May 8, 2019
Compliance and complacency don’t go well together, so we created an e-book to help you keep your screening practices compliant.
House Oversight Committee Approves ‘Ban the Box’ Bill for Agencies and Contractors
The House Oversight and Reform Committee, through a voice vote in April, passed a bipartisan bill that would “ban the box” and prohibit federal agencies and contractors from asking job applicants about their criminal history until after they’ve made a conditional employment offer. Committee chairman Elijah Cummings (D-Md.) said the Fair Chance Act, if passed, would give “formerly incarcerated people a fair chance at a job.” The bill marks the latest efforts over the past few years to strengthen efforts made under the Obama administration to prevent a criminal history from disqualifying applicants from federal employment. The Office of Personnel Management in 2016 finalized a rule change that would delay questions about into criminal history until the later stages of the federal hiring process.
Washington State Passing Comprehensive Privacy Legislation
Comprehensive privacy laws are apparently a thing now. There is the General Data Protection Regulation (GDPR) in the European Union and California’s Consumer Privacy Act. Next, we may have Washington State passing comprehensive privacy legislation, making it the second state to do so. The statute is not finalized, but the state Senate passed a bill with bipartisan support, and a companion bill was introduced in the House and going through the committee process. Although the Washington Privacy Act (click here for SB 5376) could be amended in committee, it does to date include the following features (i) controller versus processor distinctions; (ii) consumer rights such as access, correction, erasure, portability; (iii) broad scope of applicability including whenever the products or services target Washington residents; and (iv) a requirement for meaningful privacy notices. As of now, there is an exemption for personal data under both the FCRA and the Driver’s Privacy Protection Act, which relates to background screening operations.
Salary History Restrictions, Ban the Box Ordinances, and/or Background Screening Requirements
The following states and cities passed salary history restrictions, ban the box ordinances, and/or background screening requirements:
Maine Lawmakers Celebrate ‘Equal Pay Day’ by Passing Pay History Ban
On April 2nd, Equal Pay Day, Maine’s House and Senate passed a bill prohibiting employers from asking about a potential worker’s wage history before making a job offer. L.D. 278 passed the Maine House by a vote of 86-54 after clearing the Maine Senate by a vote of 22-11 earlier in the day.
If Governor Janet Mills, a Democrat, signs the bill into law, it will go into effect immediately, and Maine will become the 14th state in the nation to prohibit employers from making pre-offer inquiries into an applicant’s compensation history.
The bill would bar an employer from inquiring about compensation history unless it has negotiated and made an offer to the prospective employee that includes all terms of compensation. The employer may not make such inquiries of the prospective employee or of the employee’s current or former employer.
The bill also clarifies that the state’s existing pay transparency law prohibits employers from stopping employees from discussing or disclosing their own or another employee’s wages.
Evidence of Discrimination
Maine specifically identifies an employer’s direct or indirect inquiry into an applicant’s pay history as evidence of unlawful employment discrimination. It is the first state to do so.
The bill allows the following:
Further, the law is inapplicable to an employer who makes a compensation inquiry based upon any state or federal law that requires disclosure or verification of compensation history.
Governor Janet Mills is expected to sign L.D. 278. Once signed, the law will go into effect immediately. Employers should review and revise their job applications and policies and procedures and consider training personnel about the ban.
Maine New Legislation Regarding SSN
On April 22nd, Maine enacted H.P. 229 – L.D. 305, in which an employer may not request a social security number from a prospective employee on an employment application or during the application process for employment except for the purposes of certain substance abuse testing or a preemployment background check. This would not apply to an employer’s request for a social security number after the employee has been hired.
State Background Screening Legislation
The following states passed or enacted legislation regarding background screening:
North Carolina Enacted Ban on State Government Agencies from Considering Salary
To help address the gender pay gap for women workers in North Carolina, Governor Roy Cooper today signed Executive Order No. 93. The order directs state government agencies to ban the use of salary history in the hiring process. The Executive Order prohibits state agencies under the purview of the Governor’s Office from requesting salary history from job applicants and directs them to avoid relying on previously obtained salary history information to determine an applicant’s salary. Executive Order No. 93 also directs the North Carolina Office of State Human Resources to remove employment salary history fields from state employment applications as soon as possible. As state employee salary history is a public record, the Executive Order mandates that the Office of State Human Resources work to ensure previous salary information is not used in a discriminatory way.
New Mexico’s “Criminal Offender Employment Act” to Prohibit Private Employers from Criminal History Inquiry on Initial Employment Applications
Effective July 1, 2019, a new section of The Criminal Offender Employment Act will prohibit private employers from inquiring about an applicant’s arrest or conviction history on an initial employment application (written or electronic). The employer may take into consideration an applicant’s conviction after review of the employment application and upon discussion of employment with the applicant. Nothing in the statute prohibits an employer from notifying the public or an applicant that the law or the employer’s policy could disqualify an applicant who has a certain criminal history from employment in particular positions with that employer (e.g., within a job posting or during an interview).
New Mexico Enacted the Criminal Record Expungement Act
New Mexico enacted H.B. 370, the Criminal Record Expungement Act, which permits a person who is wrongfully identified in arrest records or public records as a result of identity theft to petition the court for an order to expunge arrest records and public records.
New Mexico’s Expanded Employment Protections for Medical Marijuana Users
In recent months, the New Mexico Legislature enacted legislation expanding employment protections for medical marijuana users. Recent changes to the Lynn and Erin Compassionate Use Act, New Mexico’s medical marijuana law, expand the range of medical conditions for which medical marijuana may be prescribed and create new employment protections for employees who legally use medical marijuana.
On April 4, 2019, New Mexico Governor Michelle Lujan Grisham signed Senate Bill (SB) 406 into law. SB 406 is the first statutory change to the Lynn and Erin Compassionate Use Act since it was enacted in 2007. At least two of the changes are of potential importance for New Mexico employers.
First, SB 406 creates employment protections for employees who use medical marijuana. The law now prohibits employers from taking any “adverse employment action against an applicant or an employee based on conduct allowed under the Lynn and Erin Compassionate Use Act,” with some exceptions. In most situations, New Mexico employers are now prohibited from refusing to hire, discharging, or taking any adverse action against a job applicant or employee solely on the basis of the individual having a prescription for and/or using medical marijuana.
While SB 406 creates significant employment protections for medical marijuana users, these protections are not absolute, and several exceptions to the law apply. First, the employment protections do not apply to employers that could lose monetary or licensing-related benefits under federal law or federal regulations for hiring or employing individuals who use marijuana or test positive for marijuana use. Similarly, the protections in SB 406 do not apply to employees who work in a “safety-sensitive position,” defined as “a position in which performance by a person under the influence of drugs or alcohol would constitute an immediate or direct threat of injury or death to that person or another.” The law also does not protect employees who use or are impaired by medical marijuana while working or on the premises of employment or during the “hours of employment.” Employers may still take adverse action against employees “for use of, or being impaired by, [marijuana] on the premises of the place of employment or during the hours of employment,” even if the employee has a prescription for medical marijuana.
Additionally, SB 406 expands the definition of a “debilitating medical condition” for which medical marijuana may be prescribed. Some of the new medical conditions include Parkinson’s disease, posttraumatic stress disorder, severe chronic pain, and severe anorexia or cachexia. Employers may want to keep in mind that employees with the medical conditions covered by the Lynn and Erin Compassionate Use Act, as amended, may be prescribed medical marijuana. Such employees are subject to the employment protections in SB 406 and are likely to be entitled to the disability anti-discrimination provisions of the New Mexico Human Rights Act and federal Americans with Disabilities Act.
In light of the new protections offered by SB 406, New Mexico employers may want to reevaluate existing drug testing policies for applicants and employees. Employers operating in states with similar laws may have already revised their policies to limit mandatory drug tests to employees in, or applicants for, safety-sensitive positions. Employers that prohibit employees from using or being impaired by medical marijuana while working, if they haven’t already done so, may want to create policies requiring or allowing for drug testing of employees when there is reasonable suspicion that those employees are impaired at work.
Navigating Marijuana in the Workplace
The legalization of medical marijuana in several jurisdictions throughout the U.S. presents employers with the difficult task of reconciling their anti-drug policies with those state statutes authorizing marijuana use for medical purposes. Adding an additional layer of complexity to this already uncertain landscape, is the growing number of states that have also legalized marijuana for recreational use. As state marijuana laws continue to grow and develop, employers must stay attune to how they approach employees’ off-duty marijuana use for both medical and recreational purposes.
Medical Marijuana and the Duty to Accommodate
Perhaps the most common issue employers now face is whether they must accommodate an employee’s use of medical marijuana for a disability. Because marijuana continues to be an illegal drug under federal law, the Americans with Disability Act does not require employers to accommodate an employee’s off-duty use of medical marijuana, even when condoned under state law. Several states that have legalized medical marijuana, including California, Colorado, Georgia, Michigan, Montana, New Hampshire, New Jersey, New Mexico and Ohio, follow suit and do not currently protect off-duty use of marijuana for medicinal purposes.
Yet some states, such as Alaska, Arizona, Arkansas, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New York and Rhode Island protect an employee’s off-duty use of medical marijuana for valid medical reasons, provided the employee does not report to work under the influence. In those states, a positive drug test alone will not warrant disciplinary action—rather, employers must provide concrete proof of an employee’s intoxication while at work. Many of these states also require that employers reasonably accommodate employees who use marijuana for medical purposes, such as additional time off or a leave of absence during the time the employee must use the drug. Most state statutes provide exceptions for those employees in safety-sensitive positions.
Massachusetts Court Protects Off-Duty Medical Marijuana Use
A recent opinion issued by a Massachusetts high court highlights the trend towards protecting workers who partake in medical marijuana use outside of the workplace and outside of working hours. In Barbuto v. Advantage Sales and Marketing, LLC, the court held that an employer had to provide a reasonable accommodation to an employee for off-duty use of medical marijuana, notwithstanding the employer’s zero tolerance drug policy.
In Barbuto, the employee accepted a salesperson position that was contingent upon passing a post-offer drug test. After accepting the position, the employee informed her employer that she used medical marijuana to treat her Chron’s disease. When the employee’s drug test came back positive for marijuana, the employee was fired for violation of the company’s drug policy. In allowing the employee’s reasonable accommodation claim to proceed under Massachusetts state law, the court held that the employer had to engage in the interactive process and that an exception to the company’s anti-drug policy to allow the off duty use of marijuana for medicinal purposes could constitute a reasonable accommodation. Connecticut and Delaware have likewise interpreted their state laws to prohibit adverse employment actions against those employees who use marijuana for medicinal purposes while off duty.
More Discretion For Employers When It Comes To Recreational Marijuana
Employers enjoy significantly more discretion in their approach to an employee’s off-duty use of recreational marijuana. While several states—including Alaska, California, Colorado, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, and Washington—have legalized recreational marijuana use, Maine is the only state that protects an employee’s off-duty use of recreational marijuana. Indeed, most of these state marijuana laws expressly provide that they do not inhibit an employer’s ability to enforce its zero-tolerance drug policy. Therefore, employers in those states may continue to discipline or terminate employees who test positive for marijuana, even if those employees engaged in legal marijuana use while off-duty, unless that state expressly protects off-duty medicinal use of the drug.
Takeaways for U.S. Employers
Because of new state statutes and growing case law governing both the medical and recreational use of marijuana, U.S. employers must keep a close eye on whether their drug policies and drug testing practices comply with the laws of the state(s) in which they operate. Employers in those states that protect off-duty use of medical marijuana should update their zero tolerance drug policies to reflect a willingness to accommodate off-duty marijuana use for valid medical reasons. In that same vein, employers in those states that have legalized recreational marijuana should update their zero tolerance drug policies to underscore the employer’s right to prohibit drug use in the workplace and to administer drug tests to ensure compliance with those policies.
NYC One Step Away from Banning Pre-Employment Marijuana Tests
While it has been a challenge for employers to keep up with the explosion of medical and recreational marijuana laws spreading across the nation, employers have taken some comfort in that most of these states still grant employers the right to maintain a drug-free workplace and take action against those who test positive for marijuana. Yet, the tide seems to be shifting, with more courts granting pot smokers certain rights and finding that employers are required to comply with federal and state disability laws when confronted with medical marijuana users. Now it seems states and localities are stepping in and granting certain employment protections to recreational marijuana users. Effective February 1, 2018, Maine became the first state in the country to protect employees and applicants from adverse employment action based on their use of off-duty and off-site marijuana. In fact, because Maine only allows employers to prohibit the use and possession of marijuana “in the workplace” and to “discipline employees who are under the influence of marijuana in the workplace,” non-regulated employers may no longer test job applicants for marijuana and cannot take action against an incumbent employee based solely on a positive test result for marijuana.
New York City seems well on its way to enacting a similar measure. On April 9, 2019, the New York City Council passed (by a 41-4 vote) a bill (Intro. No. 1445-A) that will make it unlawful for an employer, labor organization, or employment agency to require a job applicant to submit to a marijuana test as a condition of employment. The bill exempts from the prohibition: positions in law enforcement; construction jobs (as defined in the law); any position requiring a commercial driver’s license as well as those subject to Department of Transportation drug testing regulations (Part 40); positions requiring the supervision or care of children, medical patients, or vulnerable persons; and positions with the “potential to significantly impact the health or safety of employees or members of the public,” as determined by rules promulgated by the City. Also exempt are employers with federal contracts that mandate drug testing and any applicants whose prospective employer is a party to a valid collective bargaining agreement that specifically addresses the pre-employment drug testing of the applicants.
If Mayor Bill de Blasio approves the bill, it will take effect one year after enactment. Now more than ever, employers in all jurisdictions should consider reviewing their existing drug testing or substance abuse policies and determine how best to address any employee positive test result for marijuana, especially in states with medical marijuana laws. In jurisdictions like Maine and, possibly, New York City, employers may also need to consider working with their drug testing vendors and Medical Review Officers to ensure that job applicants are not tested for marijuana. As mentioned, more states are enacting medical marijuana laws and courts have issued employee-friendly decisions addressing existing laws, which makes it particularly important for employers to stay ahead of this evolving area of the law.
Medical Marijuana Users May Not Be Discriminated Against In New Jersey
A New Jersey appellate court has held that a disabled employee may sue his former employer under the New Jersey Law Against Discrimination (“NJLAD”) for alleged discrimination based on the employee’s use of medical marijuana. Wild v. Carriage Funeral Holdings, Inc., et al., Docket No. A-3072-17T3 (N.J. App. Div. Mar. 27, 2019). Although the New Jersey Compassionate Use of Marijuana Act (“NJCUMMA”) does not prohibit employment discrimination based on medical marijuana use, the Court held that the NJCUMMA does not immunize “employers from obligations already imposed elsewhere [such as under the NJLAD].” Plaintiff Wild, a licensed funeral director, brought an action against Carriage Funeral Holdings, Inc. and others alleging that he was unlawfully discriminated for his use of medical marijuana permitted by the NJCUMMA. A physician prescribed Wild medical marijuana as part of his treatment for cancer. In May 2016, Wild was involved in a car accident while working a funeral. Wild was taken to the hospital and claimed that the doctor who treated him stated that Wild was not under the influence of drugs or alcohol, so a blood test was not necessary. The day after the accident, Carriage advised that a blood test was required before he could return to work, and Wild’s father disclosed Wild’s use of medical marijuana. Later that evening, Wild submitted to a urine and breathalyzer test at a local urgent care facility. However, Wild never received the results of the tests and they were not made part of the record. The next day, Wild returned to the funeral home to attend the services of a close friend’s family member. While there, he spoke to his employer about his off-work medical marijuana use to treat severe pain. The following week, Wild worked a funeral for a few hours and then went home because he was “very sore.” Several days later, Wild was informed that “corporate” was unable to “handle” his marijuana use and his employment “was being terminated because they found drugs in [his] system.” Thereafter, Carriage informed Wild in a letter that he was not terminated because of his drug use, but because he failed to disclose his use of a medication that might adversely affect his ability to perform his job duties in accordance with company policy. Wild filed a lawsuit claiming that Carriage could not lawfully terminate his employment without violating NJLAD, despite the results of his drug test, because he had a disability (cancer) and was legally treating that disability in accordance with the NJCUMMA. In granting Carriage’s motion to dismiss, the lower court determined that the NJCUMMA “does not contain employment-related protections for licensed users of medical marijuana” and, as set forth in Wild’s allegations, the adverse employment action was taken due to a positive drug test and a violation of Carriage’s drug policy. However, the appeals court determined that Wild sufficiently pled the elements of a prima facie case for disability discrimination, reversed the lower court’s decision to dismiss, and remanded the case for further proceedings.
The appeals court explicitly held that there was no conflict between the NJLAD and the NJCUMMA. The NYCUMMA states that “[n]othing in this act shall be construed to require…an employer to accommodate the medical use of marijuana in any workplace.” But the court held that this language “can mean only one thing: the [NJCUMMA] intended to cause no impact on existing employment rights.” Moreover, the NJCUMMA neither created new employment rights nor destroyed existing employment rights—and it certainly expressed no intent to alter the NJLAD. The court stated that “[i]t would be ironic indeed if the Compassionate Use Act limited the Law Against Discrimination to permit an employer’s termination of a cancer patient’s employment by discriminating without compassion.”
Wild did not assert his claims under the NJCUMMA; rather, he asserted disability discrimination claims under NJLAD. Many of his allegations concerned his “disability,” without specific reference to his cancer or his medical marijuana use. At this early stage of the lawsuit, however, he was not required to prove his claims and those general allegations were enough to withstand a motion to dismiss.
The Wild Court completely ignored a recent federal court decision in New Jersey, Cotto v. Ardagh Glass Packaging, 2018 U.S. Dist. LEXIS 135194 (D.N.J. August 10, 2018) (which we blogged about here). That court held that neither the NJLAD nor the NJCUMMA compels an employer to waive its requirements for employees to pass drug tests, even when those drug tests include testing for marijuana. The Cotto Court found it significant that the NJCUMMA does not provide any employment protections for medical marijuana users and predicted that the New Jersey judiciary would conclude that the NJLAD does not require an employer to accommodate an employee’s use of medical marijuana with a drug test waiver. The Cotto Court’s prediction apparently was wrong, although it is far from clear whether Wild will be able to prove his claims. The important takeaway for employers is that even in states where the medical marijuana law offers no employment protections, disabled employees and applicants may refashion their legal claims as ordinary disability discrimination claims.
New Bern NC Enacts Ban the Box Resolution to Support Fair Hiring Practices
On March 26, 2019, the City of New Bern NC officially enacted a resolution to “Ban the Box” and remove the checkbox on city job applications that applicants are asked to check if they have a criminal record in order to support fair hiring practices that will be effective April 1, 2019, according to a report from WNCT.
Massachusetts Governor Baker Signs Bill to Enhance Credit Data Security
Governor Charlie Baker and Lt. Governor Karyn Polito joined legislators and stakeholders for a ceremonial bill signing for H.4806, An Act relative to consumer protection from security breaches. The legislation requires consumer consent before any third party can obtain the consumer’s credit report from a credit reporting agency for most non-credit purposes. The bill also requires that credit reporting agencies allow a consumer to place a “security freeze” on the consumer’s credit report at no cost and prohibits credit rating agencies from charging a consumer to lift or remove a credit freeze. The bill enhances reporting requirements for holders of consumer data that have experienced a security breach and requires these holders to offer free credit monitoring to affected consumers in certain circumstances. This bill includes language proposed by Governor Baker that ensures that state agencies charged with ensuring payment of child support obligations and protecting the credit history of children under state care may continue fulfill their statutory responsibilities. The bill also maintains access to credit reporting for state agencies and courts that are required by law to review consumer credit information.
Fair Housing Act Ruling
On March 25, the United States District Court for the District Court of Connecticut denied the defendants motion to dismiss, holding that consumer reporting agencies (CRAs) must comply with the Fair Housing Act (FHA) when their services include automated scoring or grading criteria for property managers. In the case, the defendant’s services included the ability for clients/property managers to select criteria which would deem an applicant ineligible for housing. The reports prepared using the automated scoring then indicate whether the applicant meets or does not meet the criteria established by client—the underlying results that were used to determine whether the applicant meets or does not meet the criteria were not included in the report.
Trucking Company Used Post-Offer Screen that Screened-Out Applicants on the Basis of Disability, Federal Agency Charged—JBS Carriers to Pay $250,000 and not Resume ErgoMed Screening to Settle EEOC Discrimination Suit
National trucking company JBS Carriers, Inc. will pay $250,000 and furnish other significant relief to settle a disability discrimination lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC), the federal agency announced today. According to the EEOC’s lawsuit, JBS Carriers contracted with a third party, ErgoMed Work Systems, Inc., to administer pre-employment screening of applicants for truck driving jobs. The EEOC alleged that this process unlawfully screened out people with disabilities who were qualified for the truck driving jobs they sought. The screening subjected all applicants to a medical history questionnaire, a physical examination, and nine physical abilities tests. If an applicant failed any one of the tests or was prevented by ErgoMed from taking the tests based on information obtained from the questionnaire or during the physical examination, ErgoMed sent JBS Carriers a negative job recommendation. The lawsuit alleged that JBS Carriers then withdrew conditional job offers to applicants based on ErgoMed’s recommendations.
For example, the EEOC alleged in its suit that one applicant, Cindy Divine, had over 30 years of commercial truck driving experience. After JBS Carriers offered her a job, Divine traveled to Greeley, Colorado to complete the screening. According to the EEOC’s lawsuit, ErgoMed concluded that she had disqualifying issues with her shoulders, even though Divine told ErgoMed’s examiner that she was only sore from carrying heavy luggage from the bus stop to her motel. ErgoMed prevented Divine from completing its physical tests and provided a negative recommendation to JBS Carriers, which then withdrew her job offer. The Americans with Disabilities Act (ADA) prohibits employment discrimination based on disability and makes it illegal for employers to impose standards or criteria for job applicants that have the effect of discriminating based on disability or that screen out individuals with disabilities. In its suit (EEOC v. JBS Carriers, Civil Action No. 1:18-cv-02498-CMA-NRN (D. Colo.)), the EEOC charged that the pre-employment screening required by JBS Carriers and administered by ErgoMed violated the ADA because it excluded qualified applicants with disabilities. The EEOC also alleged that by relying on ErgoMed’s screening without giving individual consideration to job applicants, JBS Carriers discriminated against job applicants based on disability and failed to provide reasonable accommodations.
The settlement payment of $250,000 will be distributed among five individuals who were adversely impacted by the ErgoMed screening and who participated in the EEOC’s investigation.
After years of using the ErgoMed screen, JBS Carriers halted the practice, and now only requires job applicants to obtain the Department of Transportation (DOT) medical certification necessary to be a licensed commercial truck driver. Under the consent decree settling the EEOC’s lawsuit, JBS Carriers will not contract with ErgoMed for three years and will not implement any physical or medical screening for conditional hires apart from the DOT medical certification and a urine analysis. JBS Carriers will also provide training on the ADA to its employees, appoint an ADA coordinator, review and revise its ADA policies, and report semi-annually to the EEOC on how the company has addressed reports of disability discrimination and requests for accommodation. JBS Carriers is the transportation affiliate of multinational meat processor JBS USA. JBS Carriers is based in Greeley and operates throughout the United States, with terminals in Greeley; Green Bay, Wis.; Hyrum, Utah; Cactus, Texas; Pittsburg, Texas; and Oakwood, Ga.
On April 23rd, Yahoo! Finance published an article summarizing two lawsuits against Starbucks Corporation for alleged violations of the Fair Credit Reporting Act (FCRA) during the background checks for prospective employees. The two lawsuits will be combined in the U.S. District Court for the Northern District of Georgia in preparation for a settlement. The first lawsuit, filed in the U.S. District Court for the Western District of Washington, alleged that the plaintiff was denied a job at Starbucks due to inaccuracies on the plaintiff’s criminal record and that Starbucks did not reverse its adverse action when the plaintiff corrected the errors. The second lawsuit, filed in the U.S. District Court for the Northern District of Georgia, alleged that a Starbucks employee lost his job when a background check included criminal convictions for a different person by the same name. The combined lawsuits claim that Starbucks allegedly violated the FCRA when the company:
Employer Prevails in FCRA Class Action in California
On April 15, 2019, a California Court of Appeal affirmed summary judgment for the employer in an action alleging class-wide violations of the hyper-technical provisions of the federal Fair Credit Reporting Act (FCRA).1 Following just shortly after the Ninth Circuit’s pro-employee opinion in a similar case, Gilberg v. California Check Cashing Stores, the court’s opinion is a welcome development for embattled employers in California.2
The Court of Appeal Decision
The plaintiffs’ class action suit alleged two purported FCRA violations against the employer: (1) that its background check disclosures to job applicants did not comply with the FCRA’s “standalone” disclosure requirement; and (2) that it rejected certain applicants based on information in their consumer reports without first providing the requisite pre-adverse action notice. The employer moved for summary judgment following an order certifying the case as a class action.3 The trial court granted summary judgment for the employer on both claims, concluding that any alleged violation of the FCRA’s provisions was not “willful.”4 The plaintiffs appealed the trial court’s ruling, but the Court of Appeal affirmed the trial court’s judgment.
The Court of Appeal held that the employer’s disclosure did not constitute a willful violation of the standalone disclosure requirement. The court rejected the plaintiffs’ argument that the FCRA permits only a “10-word disclosure” because no authoritative guidance by the Ninth Circuit, the Federal Trade Commission, or the trial courts existed at the time of the alleged violations (i.e., when the employer presented the disclosures to the plaintiffs). The court distinguished the Ninth Circuit’s recent opinions in Syed v. M-I5 and Gilberg because they were decided after the employer presented the disclosures to the plaintiffs. Additionally, neither case considered alleged “extraneous” information similar to that in the employer’s disclosure forms. In sum, no authorities had existed to warn the employer away from using its forms. Thus, the employer’s alleged violations could not be willful as a matter of law.
Pre-Adverse Action Notice
The plaintiffs argued that, rather than provide the required pre-adverse action notice to potentially disqualified job applicants, the letter issued by the background check company for the employer prematurely communicated a final decision by the employer. The Court of Appeal disagreed. The court held that the employer took a reasonable position in its pre-adverse action letters, pointing to the conditional nature of the letter and the time provided before any final action in fact would be taken. It noted that an employer can fully intend to carry out the adverse action absent a dispute by the consumer.
While this Court of Appeal decision represents a victory for employers, the law in this area remains dynamic. Employers should still take care to arrange for a privileged review of their background check consent forms and adverse action process. A thorough review of these forms and processes may help avoid the types of claims raised in cases that take issue with an employer’s inclusion of text beyond the minimum necessary for FCRA disclosures. Employers should also continue to be mindful of their obligations under state and local ban the box laws, which intersect with the FCRA’s required processes.
Seventh Circuit Court Decision
The Seventh Circuit held that deferred adjudications in Illinois are “convictions” for purposes of the Fair Credit Report Act. The court also dismissed plaintiff’s accuracy claim noting that to bring a successful claim the consumer must show that they suffered injury as a result of any inaccurate information.
Equifax Settles FCRA Claims Related to Reporting of Civil Judgments and Tax Liens
As part of its business, Equifax reports publicly available civil judgment and tax lien information about consumers. However, in multiple class action lawsuits filed across the United States, plaintiff-consumers alleged that while Equifax promptly reported civil judgment and tax lien information, Equifax did not update cancelled or satisfied judgments and liens with similar vigor or regularity. The plaintiff-consumers contend that reporting that did not indicate the cancellation or satisfaction of a judgment or lien was incorrect and misleading. Further, the consumers alleged that Equifax’s reporting violated 15 U.S.C. § 1681e(b), a provision of the Fair Credit Reporting Act (FCRA) that requires a reporting entity to follow reasonable procedures to ensure the accuracy of the information published. Equifax vigorously denied that it engaged in any conduct prohibited by the FCRA or that a litigation class could be certified due to the differences in how judgments and liens are reported from jurisdiction to jurisdiction. Nevertheless, Equifax and the plaintiff-consumers have reached a mediated resolution to all of the pending litigation. On April 17, 2019, in Thomas, et al. v. Equifax Information Services, LLC, United States District Court for the Eastern District of Virginia, Civil Action File No. 3:18-cv-00684, a class representative filed a motion for preliminary approval of a settlement related to its reporting of civil judgments and tax liens. The proposed settlement requires the entry of an injunction that prohibits Equifax from reporting any civil judgment or tax lien records for a period of five years, subject to conditions that may permit Equifax from resuming such reporting earlier. Further, the proposed settlement requires Equifax to establish an ADR program pursuant to which impacted consumers can submit claims that will be evaluated by an independent administrator. For claims that are accepted, Equifax will pay the consumer $1,500. There is no cap to the amount of money that Equifax may have to pay under the ADR program. The proposed settlement also requires Equifax to bear the entire cost of the ADR program, pay $1,850,000 for class notice activity, and an amount not to exceed $9,500,000 for attorneys’ fees and a service award for the class representatives.
Privacy Shield and the UK FAQs
Can a Privacy Shield participant rely on the EU-U.S. Privacy Shield Framework to receive personal data from the United Kingdom in light of the UK’s planned withdrawal from the EU?
The European Council and the United Kingdom (UK) have agreed to extend the period for withdrawal of the UK from the European Union (EU) beyond March 29, 2019. During the extension period, the UK will remain a Member State of the EU; as a Member State, EU law will remain applicable to and in the UK. The length of the extension period has not yet been determined.
In order to receive personal data from the UK in reliance on the EU-U.S. Privacy Shield Framework (“Privacy Shield” or “the Framework”), Privacy Shield participants must update their Privacy Shield commitments by the Applicable Date, as explained below, depending on how the UK and the EU implement the withdrawal.
Scenario (1) “Transition Period”: The UK and EU have preliminarily agreed that from the date the UK leaves the EU until December 31, 2020, a Transition Period will take place during which EU law, including EU data protection law, will continue to apply to and in the UK. During the Transition Period, the European Commission’s decision on the adequacy of the protection provided by Privacy Shield will continue to apply to transfers of personal data from the UK to Privacy Shield participants. During the Transition Period, the United States will consider a Privacy Shield participant’s commitment to comply with the Framework to include personal data received from the UK in reliance on Privacy Shield with no additional action on the part of a participant required.
Privacy Shield participants seeking to receive personal data from the UK in reliance on the Privacy Shield after the end of the Transition Period must take the steps below by the Applicable Date of December 31, 2020. The Department of Commerce encourages Privacy Shield participants to use the Transition Period as an opportunity to update their privacy policies.
Scenario (2) “No Transition Period”: In the event that the UK and the EU do not finalize an agreement on the Transition Period, Privacy Shield participants receiving personal data from the UK in reliance on the Privacy Shield must take the steps below by the Applicable Date of April 12, 2019 or May 22, 2019, as the case may be, dependent on the date of the UK’s withdrawal from the European Union.
Updates by the Applicable Date:
To receive personal data from the UK in reliance on Privacy Shield in the case of no Transition Period, or after the Transition Period, a Privacy Shield participant will be required to adhere to the following:
Ontario, Canada: Employers Can Provide Candid Job References
Ontario employers can speak candidly about former employees’ weaknesses when providing job references, as long as the dominant motive for the reference is not malicious, the Supreme Court of Canada (SCC) recently indicated. The SCC declined to review a lower court’s finding that a plaintiff failed to prove her former manager defamed her by giving her a negative reference that led to revocation of a job offer.
The plaintiff sought to prove her former manager was liable for defamation after the manager’s negative job reference led to the job offer revocation. After the Court of Appeal for Ontario (OCA) upheld the lower court’s decision, which did not find the manager liable, the plaintiff tried to appeal to the SCC. But the SCC declined to hear her appeal.
The lower court found that when providing the reference, the manager had stated that:
The plaintiff did prove the elements of defamation summarized in Papp v. Stokes (Sup Ct J (Ont.) 2017 ONSC 2357 (2017-04-18)). The court concluded that the manager’s words were specifically about the employee, were communicated to the person who contacted him for the reference and lowered the employee’s reputation in the eyes of a reasonable person.
Nonetheless, the lower court agreed with the manager that he was protected because his remarks were made in the context of an employment reference. The court noted that “The social policy underpinning the protection of employment references in this manner is clear: an employer must be able to give a job reference with candor as to the strengths and weaknesses of an employee, without fear of being sued in defamation for doing so. Without this protection, references would either not be given, or would be given with such edited content as to render them at best unhelpful or at worst misleading to a prospective employer.”
Someone would lose the protection, however, if the plaintiff could prove that the defendant’s dominant motive for the defamatory statements was malice. The court concluded that since the evidence did not establish malice, the plaintiff had not defeated the manager’s defense of qualified privilege.
Kanak v. Riggin (Sup Ct J (Ont.), 2017 ONSC 2837 (2017-05-18), upheld by the OCA, 2018 ONCA 345 (2018-03-09), leave to appeal to the SCC denied, 2019 CanLII 1628 (2019-01-17)).
Professional Pointer: Employers that speak candidly about the weaknesses of an employee when providing a reference risk the possibility that a disgruntled former employee will sue them for defamation. An employer should not mislead a prospective employer when providing a reference, but instead should be practical and should exercise a measure of caution.
Criminal Record Expungement
On April 2nd, Nextgov published an article about the expungement of criminal records. A recent study at the University of Michigan found that 6.5 percent of eligible individuals in Michigan apply to have their criminal records expunged within five years. The study found that individuals who have their records expunged have improved economic outcomes, including a 25 percent increase in wages and improved housing opportunities. The researchers hypothesized that the low percentage of individuals applying for expungement may be due to administrative challenges, application fees, and the lack of clear information about the expungement process.
This information has been prepared by Validity Screening Solutions for informational purposes only and is not legal advice. The content is intended for general information purposes only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have.