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Connecting the Dots

If you’re an employer, you know the hiring process for a new employee is complicated. Being a good judge of character and sealing a job offer with little more than a handshake served most employers well for a long time. Now, more regulations exist that employers must follow to the letter when they’re considering job candidates.

Recent new laws in California, combined with federal code and laws passed years ago, have toughened restrictions on employers who conduct interviews, background checks and credit report inquiries on prospective employees.

“One question I’m frequently asked by clients goes something like this: ‘We ran a background check on this guy and found a crime. We don’t have to hire him, right?’” says Kari J. Brown, an employment attorney with Spaulding McCullough & Tansil in Santa Rosa. “Most employers seem to know they must follow the proper steps before running a background check, such as first making the conditional offer of employment to the candidate, then getting consent from that person to run the background check. Before the employer can even do the check, they have to get the job offer out there. That’s a big issue.”

Pre-employment screening

When a conditional offer of employment is on the table, the prospective employee can agree to a background check by signing two consent forms, one federal and one state. A background check can search for many different things, such as any criminal history, education and employment history, civil records, and even to verify that applicants are who they claim to be.

“We can’t ask prospective employees if they’ll pass a background check, but we can advise them that some of our clients cannot, by law, employ workers who cannot pass a background check,” says Rosanna Hayden, chief executive officer of Artizen Staffing, an employment agency in Rohnert Park. “We do ask prospective employees to let us know if there is anything in their backgrounds that might be a problem. We don’t want to waste their time if they likely won’t be accepted for hire based on a background incident.”



Background checks are mandated for certain financial institutions and industries, including banks and gaming casinos. “If a casino fills a position for a dishwasher, that prospective employee must undergo a background check, and pass it, prior to starting work so the casino can ensure they’re in compliance with federal requirements,” says Hayden. “He or she might not be handling money on the job, but certain types of employers and industries are ultimately overseen by the federal government, such as banks and financial institutions, and those positions require these checks.”

Many employers today run background checks because if they don’t take that step, they can be held liable for negligent hiring should something go wrong, according to Pri Murphy, account executive of Employment Screening Resources. The company, headquartered in Novato, conducts extensive background checks for local and national clients. Murphy is also president of the Professional Association of Sonoma County (PASCO), an organization of Human Resources professionals.

“Background checks are standard for the onboard hiring process, and what’s run on a check can vary widely depending on the industry,” says Murphy. “Pre-employment screening is more common for employers to do these days, and some checks are dependent on the risk mitigation and sensitivity of rules. Some industries and employers also order ongoing background checks on the hired employees, annually or every few years.”

For instance, says Murphy, background checks on health-care workers will be much different than for someone working in an office, and require a comprehensive set of searches to ensure patient safety. Criminal history and sex offender searches are also expected, as are verifications of health-care licenses, to confirm the provider has a current license free of any disciplinary actions or sanctions by state and federal agencies. “A hospital has an added level of responsibility because their employees work in an environment of vulnerable individuals and added due diligence is a necessity,” she explains. “It’s common for health-care organizations to recurrently monitor their workforce for new criminal activity as well as state and federal sanctions databases to ensure no member of their workforce appears on a sanction list, which can impact their ability to participate in federal Medicare and Medicaid programs.”

In hiring for a financial position, as an example, the background check might reveal that an applicant was once indicted for a finance-related crime. “A candidate whose job includes financial duties, or fiduciary oversight, appearing on a financial sanction or watch list, could disqualify the individual, according to federal regulation and/or the employer’s policy,” adds Murphy. When it comes to screening a potential hire, an employer always needs to consider the extent and severity of the crime as well as when the crime took place, the history since the offense and how the offense might relate to the job role and responsibilities to comport with the EEOC’s guidance on the use of criminal information in hiring decisions.

“Soft” credit reports

Many background checks turn up far less nefarious information than past crimes, such as embellishments on a resume. “It’s more common for my company to see falsifications on resumes about prior employment and education. Applicants can misrepresent how long they were at a particular job, their job titles, and whether they completed the degrees they claim to hold,” says Murphy. “All of that can usually be verified with a background check.”

As the chief executive officer of an employment agency, Hayden orders background checks on every person her clients hire. “It’s required in my contract with some clients to run these checks. Other clients prefer to run them [on their own], but I do them for all clients as a matter of course.” Artizen employs a staffer whose job is solely to handle the ordering and dissemination of background checks.

Having a DUI pop up on a background check doesn’t usually mean that prospective employee won’t be hired. “Frequently, employers will disregard a single DUI in someone’s past,” she says. “Many will look at that and say, ‘That’s okay.’ But if driving a vehicle is part of the job, or the candidate has more than one DUI, that can be a red flag.”

Hayden’s clients rarely ask her to order credit report checks on potential job candidates. “Unless there is a business justification for doing so in the hiring process, you can’t order a credit report on a potential employee. There would be no need, for example, when hiring a prospective employee who will be washing cars, and not handling money. But if I have a jewelry store client seeking an employee who will handle expensive merchandise and processing cash and credit card transactions, then a credit check request is completely justified.”

Credit report checks for pre-employment, says Murphy, are only run in certain cases when the use of that information is directly related to the job and business necessity. “It’s called an ‘employment purpose credit report,’ and it’s highly regulated in California and several other states,” she adds. Since a credit report is prohibited in hiring decisions in all but limited circumstances in California, employers here have to be extremely careful running a credit report on a job candidate.”

When a credit report is ordered, it’s only a “soft” hit on a person’s credit history. “It will show that person’s credit payment history and any bankruptcy filings, for example, but the person’s actual current credit score is not revealed,” she adds.
Fingerprinting is required for certain types of background checks, but is not commonly required for most employers, according to Murphy. “Fingerprinting is typically more expensive and takes more time to process than a standard background check, and fingerprint records are not always up to date and often contain incomplete information.

“A fingerprint check is only as good as the database behind it,” she adds. “There are a host of issues that impact fingerprint repositories, including missing information and backlogs based on personnel resources.” According to Murphy, the Virginia State Crime Commission recently indicated that their state’s Central Criminal Records Exchange, managed by the Virginia State Police, is missing 750,000 records.

However, if an employer is in a regulated industry where fingerprinting is mandated, then there’s no way around it. “But it should be utilized as one facet of the background check, and shouldn’t be relied upon as the only search conducted,” she adds. “Employers strive to create a comprehensive screening program, and should consider the fingerprint check to be one arrow in the quiver. It should be supplemented with a set of services that provides a complete picture by working with a professional background screening firm.”

Do’s and don’ts

Attorney Brown says all employers should be familiar with current legal code [California Government Code section 12952, Article 1, Unlawful Practices Generally] as they navigate the technicalities of gathering job applications, interviewing and hiring. “This code is clear about what’s required of employers,” she says. “Even if the employer gets a background report that shows a serious criminal conviction such as robbery or a sexual offense, the employer still has to follow the procedures outlined in the code.”

That means employers must take into account the duties of the job being offered and any direct and adverse connection between the past crime and the duties of the position. “The employer must consider the severity of the crime, how close in time it has been since the conviction, the length of rehabilitation (if any), and how the nature of the conviction may relate to the job,” says Brown.

An example, she adds, might be someone with a prior sex-based conviction. “There are different levels of offenses, and they can look particularly bad on paper. But sometimes the conviction is not as bad as it initially seems, or it has nothing to do with the applicant’s qualifications. For every applicant where the employer is thinking about rescinding an offer, the employer must do an individualized assessment of the candidate and follow the procedures outlined in the code. Job duties must be considered in relation to the conviction or the employer could face a claim for damages.”

Additionally, it’s forbidden for employers to search job applicants (or any employees) on the California Megan’s Law website that lists sex offenders and where they live, says Brown. “If a company uses any information from that site whatsoever in making an employment decision, that company can face substantial fines and penalties, up to three times the actual damages suffered by the applicant or employee,” she says.

The heart of the recently passed “ban-the-box” law is to remove all questions about criminal records from job applications and to delay all inquiries about criminal history until later in the hiring process after a conditional job offer is made.

“California has now fallen in line with many other states by banning the check box on job applications asking about past criminal history, and it’s a trend we’re seeing all across the nation. Employers used to sort through applications and automatically throw out all those with that box checked without first considering the candidate’s job qualifications,” says Murphy. “Ex-offenders are now given an equal chance to be considered based on their qualifications. Taking into account the seriousness of the crime and how much time has passed, is it appropriate to deny employment if the debt to society was paid?”

Brown and Murphy both emphasize that employers must work closely with their attorneys to ensure that job applications, related documents and in-house hiring processes are in full compliance. “There are regulations about using a conviction history to make an adverse employment decision, too,” says Brown. “Just because an employer finds out something negative about a job candidate doesn’t mean they must suddenly react. They may need to contact an attorney about following the proper steps. That way they are serving the best interests of everyone involved while still being legal.”

Murphy also strongly discourages employers from running “do-it-yourself” background checks using the many online services available. “I frequently warn my clients that if they do a check that way, they may be vulnerable to a lawsuit by utilizing deficient sources, or inadvertently triggering state and federal consumer protection laws that come with a complex set of legal obligations.”

Why bother with checks?

Brown says that some employers are beginning to question whether to run background checks at all. “They ask me, ‘Well, if I can’t use this [negative] information, then why am I checking?’ Sometimes there is a small stratus of employees in positions that may be germane to their past convictions. Let’s say a medical facility wants to hire a receptionist, and their best candidate has an old drug charge on her record. Now, if this receptionist has no legal access to medications on the job, and in fact it would be unlawful for that person to even handle medications, they are likely a low risk for that employer. Would a past drug conviction be related to this job, in that case?”

It comes down to risk evaluation, she says. “What’s more valuable to the hiring employer? That they not hire this person at all and the employer risks a potential discrimination claim, or is there really no justification to not hire this person, and the employer finds ways to work around any possible conflicts? That’s what the ban-the-box law was intended for, to give these convicted people a chance. Sometimes having a conviction doesn’t mean [the individual] is a bad person, they just made a mistake once, and that’s why the law was written in the first place. It makes it more difficult to weed these candidates out of the hiring process.”

Keeping employers in compliance with these regulations is no joke, says Murphy. “We are seeing more people out there basically filing lawsuits against employers as a career. They get employers to do something wrong in the hiring process so they can sue them. Employers need to be aware of who they’re engaging with and who performs background checks on their behalf to ensure a fully compliant process. We always encourage prospects to engage with a professional background screening firm that is accredited by the National Association of Professional Background Screeners (NAPBS), and also that they review that company’s litigation history.”

Each prospective job candidate’s case is unique, says Brown. “Hiring an individual all turns on the facts of a case. We can generalize about the process and procedures and codes and what’s legal, but everything else is super-specific to the job and the individual. Every single time, it’s a new question.”

know the regulations

On January 1, 2018, California passed the following laws, which  impacts how employers can legally vet job candidates.

Assembly Bill 1008: Prior Conviction History of Applicants. This is commonly called the “Ban-the-Box” initiative, referring to the check box (or question) on a job application that requires a candidate to disclose his or her criminal history. It’s now unlawful in California for an employer to include questions seeking disclosure of an applicant’s criminal history on any employment application, to inquire or consider the conviction history of an applicant before extending a conditional offer of employment, or consider or distribute specified criminal history information in conducting a conviction history background check. If an employer intends to deny a position solely (or in part) because of the applicant’s prior conviction, the employer must make an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship with the duties of the job, and allow the applicant to dispute the accuracy of the conviction history.

Assembly Bill 168: Salary History. This legislation bars employers from asking job applicants about their previous salary. The goal of this legislation is to narrow the gender gap by preventing employers from basing offers on prior salary and thus, presumably, perpetuating historical discrimination. This also removes the perceived gap in negotiating power between an employer and employees who must disclose their prior salary. Employers should ensure that their job applications don’t seek prohibited information and that those interviewing applicants know not to ask these questions.

For more information, visit leginfo.legislature.ca.gov.

compliance on credit reports

Eight years ago, California passed Assembly Bill 22 (Employer Use of Consumer Credit Reports), which took effect in 2012. Though it’s been law for seven years, employers should be reminded that they must be in compliance when they request a credit report on a prospective employee. Existing federal and state law (including the federal Fair Credit Reporting Act), specify the procedures that an employer is required to follow before requesting a credit report and if adverse action is taken based on the report.

A credit report is not the same as what most people refer to as a background check. Instead, a credit report is information about an individual’s credit worthiness, credit standing, or credit capacity, which is used for employment purposes. AB 22 prohibits an employer from obtaining a consumer credit report, as defined, for employment purposes unless the position of the person for whom the report is sought meets specific criteria. AB 22 also created new penalties for non-compliance.

leginfo.legislature.ca.gov