Independent Contractors vs. Employee vs. FCRA – It’s Not as Settled as You Think

It is no surprise that the Fair Credit Reporting Act (FCRA) is the subject of many lawsuits and multi-million dollar class action settlements, particularly when it comes to a consumer report being obtained for “employment purposes.” This includes the “stand-alone disclosure” requirement and the two-step adverse action process when making an adverse employment decision.  What is a surprise is that even when we think FCRA issues are settled, they can arise again and be interpreted differently than they had been before.  Specifically, the issue of whether the FCRA requirements apply to independent contractors has recently been brought back to the forefront.

Contrary to the long-standing approach of many employers, in Smith v. Mutual Omaha Insurance Company, the Southern District of Iowa held that the protections afforded when consumer reports are obtained for “employment purposes” under the FCRA do not extend to reports obtained for independent contractors.  In this case, Smith applied as an insurance salesperson contractor with Mutual Omaha.  He was not hired because of an inaccurately reported felony on his background screening report.  However, Mutual Omaha did not provide prior notice before advising him that he did not get the position.  Smith brought suit, alleging a violation of the FCRA requirement of providing a pre-adverse action notice and a summary of rights if a consumer report is used to make an adverse employment decision.  Mutual Omaha moved to dismiss on the basis that Smith was an independent contractor and not an employee, so that the FCRA’s pre-adverse action notice requirement did not apply.

“Employment purposes” is defined by the FCRA as “a report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.” 15 U.S.C. § 1681a(h) (emphasis added).  The court looked at the plain language of the statute and found that there was no ambiguity– that the requirement applies only to employees and not independent contractors.  In doing so, the court followed the reasoning of two prior cases–the Northern District of Ohio in Johnson v. Sherwin-Williams Co., 152 F. Supp. 3d 1021 (N.D. Ohio 2015) and the Eastern District of Wisconsin in Lamson v. EMS Energy Marketing Service, Inc., 868 F. Supp. 2d 804 (E.D. Wis. 2012).

In the Lamson case, a Wisconsin federal court judge also held that the FCRA’s disclosure obligations do not apply to independent contractors. In that case, a sales representative filed suit against EMS Energy Marketing Service after he was terminated, based on claims that they failed to provide him with the written notice of his rights and a copy of the background screening report.  The court ruled that Lamson was hired as an independent contractor, not an employee, and that the language of the statute refers only to employees. As such, the FCRA’s requirements did not apply.

With these cases, it appears there is a trend that the FCRA requirements do not apply to independent contractors.  However, it wasn’t long before the Lamson case that the Federal Trade Commission issued contrary guidance on this particular subject, noting “’employment purposes’ is interpreted liberally” and it “may apply to situations where an entity uses individuals who are not technically employees to perform duties” in its 2011 staff report titled 40 Years of Experience with the Fair Credit Reporting Act.  Specifically, the FTC stated:

INDEPENDENT CONTRACTORS, AGENTS, AND VOLUNTEERS Because the term “employment purposes” is interpreted liberally to effectuate the broad remedial purpose of the FCRA, it may apply to situations where an entity uses individuals who are not technically employees to perform duties. Thus, it includes a trucking company that obtains consumer reports on individual drivers who own and operate their own equipment; a title insurance company that obtains consumer reports on individuals with whom it frequently enters into contracts to sell its insurance, examine title, and close real property transactions; or a nonprofit organization staffed in whole or in part by volunteers.

The FTC relied, in part, on the 1975 case of Hoke v. Retail Credit Corp., 521 F.2d 1079 (4th Cir. 1975), which noted that courts “are not constrained to limit its application by the common-law concept of master and servant,” so the FCRA could apply to independent contractors under some circumstances.

Based on the FTC’s liberal interpretation, many employers have proceeded with caution (and justifiably so) by applying the FCRA’s requirements to all applicants, regardless of their status as employee or independent contractor.  There is now a third ruling demonstrating this may not be necessary.  This conflict continues to beg the question – does an employer need to abide by the FCRA when it comes to independent contractors?

One may argue that in order to “play it safe” until there is a definite answer to this question, an employer should merely treat everyone the same whether they are independent contractors or employees.  However, this could contradict a long-standing employment law doctrine, which differentiates the two categories.  If an employer treats an intended independent contractor as an employee for FCRA purposes, could they be deemed an employee for other purposes?  This leads down a path filled with issues of interpretation and sources of potential litigation.

There is also the question about state requirements.  Other than the FCRA, certain states, such as Pennsylvania, California, and Massachusetts, to name a few, also have their own requirements when it comes to pre-adverse action notices.  Are they going to fall under the broader interpretation or the narrower one, as exemplified in the Smith case?  As far as statutory construction, all three state statutes specifically use the word “employment.”   For example, Pennsylvania mentions “employment applicant” and “suitability for employment,” while California says “position of employment” and Massachusetts uses “employment decision.”  Following the reasoning of the Southern District of Iowa, it would appear that these statutes apply to employees and not independent contractors.  However, the courts in these (and other) states do not have to follow Iowa’s reasoning and could make their own decision, independent of the ruling in the Smith case.

Ultimately, this is one district court’s opinion, but the evolution of this issue demands attention.  Other courts could take the broader interpretation that “employment purposes” includes the work of independent contractors, depending on the circumstances.  Until there is more clarification, employers may consider treating independent contractors the same way they would treat employees for the purpose of the FCRA’s requirements.  In doing so, they would be well-advised to create a separate background screening policy for independent contractors, rather than including them in the employee background screening policy.  Modifying forms to refer to the applicant as an independent contractor and not as an employee could help to avoid the question of the status of that work relationship for other reasons later.

At Hire Image, we understand the various issues surrounding the FCRA, including the distinction between employees and independent contractors.  Additionally, our disclosures and authorizations already cover contractors and volunteers.  Contact us to discuss your situation and ways in which we can help.

 

At the Crossroads of Reintegration and Recidivism

Last month, the Society for Human Resource Management’s (SHRM) announced the launch of “Getting Talent Back to Work,” a national initiative supporting the hiring of individuals with criminal records.  Through this “second-chance” initiative, business executives and association leaders are asked to take a pledge to consider qualified individuals for job opportunities, regardless of any criminal records.

At the same time, we are seeing more and more stories involving incarceration, crime rates, presidential pardons, background screening, and legislation intended to “assist” with reintegration into society saturate the news lately. While most people agree that reintegration after incarceration is important to society overall, as evidenced by SHRM’s new initiative, we would be remiss if we didn’t also recognize that there are some, at a minimum, perceived risks associated with such reintegration.

The many facets to this process, including securing gainful employment, ideally should be fair for all parties involved. Current legislation demands that we are fair to the newly released person in order to help with reintegration. However, it does little to ensure fairness to the employer, essentially taking away employers’ rights to control their own hiring processes.  Employers need to be concerned not only with ex-offenders re-entering the workforce, but also about their own specific priorities, including protecting employees, customers, property, and finances.  What are the consequences if this formerly incarcerated new employee is a recidivist?

A recidivist is a person who is released from prison and who later commits another crime, or reoffends, such as a parole violation or the commission of a new crime.  Unfortunately, recidivism is rampant across the country. According to a recent study by the United States Sentencing Commission, almost three-quarters (72.8%) of federal offenders sentenced in fiscal year 2016 had been convicted of a prior offense. The average number of previous convictions was a staggering 6.1 among offenders with criminal history.

Click Here to View our Infographic on the latest Recidvisim Rates.

According to the report, prisoners released after serving time for property offenses were the most likely to recidivate, or relapse, into crime. Within five years of release, 82 percent of property offenders were arrested for a new crime, compared to 77 percent of drug offenders, 74 percent of public order offenders, and 71 percent of violent offenders, the report found. The report also found that recidivism was highest among males, blacks, and young adults.

These findings, unfortunately, are not new and their results are even further evidenced by the stories we hear about. For instance, a priest in Florida was murdered by a career criminal he was attempting to help through an outreach program for men who had recently been released from prison. The Reverend Rene Wayne Robert was aware of his assailant’s criminal history and in trying to help him get back on his feet, he became his next victim. In Washington D.C., a prominent business man and his family were held for ransom and then murdered by a former employee with a criminal record whom the business man had given a second chance at employment in his welding business.

With the consequences of recidivism playing out in the news, how lawmakers can continue to enact new and more restrictive laws that deny employers the right to know who is in their midst is unclear. Despite the evidence to the contrary, legislators continue to reduce barriers for criminals to gain employment after being released from prison. Lawmakers want to level the playing field with legislation such as Ban the Box, affecting more states and cities each year. The legislation is more than just removing the question on the initial application of whether the applicant has a prior criminal history.  The trend is how far back an employer can obtain the records, if the employer can use the information returned on a criminal record, increased notifications and other regulatory burdens. These steps are taking the employers out of making their own informed employment decisions.  Imposing new laws and rules that force employers to relinquish control over their own business processes, without receiving any benefit is unacceptable.

The alarming recidivism rates should be evidence enough that employers and business owners must have access to criminal history information if they are to keep their workplaces safe.  This can only be done by conducting comprehensive background screening, while complying to all applicable rules, regulations, and laws. Background screening is invaluable to the interest of public safety, especially as more federal and local policies are introduced that curb an employer’s ability to use criminal history information in employment decisions.

We, as a society, need to find a better way to weigh the rights of the formerly incarcerated in finding employment with the rights of an employer to control their own hiring process. For common-sense reintegration efforts to truly work, lawmakers should look at the numbers supplied by their own agencies, recognize that businesses must continue to have a right to look at criminal history in order to mitigate risk in their workplaces, and come up with creative ways to assist reintegration efforts without imposing new, more restrictive laws.

Tax incentives are one way to assist employers able and willing to take the risk. The creation of a re-entry certification program whereby the government attests to and backs the individual’s fitness for the workplace and provides immunity for the employer who relies on those certifications is another positive step.  Additionally, programs that focus on helping individuals gain skills that may have been lost or never learned due to years behind bars should be applauded.  There have been, and continue to be, similar efforts to the SHRM Initiative.  For example, President Obama had created the Fair Chance Business Pledge in 2016, a call-to-action for business owners to improve their communities by helping eliminate barriers for those with criminal records.  More recently, President Trump signed the First Step (“Formerly Incarcerated Reenter Society Transformed Safely Transitioning Every Person”) Act into law, reducing sentences and introducing opportunities for early release for people serving time in federal prisons, impacting over 180,000 people.

Our hope would be a shift in the “leveling of the playing field,” so that businesses can perform the best due diligence possible to keep their workplaces safe, while assisting with reintegration in ways that make sense for all parties involved.  Throughout this process, the value of background screening cannot be understated. A trusted partner can help navigate the complexities of the varying state and municipal laws, while enabling employers to make the best, most risk-adverse decision for their businesses.

 

Hire Image’s Top 10 Background Screening Predictions for 2019

When it comes to background screening, drug screening, and employment verification, those in the background screening industry must keep informed of the ever-changing rules, regulations, laws, and court decisions.

What are the most impactful topics facing the industry for 2019?  Of those, what will have the greatest impact on the practice of human resources related to background screening?

Here are Hire Image’s 2019 Top 10 Predictions for what is sure to demand attention this year.

1. Criminal Justice Reform Continues to Gain Momentum with the Passage of the First Step Act

On December 21, 2018, the First Step (“Formerly Incarcerated Reenter Society Transformed Safely Transitioning Every Person”) Act was signed into law and is reported to bring the most significant changes to the criminal justice system in decades.

The First Step Act will reduce sentences and introduce opportunities for early release for people serving time in federal prisons, impacting over 180,000 people.  It will encourage inmates to participate in job training and rehabilitation programs and allocate millions of dollars into those programs over the next five years.  Inmates also have the ability to earn more credits for good behavior to shorten their prison time and transfer to halfway houses, home confinement, or other supervised release.  Additionally, judges will have more discretion with mandatory sentencing guidelines for people with limited criminal backgrounds.

This law impacts only the federal court system, but we expect criminal justice reformers to use this legislation to push for changes at the local level. According to the US Bureau of Justice Statistics, 87% of US inmates are in held in state facilities and many more are in local jails.

 2. Questions Not to Ask when Hiring Continue to Rise

There are more jurisdictions, both at the state and local levels, with Ban the Box laws and Salary History Bans than ever before.  These laws severely restrict the information a prospective employer has access to in order to make hiring and promotion decisions.  2019 will see more of these laws go into effect, starting with both Connecticut and Hawaii adding Salary History Bans, effective as of January 1, 2019.

The substantial increase in these types of laws, coupled with criminal justice reform that is just starting to scratch the surface, is leading employers down a path they do not want to go – having to make hiring, promotion, and other business decisions with only limited information.  While the reasoning behind these laws is sound, unfortunately, there is not much in terms of protecting the employers who need to balance their decision-making process in face of these laws with the effective running of their businesses and protection of their customers and property.

3. Marijuana Laws, Including Recreational Marijuana, and Cases on the Rise

Marijuana remains a Schedule I substance under the Controlled Substance Act, which makes it illegal for any reason under federal law.  However, more than half of the states have now legalized marijuana for either medical or, the more expansive, recreational use.  Each state then has its own nuances to further complicate the matter.  This inconsistency among states and, more specifically, between states and the federal government leaves many employers wondering what the changing laws mean for their existing drug screening policies.

2018 saw a Minnesota job applicant who filed a federal class action alleging violation of the Minnesota Human Rights Act because of a company’s refusal to hire marijuana users, including medical marijuana users. And in a federal case in Connecticut, the court ruled that under the Connecticut Palliative Use of Medical Marijuana Act, employees who use the drug after work hours and are not impaired cannot be discriminated against despite the company’s federal contractor status.  Delaware also recently ruled that its medical marijuana law did not conflict with the federal Controlled Substances Act and provides its own implied right of action.  Cases will be on the rise in 2019 and beyond until some clarity on this issue is found.

Employers will increasingly need to review their job descriptions and perform a safety analysis to determine if accommodations are necessary, based on the applicable laws in their states.

4. Social Media Searches Continue to Rise

Employers and prospective employees are using social media more and more when recruiting or looking for employment, respectively.    According to a 2018 survey, 70% of employers are now using social media.  This represents a significant increase from the 22% who did so 10 years ago.  That increase in percentage, along with the increasing amount of Generation Z entering the workforce demonstrates that the use of social media in the hiring process will continue to increase.

As with most business decisions, for the employer, it is a risk versus reward analysis.  The reward is avoiding a potentially bad hire and the tremendous costs associated with such.  This is invaluable.  However, there are a few risks that employers should keep in mind if they choose this route.  Some of those risks include:

  • The employer may come across protected classes of information and then use that information to make a hiring decision, whether intentionally or unintentionally. Even the appearance of a decision not to hire someone based on a negative impression related to race, gender, religion, disability, or other protected classes could subject them to a discrimination lawsuit.
  • There is a greater chance of coming across false positives or negatives. People use different names on their social media accounts and at least some information posted is usually incorrect.  Employers run the risk of misidentifying someone or missing someone all together because of these inaccuracies.
  • The employer needs to be careful not to violate the applicant’s right to privacy. It should be noted that this does not apply if the applicant’s social media settings are set to public.  That information is open for anyone, including potential future employers, to review.  However, if their profile is set to private, the employer cannot try to bypass those settings without risking exposure to potential liability down the road.
  • The employer needs to evaluate how he or she will use information found on legal issues, including gun control, alcohol use, or legalized drugs. Employers will need to have policies in place to address these areas, and the risks, if any, that apply to their companies.

These concerns should be considered carefully in order to decide if this type of investigation is worth the effort and risk. Companies are encouraged to discuss these searches with their legal counsel and consider outsourcing this process to stay away from potential discrimination claims.

5. Drug Screening Panels and Tests will Continue to be Added in Response to the Country’s Drug Crisis

According to an analysis of over 10 million drug tests, Quest Diagnostics found that the American workforce reached the highest positivity rate for drug use in over a decade.  Barry Sample, Senior Director, Science and Technology at Quest said, “[t]his year’s findings are remarkable because they show increased rates of drug positivity for the most common illicit drugs across virtually all drug test specimen types and in all testing populations.”

Poison control centers and hospital emergency rooms have reported increasing instances of abuse and overdose of synthetic (also called designer) drugs, which are not approved by the FDA.  Synthetic drugs have constantly changing compounds, so that testing becomes increasingly difficult.  As such, it is imperative to stay one step ahead in new drug-test development.

Drug screening panels will need to be added or changed in order to keep up with the increased use of various drugs.  Both the Department of Health and Human Services (HHS) Mandatory Guidelines and the Department of Transportation’s rules reflect this trend by clarifying existing drug testing program provisions and adding certain semi-synthetic opioids including hydrocodone, oxycodone, hydromorphone, and oxymorphone, commonly referred to as OxyContin®, Percodan®, Percocet®, Vicodin®, Lortab®, Norco®, Dilaudid®, and Exalgo® to the drug testing panel in response to the increasing concern over opioid abuse in this country.

Other than the new panels, additional drug screening tests are also becoming more prevalent.  Specifically, more employers are using oral fluid testing, which is considered better at detecting recent drug use than urine and hair drug tests.  According to Quest Diagnostics, “oral fluid testing offers confidential lab-based drug test results.  By using oral fluid instead of urine, donors can collect their own samples on-site and in the presence of a monitor, reducing the likelihood of tampering or a donor challenge later in the screening process.”

6. Data Security Post-GDPR Remains a Priority

As always, with an increase in online information, comes an increase in concern over the security of that information.  Securely maintaining and disposing of records that contain sensitive information will continue to be a top priority for every business owner, especially in light of 2018’s GDPR passage.  The GDPR was the first legislation of its kind, tackling threats to data security and specifically addressing a company’s accountability to their customers.  These important changes required action by companies and institutions around the world. Organizations will continue to work on compliance in this area, as much of the impact of the regulation will likely be determined with cases that are sure to arise and through the reasoning of the courts in resolving such issues.

The Federal Trade Commission (FTC) is charged with the regulation and oversight of business privacy laws and policies in the U.S. that impact consumers, including the Fair Credit Reporting Act, which governs background checks and provides guidance on best practices businesses should follow to keep data secure.

In addition to following the FTC’s guidance on the proper data security practices, businesses that utilize a consumer reporting agency for their background screening services should be sure to partner with one that has achieved accreditation with the National Association of Background Screeners (NAPBS) Background Screening Credentialing Council (BSCC). The Background Screening Agency Accreditation Program (BSAAP) standard, policies and procedures, and measurements are available at http://www.napbs.com.

7. Access to Criminal Data Information will be Limited

The Clean Slate Act of 2018 was introduced in August with the goal of helping individuals charged with certain crimes rehabilitate by clearing their criminal history.  If passed, federal criminal records for marijuana and minor drug-related offenses would automatically be sealed, rather than having to go through the current process for sealing records.  As such, on a much larger scale, employers and landlords would not see these records when running background screenings and would have no indication if there are criminal-related red flags.

Some states have already implemented similar legislation.  For example, Pennsylvania has expanded the process for sealing state criminal records to include more offenses and has automated the sealing of records, including many convictions over 10 years old, as well as arrests that do not result in conviction within 60 days.  Michigan, Colorado, and South Carolina are also expected to introduce similar legislation.  Thus, it appears that this movement is now occurring simultaneously at both the federal and state levels.

The legislation thus far relates to older charges or minor drug possession charges. Employers will want to keep an eye to legislation that may further restrict access to criminal record information that may impact the safety of workplaces, properties, customers, employees, and tenants.

8. FCRA Class Action Lawsuits will Continue to Result in Million Dollar Judgments

Recently, the United States District Court for the Southern District of California granted final approval of a $1.2 million class action settlement against Petco Animal Supplies, Inc.  Feist v. Petco Animal Supplies, Inc. demonstrates that the trend of class action lawsuits brought against employers for alleged violations under the FCRA is not slowing down.

The lawsuit challenged the company’s form of disclosure for employment background checks, alleging that Petco violated the FCRA by: (1) obtaining consumer reports for employment purposes without the required stand-alone disclosure and (2) not obtaining the required authorization.

The FCRA is intended to protect consumers from either willful or negligent inclusion of inaccurate information in their background check reports. It also regulates the collection, dissemination, and use of consumer information.  While it is intended to protect the accuracy and privacy of information used in employment decisions, it is not intended to stop employers from using background screenings.  Rather, it mandates that employers follow specific rules with regard to that information and authorizations obtained from the consumer.

This is not the first large FCRA-related settlement we have seen and it is certainly not going to be the last.   2017 saw cases involving Avis paying a $2.7 million settlement in a class action lawsuit and Postmates paying a $2.5 million settlement, among others.  This year brought class action lawsuits against McDonalds (pending), a PepsiCo Subsidiary ($1.2 million settlement), and now Petco.

Employers should not let down their guard in 2019 when it comes to FCRA-related lawsuits, as plaintiffs’ attorneys will continue to creatively bring suits to show the “concrete injury” requirement established in Spokeo, Inc. v. Robins, Inc. in 2016.  Although most class action lawsuits that wind up in the news involve large, recognizable companies, employers of any size are at risk and should frequently review their forms and processes to ensure that they are in compliance with the FCRA. Employers should also review the laws in the states and cities in which they do business to ensure compliance with local laws.

9. Continuous Criminal Background Screening Becoming More Prevalent – It’s Not Just for On-Demand Workers Anymore 

Justifiably, employers will always want to know who is working for them.  Not just at hiring, but throughout their employment relationship.  A current employee can engage in illegal behavior as much now as he or she could have before they were an employee.

On-demand employers, such as Uber and Lyft, have always used continuous background screening.  However, for the most part, it has largely stayed in that sector, other than the healthcare and financial services industries.  Now, other industries are starting to see the benefits, especially in light of the “Me Too” Movement of 2018.

The “Me Too” Movement demanded attention from employers in 2018.  Employers want to know, among other issues, are they employing people who have a tendency to harass?  Beyond harassment, there must be a certain level of trust.  Employees also represent a company’s brand and have access to financial and other confidential information.  Not having trustworthy employees can lead to loss of productivity, workplace safety, and theft.

With the consideration of continuous background screening, comes the concern over privacy.  Balancing these concerns with the pressure to protect other employees, customers, and property is going to be a key priority for employers in 2019 as they determine if background screening will stay at the pre-employment stage or continue beyond.

10. International Background Screening Becomes More Commonplace

There is no doubt that businesses have the ability to become international enterprises easier and faster than ever before.  This provides for more opportunities, and with more opportunities, comes more risks.  One of those risks is with regard to background screening employees in, or from, another country since more companies are recognizing the fact that employees no longer have to be physically present in and can work from anywhere.

Companies are well-aware of the various federal, state, and local laws with which to comply for their background screening needs – the EEOC, FTC, and FCRA, to name just a few.  However, dealing with similar laws from other countries is a “foreign concept.”  Additionally, not only are there privacy laws to deal with, but cultural nuances that also play a large part in the process.

Companies in 2019 will start to consider these issues and implement strategies and global screening policies to deal with them effectively.  Whether or not they have an office in another country is irrelevant because some of their US-based employees may have international backgrounds that need to be checked.  Companies should implement comprehensive screening plans that are flexible enough to take into account varying laws, requirements, and cultural differences.  With a plan in place, they can mitigate risks and take advantage of the benefits of increased diversity, including differing skills, creativity, and ideas in the workplace.

It is clear from all that is happening in our industry that the year 2019 will be a busy one in the background screening, human resources, and employment law fields.  Hire Image will continue to monitor legal and regulatory developments in federal, state, and local jurisdictions as it relates to background and drug screening and share those changes that impact employers.

5 Quick Fixes to Your Pre-Employment Interviews

By Dave Thompson CFI

Clear the background check, drug screening test, and pass through a series of scripted behavioral based interviews with all the decision makers. That sounds like a great process until about three weeks after hiring the candidate you find out they omitted something from their application. They have a problem with taking feedback and clearly aren’t a fit for your brand.

Without any extreme changes to your current process here are five quick adjustments to make in your next interview with the goal of obtaining more truthful statements than you have in the past.

 Get out from Behind the Desk

In a one-on-one interview it is common for the interviewer to sit behind their desk, in their office, with all their accolades hanging on the wall behind them. If you happen to walk into a room and you observe someone sitting behind a desk, immediately you associate that person as a decision maker, the judgmental authority figure. This is due to years of conditioning from walking into the boss’s office, the principal’s office or a court room – the decision maker is behind a desk. When we determine why people lie, we need to consider the fact that they are afraid that speaking the truth may result in a negative decision or judgment. The simple fact that the interviewer is positioned behind a desk only amplifies that fear which, in effect, reduces our chances of obtaining full transparency. Attempt your next interview next to a desk, in an open conference room, or somewhere that doesn’t shout judgment when they walk in the room.

 Good People Sometimes Make Bad Decisions

Similar to our last point, people may be fearful of disclosing the truth because it may label them in a negative fashion or eliminate their chances of landing the job. We need to help remind the candidate that great employees may still have imperfections in their past. If you really put this into perspective, we genuinely think of ourselves as good people and good employees; however, we’ve all made some decisions in our life that we may not be too proud of. Prior to asking a question of your candidate, it’s important to show understanding that most candidates have made errors in judgment in the past.

For example, if you are going to ask your candidate about any disciplinary issues they have had, you should set up that question beforehand. Simply explain how sometimes good employees may have acted out of character because they were short on time, rushing a project, aggravated with the company, or maybe just not trained well. Often these acts result in coaching by their employer, but we understand everyone makes mistakes and successful people learn from those mistakes; when was the most recent time you’ve received some type of coaching at work?

 Sound of Silence

Yes, it’s awkward to sit in silence while somebody in the room has their mind racing attempting to think of an answer. Allow it to happen. Often, interviewers become uncomfortable with silence and fill it with a whole bunch of nonsense. In our effort to ultimately have full clarity it’s important to allow the candidate to process their thoughts and provide an answer. However, this is not the only time silence is important. An interviewer may hear a word or a part of the candidate’s answer that triggers a follow-up question. This is a great approach to continuing to expand on a specific issue, but it’s important the interviewer allows the candidate to completely finish their answer before asking another question. Interrupting the candidate during their answer may cause them to lose their thought process or prevent them from providing further information and it’s also aggravating for a candidate who is trying to justify their qualifications. When conducting a thorough fact-finding interview – it’s important for the subject or candidate to convey their entire thought process without contamination from the interviewer.

 Stop with the “Yes” or “No” Questions

Simply put, if you ask someone a “yes” or “no” question and they feel they will be discredited by saying “yes” then they will quickly say “no”. However, if we phrase the question differently to allow the candidate to think about their answer and minimize the negativity of their admission it will result in more transparency. For example, asking the candidate – “Have you had any attendance issues in the past year?” will result in a quick “No”. Instead, ask it assumptively – “How many days were you late to work in the last year, any more than 15?” Now, when the subject thinks of their answer they could tell you “No, not that many… maybe like 5 days”. Allowing the subject to minimize their admission from an exaggeration will make it easier for them to be truthful.

 We Know What Happens When We Assume

This should be an obvious point – but all too often it is overlooked. When reviewing a candidate’s resume or application sometimes the interviewer makes assumptions without realizing it. The interview is a chance to dig further into the candidate’s qualifications, experience and personality; it should be anything but a formality. Assuming a candidate understands the amount of travel, type of work, or daily structure of the job they are applying for can be a disastrous mistake. Also, in review of a resume we make several assumptions. If a candidate has a prior job title that includes “Manager” it doesn’t necessarily mean they managed anybody or have managerial experience. The candidate lists a college or university on their resume for “education”, does not mean they actually graduated with a diploma. It’s important that an interviewer takes a critical look and identifies any gaps or assumptions prior to the conversation so they can ask the candidate to clarify.

Before you go through your next candidate interview in the same fashion you’ve been conducting them – I challenge you to review the above points and see if it results in a more open and truthful dialogue. Hopefully the truth doesn’t scare you away from the candidate, but if it does, aren’t you glad you discovered that before the offer was made?

 

David Thompson, CFI, is the Vice President of Operations with Wicklander-Zulawski & Associates, Inc. (WZ).  He is responsible for the day to day operations of WZ, as well as strategic planning and the evolution of interview and interrogation content.  David has also served as the Director of Investigations giving him the opportunity to manage a variety of cases while conducting interviews and consulting on investigations ranging from theft and fraud to sexual harassment and homicide.  David has contributed opinions on behalf of WZ for a variety of cases and has been cited by the Federal Court of Appeals for his involvement on the topic of interview and interrogation.

FCRA Lawsuits Gain Momentum with $1.2 Million Settlement in Petco Case

The end of the year is as good a time as any for a Fair Credit Reporting Act (FCRA) compliance reminder, especially in light of a recent class action settlement involving a major national retailer.  On November 16th, the United States District Court for the Southern District of California granted final approval of a $1.2 million class action settlement against Petco Animal Supplies, Inc.  Feist v. Petco Animal Supplies, Inc. demonstrates that the trend of class action lawsuits brought against employers for alleged violations under the FCRA is not slowing down.

Petco Animal Supplies, Inc. is a major national retailer that sells pet care products and services. The named Plaintiff in the case was a former job applicant of the company, who alleged that she was not properly notified that Petco would be reviewing her consumer reports and as such, was “deprived of an opportunity to review and challenge the report” upon which the denial of employment was based.

The class action was initially filed against Petco in May of 2016.  The lawsuit challenged the company’s form of disclosure for employment background checks, alleging that Petco violated the FCRA by: (1) obtaining consumer reports for employment purposes without the required stand-alone disclosure and (2) not obtaining the required authorization.

While a background check consent form was included in a series of forms in the Petco job application, the forms also contained over thirty paragraphs, including information on other authorizations, a summary of consumer rights in other states, a summary of consumer rights under the FCRA, and a list of entities that enforce the FCRA.  As such, the Plaintiff argued that the background check consent form violated the FCRA requirement that the disclosure be made “in a document that consists solely of the disclosure.”

The FCRA is intended to protect consumers from either willful or negligent inclusion of inaccurate information in their background check reports. It also regulates the collection, dissemination, and use of consumer information.  While it is intended to protect the accuracy and privacy of information used in employment decisions, it is not intended to stop employers from using background screenings.  Rather, it mandates that employers follow specific rules with regard to that information and authorizations obtained from the consumer.

In this case, the judge certified the class as follows: “All persons regarding whom Defendant procured or caused to be procured a consumer report for employment purposes during the period from May 1, 2014 through December 31, 2015. Included in the Settlement Class is a subclass consisting of those against whom Petco took an adverse action subsequent to procuring a consumer report and did not receive a pre-adverse action notification letter.”

After the judge denied Petco’s Motion to Dismiss, Petco settled the suit and agreed to pay $1,200,000 to establish a settlement fund. Under the approved settlement, the lead plaintiffs would receive $10,000 as an incentive award and the attorneys would receive fees and costs.  The remaining class members (approximately 50,000) would receive an estimated $20 each.

This is not the first large FCRA-related settlement we have seen and it is certainly not going to be the last.   2017 saw cases involving Avis paying a $2.7 million settlement in a class action lawsuit and Postmates paying a $2.5 million settlement, among others.  This year brought class action lawsuits against McDonalds (pending), a PepsiCo Subsidiary ($1.2 million settlement), and now Petco.

Employers should not let down their guard when it comes to FCRA-related lawsuits, as plaintiffs’ attorneys will continue to creatively bring suits to show the “concrete injury” requirement established in Spokeo, Inc. v. Robins, Inc. in 2016.  Although most class action lawsuits that wind up in the news involve large, recognizable companies, employers of any size are at risk and should frequently review their forms and processes to ensure that they are in compliance with the FCRA. Employers should also review the laws in the states and cities in which they do business to ensure compliance with local laws.

The EEOC is Cracking Down on Employers with Pre-Employment Physical Ability Tests

The EEOC’s Strategic Enforcement Plan (SEP) focuses, in part, on eliminating class-based recruitment and hiring practices that discriminate against racial, ethnic and religious groups, older workers, women, and people with disabilities.

Since issuing the SEP, the agency has filed lawsuits against employers to ensure that there is a level playing field for women and individuals with disabilities, among other classes.  Recent cases demonstrate this with regard to pre-employment Physical Ability Tests (PATs) for job applicants.  The EEOC is pursuing employers where the PAT being used may be disparately impacting women – and, the EEOC is winning.  In the most recent case, $3.2 million was awarded to a class of female applicants, who were disproportionately turned away from a job because of the results of the PAT.

Given this impact, and especially in light of the size of the recent judgment, it is crucial for employers to understand the issues surrounding PATs.  The EEOC is searching for any disparate impact a PAT could have.  If one is found, the employer has the burden of showing (1) the use of the PAT is job-related and (2) the PAT is consistent with business necessity.  In order to show business necessity, the PAT must be predictive of the individual’s ability to perform essential job tasks.  The employer must also show that no alternative practice could achieve his or her objectives with less adverse impact.

The EEOC lists Best Practices for Employment Testing.  Those include:

  • Employers should administer tests and other selection procedures without regard to race, color, national origin, sex, religion, age (40 or older), or disability.
  • Employers should ensure that employment tests and other selection procedures are properly validated for the positions and purposes for which they are used. The test or selection procedure must be job-related and its results appropriate for the employer’s purpose. While a test vendor’s documentation supporting the validity of a test may be helpful, the employer is still responsible for ensuring that its tests are valid under UGESP.
  • If a selection procedure screens out a protected group, the employer should determine whether there is an equally effective alternative selection procedure that has less adverse impact and, if so, adopt the alternative procedure. For example, if the selection procedure is a test, the employer should determine whether another test would predict job performance but not disproportionately exclude the protected group.
  • To ensure that a test or selection procedure remains predictive of success in a job, employers should keep abreast of changes in job requirements and should update the test specifications or selection procedures accordingly.
  • Employers should ensure that tests and selection procedures are not adopted casually by managers who know little about these processes. A test or selection procedure can be an effective management tool, but no test or selection procedure should be implemented without an understanding of its effectiveness and limitations for the organization, its appropriateness for a specific job, and whether it can be appropriately administered and scored.

The following are some recommendations specifically for employers conducting PATs:

  • Ensure the PAT is properly validated (actually testing physical abilities that workers need on the job)
    • Use a professional job analyst/consultant (appropriate employee safety experts)
      • Include measurements of frequency, weight, durations, tools, and distances involved in performing physical tasks
    • Have the analyst document the verifiable physical tasks necessary for the specific job (not a class of jobs)
  • Design/Redesign a PAT to simulate job tasks or test minimum level of fitness required to safely and effectively perform the job.
  • Revalidate PATs to make sure tests are still measuring only necessary job tasks.

While PATs are useful tools to improve worker safety, they can result in disparate treatment leading to claims of discrimination.  Employers should pay close attention to their practices, consider the above recommendations, and be aware of the EEOC’s continued pursuit of employers who are not doing enough to ensure that women and people with disabilities have a fair chance to obtain a position that may involve a pre-employment physical ability test.