By: Naomi R. Dewey, Partner
June 2015
Whether our clients are running large, multi-state organizations or looking for a caregiver to sit with an elderly parent, background checks are an important tool. However, the law on background checks continues to evolve and, sometimes, a little knowledge about a potential employee can be a dangerous thing. This Advisor is designed to highlight some of the legal issues that surround employment screening, background checks and credit reports, and, hopefully, to demystify some of the rules and regulations that apply to this often overlooked area.
Internet Searches
The most common pre-employment screening that we see is simple: a candidate sends his or her resume to a client, and the client performs an internet search using the candidate’s name or email address to gather more information. Easy, right? Yes, and no. Under federal law, it is illegal for an employer to discriminate against a job applicant because of his or her race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information. California law takes this one step further, and includes medical condition, gender identity, sexual orientation, and in some cases immigration status as protected characteristics. If your internet search leads you to information that a candidate is, for example, pregnant, or active in their local chapter of the AARP, would you later be able to prove that this information did not influence your decision to hire an alternate candidate?
The key to surviving claims for discrimination in hiring is to hire on merit, and establish objective criteria that enable you to do so. If you establish such criteria first, an internet search (to verify, for example, educational background) is not a bad idea. However, think carefully before you surf the web!
Background Checks
Many of our clients choose to make a successful background check a condition of any job offer. If you adopt this practice, make sure that it is in writing and included in any offer letter to the candidate. By using an outside vendor (or a law firm) to perform a check into databases that include criminal records, liens, judgments, DMV records and other information relevant to the position for which the applicant is being considered, employers can verify that the candidate is suitable for the job they are being hired for. More in-depth searches can include verification of educational qualifications, reference checks and review of professional licensure records. Such searches are almost always worth the expense –compare to the $2,500 or so that the most in-depth investigation will cost with the much greater cost of terminating an employee or, worse still, hiring an employee who turns out to have a history of embezzlement!
Consumer Credit Reports
California law prohibits employers from using an employee’s credit record as a factor in hiring, but there are notable exceptions: the law does not apply to (1) managerial positions or positions with regular access (other than in a retail setting) to date of birth, Social Security number, and credit or bank account information, (2) positions where the employee will have full banking access or enter financial contracts, (3) positions that involve access to the employer’s trade secrets or confidential or proprietary information, or (4) positions that involve regular access to at least $10,000 in cash. If you believe a potential employee falls into one of these exceptions, you must first offer him or her a position contingent on a satisfactory consumer credit report. You must also obtain written consent, using a form that contains specific legal language and offers the employee a chance to obtain a copy of any report. Always use an outside vendor for this process.
Handling Unsuccessful Background Checks
If you made a contingent job offer to an employee, and the background check or consumer credit report comes back with negative information, proceed with caution. Here, again, it pays to have set up some objective criteria beforehand. For example, you might decide ahead of time that you will only accept a FICO score of 600 or higher, or you will not accept an employee who does not have a clean driving record. Sometimes, however, the reports will bring back information in areas that are not so easy to define.
If you believe something in a background check merits a decision to withdraw a job offer, and you didn’t set up objective criteria covering that information ahead of time, talk to your attorney. It won’t take long, and good advice is always cheaper than litigation!
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© 2015 Buynak, Fauver, Archbald & Spray, LLP
DISCLAIMER: This Advisor is one of a series of business, real estate, employment and tax advisories prepared by the attorneys at Buynak, Fauver, Archbald & Spray, LLP. This Advisor is not exhaustive, nor is it legal advice. You should discuss your particular situation with us or with your own attorney. Our legal representation is only undertaken through a written engagement letter and not by the distribution of this legal Advisor.
