If you conduct criminal or credit checks on applicants or employees take note that these continue to come under fire. Here are some highlights:

Half Empty: So far this year several lawsuits have already been filed alleging violations of the Fair Credit Reporting Act (FCRA) by employers' obtaining background reports (criminal, credit, other).  

1. Authorization form - be sure yours is separate and apart from any other document, such as your employment application. The FCRA requires that the notice be provided "in a document that consists solely of the disclosure." 
2. Make it clear and legible - the FCRA requires that your notice be "clear and conspicuous." 
3. Pre-adverse Action Notice - if you receive information which may be used as a basis (even if not the sole basis) for not hiring, firing or taking other adverse action against an applicant or employee, ensure you issue a pre-adverse action notice and copy of the report before making your final decision or taking adverse action.
4. Adverse Action Notice - once you have provided a person with a "reasonable" period of time following the pre-adverse action notice be sure you issue an adverse action notice (yes, it does seem a tad repetitive).  

Half Full: On February 20, 2015 the US 4th Circuit Court of Appeals (covering MD, VA, WA, NC & SC) found in favor of the employer.  In the case of EEOC v. Freeman the court considered a class action lawsuit pursued by the EEOC challenging the employer's use of certain background checks. The EEOC argued that the employer's use of criminal background checks had a disparate impact on black and male applicants and that its credit checks had a disparate impact against black applicants. 

The EEOC's expert and statistical evidence was provided by an organization/industrial psychologist and associate professor of criminology.  In short, the court found "an alarming number of errors and analytical fallacies," the expert's work was of a "slapdash nature," "slipshod" and...well you get the idea.  

Lessons learned?  Know before you go and choose before you use. 

• FCRA Compliance - If you obtain background reports from a vendor or third party (aka a consumer reporting agency or CRA) ensure you are complying with the FCRA.  The Federal Trade Commission has a handy publication, "What Employers Need to Know".  Click here.  
• Know your state and local laws - At least 11 states limit employers' use of credit information and many state and local jurisdictions limit employers use of criminal information or when you may obtain it. 
• Track your results - The Uniform Guidelines on Employee Selection Procedures (UGESP) may require you to periodically monitor for disparate impact based on at least race and gender.
• Other Backgrounds and People - The above may apply not only to criminal and credit checks but to other background histories such as driving and academic records, as well as non-employment relationships, including independent contractors.  

This newsletter does not constitute the rendering of legal advice.  You should consult your company's legal counsel for guidance on employment matters.