise judicially erases a criminal record in some fashion, the records disappear and can never be found.

With limited exceptions, the general rule is that the government does not destroy records. In the typical scenario, even if the judge orders a set aside, the consumer’s name can still be found by searching the court indexes and the case can still be viewed as a public record. As a general rule, the only way that a background firm knows that there has been a judicial set aside is to examine the court file where all court orders should be noted.

Of course, each state is different but as a general rule, unless an applicant has been advised by an attorney that the criminal case will be sealed and physically not available anywhere, applicants need to understand that even a criminal case that they thought was erased may still show up.

Even in those situations where the court has ordered the case sealed, the damage may already be done since the record of the case may already reside in a commercial database. If a background firm locates the case in a commercial database, then the background firm has certain obligations under the federal Fair Credit Reporting Act and similar state laws. A background screening firm is required to either notify the applicant that a criminal record is being provided, or must pull and examine the actual court file to ensure accuracy. For employers that want to avoid finding out about criminal records that have been judicially set aside, the best practice it make sure you are working with a screening firm such as Employment Screening Resources that automatically pulls the court file whenever there is a database match to make sure the criminal record is complete, accurate, up to date, applies to your applicant and is reportable.

4. ESR Announcements and Seminars

ESR has recently been featured in two Human Resources articles in national HR publications.

In the October 2007 issue of HR Magazine published by SHRM, the issue of “How Deep Can You Probe,” is examined. ESR president, Lester S. Rosen, is quoted at length on the legal implications of background screening.

In the July issue of Human Resources Executive, ESR president, Lester S. Rosen, is also quoted in an article on “Immigration and Aggravation.” Rosen is quoted on issues involved in using biometric measurements for immigration controls. The article concludes with a quote from Rosen that “The employers who do the bare minimum are the ones who get into trouble. When it’s easy entry, it’s easy fraud.”

ESR is pleased to announce new services that are available to US employers:

  1. Form I-9 Compliance ESR is qualified to act as an employer’s Designated Agent to perform the verification of employment eligibility checks to determine that individual’s employment eligibility through databases administered by the Department of Homeland Security and Social Security Administration. See:
  2. In-depth Searches and Litigation Support ESR has introduced a new service, an “Integrity Check” for businesses that need in-depth research on partners, key executives, prospective members of a Board of Directors, and other highly sensitive positions, It is also ideal for law firms for litigation preparation. See:
  3. Vendor Checks ESR has introduced a new program to allow businesses to check their vendors. Businesses who would never allow an employee onsite without due diligence, can not ensure that the same due diligence is applied to vendors, independent contractors or temporary employees. For more information, contact Jared Callahan at [email protected] or at 415-898-0044, ext. 240.

ESR will be participating in the following seminars across the United States.

ESR 2007 Schedule

November 9/10, 2007 Baltimore, MD “Negligent Hiring Mock Trial — College and University HR in the Hot Seat.” National HR Conference for College and University Professional Association for Human Resources (CUPA-HR)

November 12, 2007 Tampa, FL The Pre-employed Screening Industry–The Good, the Bad and the Ugly.” Keynote address at the Annual Pre-Employment Screeners Conference sponsored by the Background Investigator (Intended for background firms and record retrievers)

November 13, 2007 Orlando, FL Background Checks and Recruiting Practices and Legal Compliance Kennedy Information’s Recruiting 2007 Conference and Expo

November 16, 2007 Contra Costa, CA Extreme Caution Advised: Advising Employers on Compliance with Federal and State Laws Regulating Pre-employment Screening and Background Checks Contra Costa Bar Association MCLE Seminar (intended for attorneys)

December 6-7, 2007 Bangalore, India “Background Screening for US Firms with Operations in India and the Pacific Rim.” Keynote Address at the International Pre-employment Screening Conference, The Taj West End Hotel

Contact ESR for further details.

Employment Screening Resources (ESR) Rated Top Background Screening Firm in First Independent Industry Study. See the Press Release

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.

Employment Screening Resources (ESR)

1620 Grant Avenue, Suite 7

Novato, CA 94945


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