The Latest in Multi-Jurisdictional Background Check Compliance | Ogletree, Deakins, Nash, Smoak & Stewart, CP

Criminal background checks on job applicants is standard practice for employers, but it raises a host of compliance issues amid a slew of federal, state and local laws and regulations governing how and when background checks history can be done.

Ogletree Deakins recent investigative report, Strategies and Benchmarks for the Workplace: Ogletree Survey of Key Decision Makers, pointed to background checks as one of the top five most challenging multi-jurisdictional compliance issues for employers. The survey further indicated that in today’s competitive job market, more than 17% of employers have eliminated or relaxed background check requirements to address recruiting and hiring challenges.

Several recent developments further complicate the ability of employers to conduct criminal background investigations and background checks on job applicants.

Disclosure requirements

Background check disclosure is a key part of the federal Fair Credit Reporting Act (FCRA) and has become a hot area for class action lawsuits. Before an employer performs a background check on an applicant, the employer must disclose to the applicant that they may obtain a background check or consumer credit report for employment purposes.

The FCRA imposes technical requirements for the exact language; adding too much or too little information may result in liability. For example, a 2022 California Court of Appeals decision allowed a class action lawsuit proposed by the FCRA alleging that a legal disclaimer mistakenly left in a background check disclosure was “foreign” information. inappropriate to sue the employer.

Under the FCRA, companies can face statutory damages of $100 to $1,000 per violation, which can add up if an organization has conducted a number of background checks over several years. Additionally, contracts between employers and background check providers generally do not require providers to compensate employers for non-compliance, leaving employers liable to significant fines and penalties.

Ban Box Laws

Des Moines, Iowa, last year became the last jurisdiction pass a “ban the box” law that will limit employer inquiries and criminal background checks of a job seeker early in the hiring process. While banning the box laws were initially intended to ban the threshold question on a job application to find out if an applicant has been convicted of a crime in the past, jurisdictions such as Des Moines are increasingly imposing restrictions. substantial benefits to employers in this area.

The focus is now on when employers can inquire about criminal history or conduct a background check. The Des Moines law, which was passed in November 2021, makes it “unlawful and discriminatory” for employers to either inquire about an applicant’s criminal history or conduct a criminal background check before the employer make a conditional job offer to the candidate.

Additionally, a number of jurisdictions such as New York City and Philadelphia, updated their existing box ban laws to make them even more restrictive.

Personally Identifiable Information Publication Restrictions

New case law, rules, and interpretations from Michigan and California, designed to protect the release of personally identifiable data (PII) such as date of birth from court records, make background checks more difficult. Consumer Reporting Agencies (CRAs) use personal information, such as dates of birth, to confirm criminal history to meet high accuracy and verification standards under the FCRA.

The originally issued rules by the Michigan Supreme Court in July 2021 barred Michigan courts from disclosing PII in court records, although the court recently changed the rules to allow background check companies to seek permission from applicants for employment to obtain this information.

California is another story. Following the 2021 California Court of Appeals decision in All of Us or None vs. Hamrickwhich prohibited Riverside County Superior Court’s electronic criminal record from being searchable by an individual’s date of birth or driver’s license number, several other state courts have said they will no longer provide these information.

There is not yet a clear workaround for performing background checks in California, but a bill introduced in February 2022, Senate Bill (SB) 1262, seeks to provide a legislative solution. In the meantime, background check companies may need to use other means to verify criminal background information, either from statewide sources or by confirming information directly with district attorneys.

Key points to remember

The burden of complying with background check requirements often falls on employers, not background check providers. Employers may consider reviewing their background check disclosures and processes to ensure compliance with relevant federal, state and local laws and regulations.

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