Source: https://www.privacyrights.org/blog/increase-employee-background-checks-strains-already-weak-flint
Timestamp: 2019-04-24 05:57:03+00:00

Document:
B.A., 2001, University of Maryland at College Park.
Employee background checks are no longer reserved for applicants to the Central Intelligence Agency. Federal and state law requires that certain employers, including those in aviation, banking and healthcare obtain background checks on their employees.1 Even when not mandated by law, many employers are performing background checks on applicants. One survey shows that 82% of employers conducted applicant background checks in 2003, compared to 66% in 1996.2 These background checks are often obtained from commercial data brokers, who collect information from public records.
One explanation for this increase is post-9/11 security concerns. However, even clerks at hardware stores are subject to background checks.3 Aside from terrorism, other more common incentives may explain the increase in background checks. Technology has made background checks cheaper and easier to get than ever before.45 In response to this demand, there are now thousands of background check companies, many of which offer reports for as little as 20 dollars. The National Association of Professional Background Screeners lists over 100 companies in California. (www.napbs.com) This increased utilization of background checks means that any problems will have a wider significance.
Unfortunately for Mr. Troupe, his experience is an example of the deceptively black and white nature of background checks. Despite society’s appreciation of Mr. Troupe’s talents, a black and white printout was allowed to be the ultimate judge. The computer printout is unable to ascertain if a college degree is important to a poet’s success. Or as a teacher. The printout cannot tell if Mr. Troupe is a serial liar. A threat to poet laureates everywhere. Before Mr. Troupe’s background check, society was confident that Mr. Troupe was a first-rate teacher and poet. Employment background checks are used in a variety of situations. In some cases the law requires that an employer hire only people who pass a background check. In other situations, employers have the flexibility to consider mitigating factors, such as experience and success, when evaluating a background check.
In Part II, this paper will review the federal law applicable to employee background checks. California is one of 27 states with laws that further restrict an employer’s use of background checks. California’s law will be examined for ways in which it exceeds the protections offered by federal law. As noted, federal and state laws govern background checks with respect to particularly sensitive jobs, such as childcare. These statutes specify the required duty of care by the employer and as these laws are relatively straightforward, this paper will not be addressing these types of employment. Rather, this paper will focus on the use of background checks when not specifically required by law. In Part III, this paper will explore the dueling policy concerns behind the use of background checks. Employers have a compelling interest in a safe work environment and in avoiding lawsuits. Also compelling is society’s interest in avoiding recidivism and unemployment. Finally, in Part IV suggestions will be made for a comprehensive law that addresses the dueling policy concerns and attempts to remedy problems that have become apparent through the increased utilization of background checks.
The FCRA was amended in 2003 by the Fair and Accurate Credit Transactions Act (The FACT Act). The FACT Act allows employers to investigate misconduct of current employees without giving the employee notice or obtaining consent.10 Most applicant background checks fall under the FCRA’s consumer report category and not the investigative consumer report addressed by the FACT Act.11 However, both the FACT Act and the FCRA only apply in situations where an employer uses a third party to perform the background check.
If an employer does use a third-party to conduct a background check, the FCRA requires that the employer notify the applicant and obtain consent for the background check. Further, the FCRA requires that if an adverse decision is made based on the background check, the employer must provide the applicant with notice of the adverse action and the name, address, and telephone number of the consumer reporting agency making the report.12 The employer is also required to give an employee a copy of the report and information on how to dispute the contents of the report.
The FCRA offers some limitations on what can be included in a background check. Bankruptcies must be removed from the report after 10 years. Civil suits, civil judgments, paid tax liens, accounts placed for collection, and records of arrest can only appear for 7 years. However, criminal convictions can be reported indefinitely. Prior to 1998, the FCRA only allowed criminal convictions to be reported for 7 years from the time of disposition or release.
The FCRA has two significant problems. One, it does not have an adequate procedure to ensure that background checks are accurate and that the applicant understands the process. An applicant only receives a copy of the background check if the employer admits that something unfavorable is contained in the report. For example, an employer may obtain a background check that shows a drug conviction and while the employer does not want that type of person around, the employer is concerned that admitting that preference may be illegal. To avoid any possible illegality, the employer may choose to tell the applicant that another person was better qualified. In this situation the applicant will not understand that it was the background check that cost him the job. When an applicant is unaware that a background check is costing him a job, the harmful effects of any errors on the report are magnified. In the above example, if the drug conviction is erroneous, the route for correcting the error will be thwarted by the applicant’s ignorance of the process.
The FCRA provides that consumer reporting agencies who furnish employment background checks must ensure accuracy by either (1) at the time the report is given to the employer, the agency can inform the applicant that a background check is being sent to the employer, or (2) maintain strict procedures designed to insure that whenever public record information is reported which is likely to have an adverse effect on a consumer's ability to obtain employment, it is complete and up to date.13 The first option of simultaneous notice is easily achieved, but does little to help the applicant correct errors before the employer views the background check. Significantly, the FCRA has no provision instructing an employer to re-evaluate its decision in the event that there are errors on the background check.
Errors on background checks can occur in many different ways, but in some cases there is an inconsistency that indicates that the information should be verified. The author has heard dozens of heartbreaking stories of errors on background checks while working for the Privacy Rights Clearinghouse, a consumer advocacy and education non-profit organization. Danielle’s14story is illustrative of the harmful effect background checks errors have on employees. Danielle applied for a job as a Senior Research Associate at a pharmaceutical company. Prior to formally offering Danielle the job, the employer asked Danielle is she had a criminal record. Danielle told the employer that she was convicted of a misdemeanor, criminal mischief. The employer offered Danielle the job, stating that they were only concerned with felony convictions. Two weeks after Danielle started working she was fired because of her background check. (See Figure 1).
The background check lists three charges: (1) Misdemeanor-Harassment, (2) Felony-Criminal Mischief $500-15,000, and (3) Felony-Arson 2 – Damages of $100 of more. According to the background check, the applicant was convicted of Felony-Arson 2. However, the sentence is listed as $159 in fees and 1 year of probation. The sentence and the purported conviction appear inconsistent and, in fact, they are. Had the background check company investigated this inconsistency it would have learned that the listed conviction was incorrect.
Danielle’s court records show that the she was charged with three offenses: (1) Criminal Mischief-$500-$15,000 (2) Harassment-Telephone-Threat/Obscene, and (3) Criminal Mischief-Under $100. The court records indicate that the she was convicted of the third charge, Criminal Mischief-Under $100. (See Figure 2).
Figure 2 – An excerpt from Danielle’s court records.
Under the FCRA, Danielle’s employer was required to tell her that she was being fired due to the information in the background check and to provide her with information on how to contact the background check company. Danielle contacted the background check company and after an investigation the errors were corrected. The FCRA does not require Danielle’s employer to re-hire her and the employer did not.
ChoicePoint’s methodology for determining its error rate illustrates the FCRA’s shortcomings with respect to applicants’ awareness and understanding of the process. ChoicePoint based its error rate on the number of complaints from job applicants. Although the FCRA instructs employers to notify applicants when an adverse action is being taken based on a background check, there is no enforcement of this provision. An employer can easily tell an applicant that someone else was better qualified or a better fit with the company. In those instances, the applicant may not suspect that the background check contained errors. Other research, based on people who ordered their reports directly from ChoicePoint before applying for a job, indicates that ChoicePoint’s error rate is closer to 35 percent.17 Under the current law, the only way an applicant can ensure that an employer is not secretly basing its adverse decision on a background check would be to initiate a lawsuit. A simpler solution is to allow the applicant time to review the report for errors before it is given to the employer.
Although an employer’s evaluation of whether the applicant actually engaged in the misconduct is not tantamount to a criminal prosecution, surely the Sixth Amendment does not stand for the proposition that an employer can judge an applicant guilty of a crime and thereby deny employment. The EEOC is correct in noting that inquiries into arrests not leading to convictions may as unfairly prejudices minorities. According to the Federal Bureau of Investigation’s 2005 Crime in the United States report, 69.8 percent of all persons arrested were white and 27.8 percent were black. However, African-Americans only represent 12 percent of the population, whereas Caucasians represent 74.7 percent of the population.19 Although an employer’s policy not to hire applicants who have been arrested may violate federal discrimination law, the principle that people deserve a fair trial judged by your peers should not be limited to protected classes.
Some scholars argue that California’s law is ineffective because of the nature of large consumer databases. ChoicePoint maintains a database with 19 billion records of individuals and businesses.24 In contrast, California has no central state criminal records depository. Only five out of fifty-eight counties in California allow ChoicePoint to access criminal records electronically. Consequently, ChoicePoint sends “runners” to the other fifty-three counties to manually retrieve the information. The lack of electronic access to criminal records means that the information ChoicePoint provides in a background check may not be up-to-date. For example, if a runner pulls John Doe’s conviction record and enters it into ChoicePoint’s database on Monday and John Doe has the record expunged on Tuesday, any background check performed on John Doe past Tuesday will be inaccurate.
California is one of eleven states that prohibit the reporting of convictions whose disposition or release is more than seven years old. Colorado, Kansas, Maryland, Massachusetts, Montana, Nevada, New Hampshire, New Mexico, New York, and Washington all have similar laws. Additionally, Massachusetts prohibits the reporting of misdemeanors whose disposition or release is more than 5 years and does not allow the reporting of first conviction misdemeanors for drunkenness, simple assault, speeding, minor traffic violations, affray or disturbance of the peace. Additionally, more than two-thirds of the states have a law prohibiting the arbitrary denial of public employment solely on grounds of a criminal conviction.25 Some critics note that these statutes are ineffective because they lack enforcement mechanisms.26 However, California’s law is integrated into the Fair Employment and Housing Act (FEHA). The significance of this integration is that in California there is a department charged with enforcing FEHA. Additionally, California’s law allows for attorney’s fees and the cost of the lawsuit to be awarded if the plaintiff prevails.27 It is unclear whether any of these factors bolster the effectiveness of California’s law, as there has been scant litigation on the subject.
Proponents of background checks use large jury awards in negligent hiring cases to suggest that background checks are necessary. According to Jason Morris, chair of the National Association of Professional Background Screeners, the average verdict in a negligent hiring action is $2 million.28 Legitimate policy concerns underlie the use of background checks, but just as ex-offender advocates would lose credibility if they suggested that ex-embezzlers would make terrific CEOs, advocates of background checks lose credibility when they suggest that failing to uncover a marijuana conviction will cost employers millions. A careful exploration of both the interest in avoiding negligent hiring lawsuits and the interest in preventing recidivism reveals that the dueling concerns can be reconciled.
The $2 million dollar verdict was not based on the employer’s failure to purchase a background check. The employer paid $2 million dollars because it did not conduct any investigation. Perhaps purchasing a background check would have caused the employer not to hire the deliveryman, but the court’s reasoning rebuts the suggestion that purchasing a background check is necessary to prevent a negligent hiring lawsuit. The court suggests that the employer could have fulfilled its duty by conducting a job interview, checking references, and requiring a written employment application.
Also using the above three-prong test another Ohio court found an employer not liable for the hiring of a tile layer, who raped a nine-year old occupant of an apartment.39 A background check would have revealed a 20-year-old criminal history. The court found that the employer has no duty to conduct a background check. Further, the court held that even if the employer had known of the criminal history it was too remote in time to hold the employer liable.
These decisions emphasize the importance of using old-fashioned judgments of character, such as contacting references, having personal conversations with employees, and observing their physical characteristics and demeanor. In the case of the drug-abusing deliveryman, the employer could have known there was a problem by looking at the “track marks” on his arm. In the case of the crack-using-truck driver, a call to his past employer would have revealed that he had been fired for drug use. Notably, these decisions do not support the notion that if an employer had performed a background check, which revealed no criminal convictions, the employer would not be liable for failure to observe physical signs of drug use or call past employers.
An employer whose employees will have substantial contact with the public can reduce the risk of negligent hiring claims by conducting background checks. But, even if employers utilize background checks, they should not overlook other means of ascertaining whether an employee is suitable for his or her position. Significantly, when Florida passed legislation describing what an employer needs to do to avoid negligent hiring lawsuits, paying $20 for a background check on the Internet was not an option.
The law specifies that in order to obtain the presumption of reasonable care the employer must (1) conduct a criminal background investigation on the applicant with the Florida Department of Law Enforcement; (2) make reasonable efforts to contact references and former employers of the applicant concerning the applicant’s suitability for employment; (3) require that the applicant complete a job application, which includes questions concerning whether the applicant has ever been convicted to a crime (including the time, date and penalty) and whether the applicant has ever been a defendant in a civil action for intentional tort (including the nature of the action and disposition); (4) obtain, with authorization from the applicant, a check of the driver's license record (if relevant to the work to be performed); and (5) interview the applicant.41 Notably, when an employer is required to conduct all five of the above steps, there is a greater chance that inconsistencies will be uncovered and that an employee will be given the opportunity to prove that he or she deserves a chance.
Monsieur to a convict is a glass of water to a man dying of thirst at sea.
The goal of reintegrating ex-offenders into society is of increasing importance, because of the large number of ex-offenders. Over the past three decades, the number of prison inmates has increased by more than 600 percent.42 Prison, once reserved for only the most despicable crimes, is now punishment for a wide range of crimes.43 For example, the adoption of mandatory sentencing laws has removed discretion from sentencing judges. As a result, the chances of receiving a state prison term after being arrested for a drug offense rose by more than 500 percent between 1980 and 1992.44 One in every five Americans has a criminal history.45 Consequently, ex-offender status is a less precise definition of a person’s character and should require further inquiry. Limited employment opportunities and earning potential are among the strongest predictors of a return to crime.46 Between 70 and 90 percent of the ex-offender population are unemployed.47 Within three years of release from prison, more than 66 percent of ex-offenders return to a life of crime.48 Thus, if ex-offenders are denied jobs solely based on their convictions, then the chances are higher that the person will return to crime.
The increased use of background checks may not only encourage ex-offenders to return to crime, it may also encourage crime in the first place. Nearly 80 percent of states allow employers to base employment decision on arrests not leading to convictions.49 If you are unable to get a job after an arrest, there are only a few options left to obtain food, shelter and clothing. Family or public welfare might provide for those needs; or the person will break the law in order to survive. And when the person steals a loaf of bread, the employer will likely pat himself on the back for seeing the person’s true colors.
Another problem facing ex-offenders is the lack of assistance with reentry into society. Many people assume that parole officers locate jobs for ex-offenders. However, an ex-offender only receives a parole officer if he or she is released early. In 2001, one-fifth of released prisoners were unsupervised.52 Additionally, sixteen states have abolished discretionary parole for all offenders.53 Without assistance in gaining reentry into society, ex-offenders face an increased likelihood of returning to crime if they are denied employment solely based on their criminal history.
The first step in drafting a comprehensive law on employee background checks is to separate background checks from other “consumer reports.” In addition to regulating background checks, the FCRA also applies to credit reports, the marketing of financial information and all types of consumer reports, from insurance claim histories to tenant records. Considering the increasingly diverse group of employers who utilize background checks, it will be impossible to draft a comprehensive law that lumps background checks in with other consumer reports.
A comprehensive background check law must also balance the interests of employers with the interests of avoiding recidivism and unemployment. Finally, measures must be in place to ensure that background checks are accurate and fair to the job applicant.
Clear examples of an employer’s duty to investigate an applicant’s background can also diminish employers’ fears of negligent hiring lawsuits. Florida’s law is a good example of a standard that considers database records, as well as former employers, references, and the applicant. Requiring the employer to seek information from multiple sources reduces the risk of error and provides a greater opportunity for an applicant to explain past mistakes.
A stricter law could prohibit employers from even asking about convictions. Hawaiian law prohibits employers from asking about convictions until a conditional job offer has been made, and then the inquiry must be limited to convictions that have a rational relationship to the job.55 The law grants exemptions to employers in the federal government, the department of education and private schools.56 Additionally, employment relating to children, private investigators, apartment or condominium owners, the judiciary, and correctional facilities are exempt through other statutes, which specifically require background checks.57 However, this extreme protection of ex-offenders is problematic, because it does not stimulate transparency of the process for both parties.
Conversely, advocates for ex-offenders may feel that a law requiring an employer to consider the relation of the conviction to the job skills required looks good on paper, but will prove to be useless. One method for ensuring that employers do not consider convictions unrelated to the job skills required would be to prohibit inquiry into all convictions whose disposition is older than seven years. This standard would effectively tell employers that these convictions are not related to the job. While some may argue that a child molestation conviction is always relevant to a job related to children, separate laws govern those areas of employment where there is a special need for background checks. Currently, separate laws require employers to conduct background checks in fields such as childcare, healthcare, banking, and aviation. This proposed law would not negate these laws. Further, the prohibition on inquiries into old convictions does not mean that the employer has no other options for determining whether the applicant is suited to the job. The employer can still check references, call past employers, and interview the applicant.
Another method of ensuring that the law is useful to ex-offenders is to allow for the recovery of attorney’s fees and the cost of a lawsuit. Yet, this provision will only be effective if all applicants receive a copy of their background check. Current law allows an applicant to see their background check only if an employer admits that they are taking an adverse action based on the background check. Many employers may choose to say that another person was better qualified, rather than admit that a conviction influenced their decision. Thus, attorney’s fees provisions are ineffective without an applicant’s access to their own background checks, because without this access applicants do not know when to seek legal representation. The law must allow applicants to obtain a copy of their background check regardless of whether they are hired.
Additionally, allowing an applicant to obtain a copy of their background check is a simple way to reduce errors. But in order for the applicant to have a chance to correct any errors, the applicant must receive a copy of the background check before it is given to the employer.
Considering the prevalence of employee background checks, federal and state laws must be crafted to ensure that the law balances the interests of the employer with the interests of reducing recidivism and unemployment. The law must also compensate for the reality that some background checks will have errors. Finally, the background check process should not be kept secret from the applicant.
1. Florentino, Tonianne, Privacy in the Workplace. 788 PLI/Pat 551, 556 (2004).
2. Matejkovic, John E. and Matejkovic, Margaret E., Whom to Hire: Rampant Misrepresentations of Credentials Mandate the Prudent Employer Make Informed Hiring Decisions. 39 Creighton L. Rev. 827, 829. (2006)..
3. Forest, Gregory A., Sealing the Record: Helping Rehabilitated First-Time Drug Offenders Get Jobs. 35 McGeorge L. Rev. 597 (2004).
4.Bloom, Elise M.; Schachter, Madeleine; and Steelman, Elliot H., Competing Interests in the Post 9-11 Workplace: The New Line Between Privacy and Safety. 29 Wm. Mitchell L. Rev. 897, 916 (2003).
5. Gerlach, Elizabeth, The Background Check Balancing Act: Protecting Applicants with Criminal Convictions While Encouraging Criminal Background Checks in Hiring. 8 U. Pa. J. Lab. & Emp. L. 981, 997 (2006).
6. Matejkovic, John E., 39 Creighton L. Rev. at 828.
8. Sotto, Lisa J. and McCarthy, Elizabeth M., Workplace Privacy in the U.S.: What Every Employer Should Know. 866 PLI/Pat 201, 206 (2006).
10. Schachter, Victor and Swanson, Shawna, Workplace Privacy and Monitoring: New Developments Affecting the Rights of Employers and Employees. 866 PLI/Pat 135, 159-60 (2006).
14. Name has been changed.
15. Liptak, Adam, Criminal Records Erased by Courts Live to Tell Tales. New York Times. Section A. October 17, 2006.
17. Barber, Grayson, Personal Information in Government Records: Protecting the Public Interest in Privacy. 25 St. Louis U. Pub. L. Rev. 63, 91 (2006).
21. Polsky, Jeffrey D., Workplace Privacy Laws Governing California Employers. 729 PLI/Lit 425. 441 (2005).
23. Cal. Civ. Code § 1786.18; Cal. Lab. Code § 432.7.
24. Associated Press, ChoicePoint tries to clamp down. March 8, 2005.
25. Love, Margaret Colgate, The Debt That Can Never Be Paid. 21-FALL Crim. Just. 16, 22 (2006).
28. How to Ferret Out Instances of Resume Padding and Fraud. 06-6 Compensation & Benefits for L. Off. 1 (2006).
29. Tallahassee Furniture Co., Inc. v. Harrison, 583 So.2d 744, 748 (1991).
35. Morris, Mary Babb, Burden of proof; presumptions and inferences--Negligent hiring, supervision, or retention. 27 AM. JUR. 2D EMPLOYMENT RELATIONSHIP § 403 (2006).
36. See Moses v. Diocese of Colorado, 863 P.2d 310 (Colo. 1993); Williams v. Feather Sound, Inc., 386 So. 2d 1238 (Fla. Dist. Ct. App. 2d Dist. 1980); Ponticas v. K.M.S. Investments, 331 N.W.2d 907 (Minn. 1983); McLean v. Kirby Co. a Div of Scott Fetzer Co., 490 N.W.2d 229 (N.D. 1992); Carlsen v. Wackenhut Corp., 73 Wash. App. 247 (Div. 2 1994).
37. Stephens v. A-Able Rents, Co., 101 Ohio App.3d 20, 27 (1995).
39. Peters v. Ashtabula Metropolitan Housing Authority, 89 Ohio App.3d 458 (1993).
40. Govan, Reginald G., Personnel, Investigative, and Health Records. 746 PLI/Lit 373, 388 (2006).
42.Pager, Devah, Double Jeopardy: Race, Crime, and Getting a Job. 2005 Wis. L. Rev. 617, 618 (2003).
45. Geiger, Ben, The Case for Treating Ex-Offenders as a Suspect Class. 94 Cal. L. Rev. 1191, 1193 (2006).
46. Pager, Devah, 2005 Wis. L. Rev. at 619.
47. Geiger, Ben, 94 Cal. L. Rev. 1191 at 1197.
49. Geiger, Ben, 94 Cal. L. Rev. at 1200.
50. Saxonhouse, Elena, Unequal Protection, Comparing Former Felons’ Challenges to Disenfranchisement and Employment Discrimination. 56 Stan. L. Rev. 1597, 1612 (2004).
52. Pinard, Michael, An Integrated Perspective on the Collateral Consequences of Criminal Convictions and Reentry Issues Faced by Formerly Incarcerated Individuals. 86 B. U. L. Rev. 623, n. 192 (2006).
53. Id. at n. 190.
57. Lau, Sheri-Ann S. L., Employment Discrimination Because of One’s Arrest and Court Record in Hawaii. 22 U. Haw. L. Rev. 709 (2000).

References: § 1786
 § 432
 v. 
 § 403
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.