Big Data

Another exciting move we witnessed in 2016 is the increase in use of “big data” to streamline hiring decisions as well as evaluate hiring trends, and is very useful to employers in many aspects.  “Big data is the process of examining large data sets containing a variety of data types -- i.e., big data -- to uncover hidden patterns, unknown correlations, market trends, customer preferences and other useful business information.

Big Data was recognized during a EEO panel by EEOC and The Chair of the EEOC, Jenny R. Yang said in a press release “Use of Big Data Has Implications for Equal Employment Opportunity” as having “the potential to drive innovations that reduce bias in employment decisions”.  Jenny also cautioned that Big Data tools “are designed to promote fairness and opportunity, so that reliance on these expanding sources of data does not create new barriers to opportunity”.  Aurico and CareerBuilder embrace the use of “Big Data” for driving innovations in all aspects of the hiring process, including predictive or talent analytics and to augment fair and unbiased decisions.

- Source: U.S. Equal Employment Opportunity Commission

New Jersey Clarifies Their "Ban the Box" Ordinance

The act became effective in March, 2015. 

The regulations¹ clarify certain key aspects of the Act as listed below:

• Employers of 15 or More Employees Are Covered: The Act applies to employers who employ 15 or more employees, regardless where those employees are actually located.  The 15 employees do not all have to be in New Jersey.
• Use of Multi-State Forms Is Permitted: Multi-state employers who use uniform employment applications and forms in multiple jurisdictions may include a question regarding criminal records on an employment application, so long as immediately before the question there is a statement that “an applicant for a position the physical location of which will be in whole, or substantial part, in New Jersey is instructed not to answer this question” until after the first interview.  This requirement is the stark opposite of the recent requirements in New York City and Philadelphia that effectively prohibit multi-state forms with state-specific carve-outs like the one permitted here.  
• “Interview”: Since employers are prohibited from inquiring into an applicant’s criminal record until after the first interview, the regulations clarify that an “interview” means “any live, direct contact by the employer with the applicant, whether in person, by telephone, or by video conferencing, to discuss the employment being sought or the applicant’s qualifications.” It does not mean solely “the exchange of e-mails or the completion of a written or electronic questionnaire.”
• Internet Searches Are Prohibited:

The City of Philadelphia Expands Their "Ban the Box" Law

On December 15, 2015, Philadelphia Mayor Michael Nutter amended the city’s current “ban the box” law Fair Criminal Records Screening Standard§ 9-3504 to expand the number of employers it covers and increase restrictions on the use of criminal background checks during the hiring process. The amendments take effect in just 90 days from December 15, 2014 and make several noteworthy changes to the city’s original Fair Criminal Screening Standards Ordinance enacted in 2012.

Here are some highlights. 

Inquiry into criminal background - post offer of employment.

Employer can only consider convictions within the last seven years (or release from confinement).

If applicant is rejected he/she must be advised as to why and be provided a copy of the record

The employer shall allow the applicant ten (10) business days to provide evidence of the inaccuracy of the information or to provide an explanation.

The following is a detailed list of the terms within the act. 

(1) In connection with the licensing or employment of any person, it shall be an unlawful discriminatory practice for a City agency or private employer to make any inquiry regarding or to require any person to disclose or reveal any criminal convictions during the application process. The application process shall begin when the applicant inquires about the employment being sought and shall end when an employer has [accepted an employment application] extended a conditional offer of employment to the applicant. The inquiry prohibited by this Section shall include any question regarding the applicant’s willingness to submit to a background check.

EEOC vs. BMW - U.S. District Court enters a Consent Decree against BMW

On September 8, 2015, The U.S. District Court for the District of South Carolina entered a consent decree ordering BMW Manufacturing Co., LLC (BMW) to pay $1.6 million and provide job opportunities to alleged victims of race discrimination as part of the resolution of a lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC). The lawsuit alleged that BMW excluded African-American logistics workers from employment at a disproportionate rate when the company's new logistics contractor applied BMW's criminal conviction records guidelines to incumbent logistics employees. According to the lawsuit, BMW ordered the new logistics company to perform criminal background checks on all existing logistics employees who had to re-apply with the company in order to continue to work on the BMW contract. Allegedly, BMW’s criminal conviction records guidelines excluded from employment all persons with convictions in certain categories of crime, regardless of how long ago the employee had been convicted or whether the conviction was a felony or misdemeanor.

According to the complaint, after the criminal background checks were performed, BMW learned that approximately 100 incumbent logistics workers at the facility, including employees who had worked at there for several years, did not pass the screen. EEOC alleged that 80 percent of the incumbent workers disqualified from employment as a result of applying BMW's guidelines were black. 

Following an investigation, EEOC filed suit alleging that blacks were disproportionately disqualified from employment as a result of the criminal conviction records guidelines. EEOC sought relief for 56 African-Americans who were discharged. BMW has since voluntarily changed its guidelines.  

The Consent Decree includes:

What Employers Could Learn from the Freeman Case

Aurico attended the NAPBS Mid-Year Regulatory Conference, held recently in Washington, D.C. The presenters included Federal Trade Commission (FTC) representative and industry attorneys who provided the audience with a wealth of information and best practices. Representing Freeman in the case filed by the EEOC, Don Livingston from Akin, Gump listed ‘what the EEOC did wrong’ and what employers can learn from the case. He noted the discrepancies against the EEOC included poor and inaccurate data management, calculation errors, EEOC manipulation, and inaccurate testimony that conflicted with the EEOC’s position on a different case.

Livingston said there are two key takeaways from this decision:

• The EEOC could not prove “disparate impact” from using general census data. Freeman maintained very detailed records of every applicant offer, acceptance, and refusal, and was able to defend its practices using that dataset.
• The EEOC must provide a certain level of specificity in its charges. The EEOC needed to point out a specific employment practice having a disparate impact, such as excluding applicants based on particular offenses such as theft, sex offenses, and/or drug trafficking.

Livingston recommended that employers maintain records and data on their decision making process and decisions. The Freeman case demonstrated that documentation is a primary reason why Freeman had a good case against the EEOC. Without data or records, the courts would have allowed the EEOC to use Census data, based on a geographic area, making the defense of employer policies and procedures problematic. 

Recent EEOC Judgment: Compliance Update

On Friday, February 20, a panel of judges from the United States Court of Appeals for the Fourth Circuit, challenged the EEOC in a case involving an employer’s use of both a credit check and criminal background check during its hiring process. The lower court dismissed the case, and the appeals court agreed, noting that the EEOC’s statistics expert was “utterly unreliable” and “made a mind-boggling number of errors.” Remarkably, the court rebuked the EEOC’s continued use of this expert (who has been found to be biased in earlier cases) as not serving the public interest well.” ¹

This case is important because the EEOC’s enforcement position on the use of background checks rests almost exclusively on statistics. If the EEOC is willing to rely upon a biased manipulation of statistics, it is hard to imagine how an employer will get a fair shake during the charge process. This case may be a call for changes to the EEOC’s aggressive position on background checks. Thus far, one might say the EEOC has had little success on these types of claims and might need to reconsider its strategy.

¹http://www.hr-headaches.com/wp-content/uploads/sites/5/2015/02/freeman.pdf

NEW MEXICO EXPANDING BAN THE BOX

The New Mexico Senate has proposed Bill 583 to expand the Ban the Box prohibition to private employer initial applications. After initial applications, there would be no constraints on asking questions about criminal history and doing criminal background checks.

New Mexico joins other states/cities that have initiated ban the box for all employers. Aurico recommends, as a best practice, to eliminate the criminal question from your job applications and ask about criminal history later in the hiring process.  

Compliance Update - Special Ban the Box Adverse Action Requirements Reminder

We want to remind our clients of special Adverse Action requirements for some of the recent cities/states that have passed "Ban the Box" ordinances. Please refer to the information below:

Chicago, IL - Requires the adverse action notice to include a reference to the specific items which form the basis of the criminal record decision. No pre-adverse action letter requirements.

Massachusetts - Requires (i) a copy of the Company’s Massachusetts Criminal Record Information Policy; (ii) the sources of any criminal history records provided to the Company (as reflected in the background report); and (iii) information from the Massachusetts Department of Criminal Justice Information Services (“DCJIS”) concerning the process for correcting a criminal record.

Montgomery County, MD - The pre-adverse action notice must include a reference to specific criminal items which form the basis of the decision; and then there is a minimum seven day waiting period before taking adverse action. Montgomery County, MD does not require that the final adverse action letter specifically enumerate the items forming the basis for the action.

Columbia City, Missouri Enacts “Ban the Box”

Columbia City, Missouri, unanimously approved the “ban the box” ordinance, prohibiting employers from asking about applicants’ criminal histories or conducting background checks, before making a conditional job offer. This law went into effect after its passage on December 1, 2014

Columbia’s “ban the box” law will apply to both public and private employers.

The ordinance excludes positions where local, state, and federal regulations bar employees with certain types of criminal convictions. Enacting the ordinance was one of the Mayor’s Task Force on Community Violence’s 26 policy recommendations for curbing violent crime.

The ordinance amends Chapter 12 of the City Code to add a new Article V, pertaining to employment opportunities for qualified applicants. The summary provisions are as follows:

ARTICLE V. EMPLOYMENT OPPORTUNITIES FOR QUALIFIED APPLICANTS

Provisions

Except as provided in subsection (b), it shall be unlawful:

(1) For an employer to inquire, question or otherwise seek information on an employment application as to whether an individual has ever been arrested for, charged with, or convicted of any crime.

(2) For an employer to inquire, question or otherwise seek information as to whether an applicant has ever been arrested for, charged with, or convicted of any crime until after the applicant has received a conditional offer of employment.

Exclusions

(b) The requirements set forth in subsection (a) of this section do not apply for positions where:

(1) Employers are required to exclude applicants with certain criminal convictions from employment due to local, state or federal law or regulation;

(2) A standard fidelity bond or an equivalent bond is required and an applicant’s conviction of one or more specified criminal offenses would disqualify the applicant from obtaining such a bond; in which case, an employer may include a question or otherwise inquire whether the applicant has ever been

convicted of any of those offenses; or

(3) Employers employ individuals licensed under the Emergency Medical Services (EMS) Systems Act.

(c) This section does not prohibit an employer from notifying applicants in writing of the specific offenses that will disqualify an applicant from employment in a particular position.

(d) Employers are encouraged to not automatically ban jobseekers with a criminal history. Employers may make final employment-related decisions based on all of the information available to them, including consideration of the frequency, recentness and severity of a criminal record as well as rehabilitation efforts against the duties and responsibilities of the position.

Complaints

(a) Any individual who claims to be aggrieved by a violation of this article may file with the commission a complaint in writing stating the name and address of the person alleged to have committed such practice, the particulars thereof, and such other information as may be required by the commission. If the alleged violation is that an employer is seeking criminal history information on an employment application, then any individual may file a complaint and that individual need not necessarily be aggrieved before filing a complaint.

(b) All such complaints shall be filed within one hundred eight (180) days of the date of the alleged violation.

Investigation, resolution

(a) The investigator shall promptly investigate the allegations of the complaint. After completing the investigation, the investigator shall report to the commission the results of the investigation and the investigator’s opinion on whether there is probable cause to credit the allegations of the complaint.

(b) After receiving the investigator’s report, the commission may direct further investigation. When the commission is satisfied that the complaint has been properly investigated, it shall determine whether there is probable cause to credit the allegations of the complaint. If the commission determines that there is no probable cause, it shall dismiss the complaint. If the commission determines that there is probable cause, the commission may forward the matter to the city prosecutor.

(c) At any stage in the process, the commission may close the case for good administrative reasons. Such reasons shall include but not be limited to the following:

(1) The complainant has failed to cooperate with the commission.

(2) The commission is unable to locate the complainant or respondent.

(3) The complainant wishes to withdraw the complaint.

Prosecutions; time limitations

(a) No prosecution for a violation of any provision of this article shall be commenced unless a complaint shall have first been filed with the commission.

(b) The period of limitation for any violation of this article shall not run during any time while a complaint involving the alleged violation is pending before the commission.

Penalty for violation of article

Any person who shall violate any provision of this article shall be deemed guilty of a misdemeanor and shall, upon conviction, be punished by a fine of not more than one thousand dollars ($1,000.00), or imprisonment not exceeding thirty (30) days, or by both such fine and imprisonment.

Aurico reminds employers that Illinois and New Jersey “Ban the Box” ordinances go into effect on January 1, 2015.

The State of Texas Appeals and Challenges the Court’s Decision Regarding Its Case Against the EEOC

On November 19, 2014, Texas filed its opening brief in support of its appeal. The State of Texas appealed the U.S District Court for the Northern District of Texas dismissal. This high profile case, brought by the State of Texas against the EEOC regarding its “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII”.  In State of Texas v. EEOC, Case No. 5:13-CV-255 (N.D. Tex. Aug. 20, 2014), the District Court held that Texas lacked standing to maintain its suit because it did not allege that any enforcement action had been taken against it in relation to the EEOC’s guidance.

This is a case to watch because the State of Texas has many state policies against hiring anyone with a felony record, by state regulation for certain positions, and as the State of Texas alleges, “without federal court intervention, the [EEOC] will be able to continue to use its threat of enforcement to bully employers into abandoning their no-felons policies”.

Federal Trade Commission Issues Guide on Background Checks

The Federal Trade Commission (FTC) recently released a guide, “Background Checks: Tips for Job Applicants and Employees,” that provides answers for questions people may have about background checks. It further expands upon the information provided in an earlier brochure the FTC released in March 2014, “Background Checks: What Job Applicants and Employees Should Know”. The FTC continues to show interest in the policies and authority of background checks. The guide lays out the steps involved in the background check process and specifies the rights of applicants and employees under the Fair Credit Reporting Act (FCRA), along with providing information about anti-discrimination laws when employers perform background checks. A copy of the guide may be downloaded from: 

http://www.consumer.ftc.gov/articles/pdf-0044-background-checks.pdf

San Francisco Compliance Update Reminder

We want to remind San Francisco based employers that the San Francisco “Ban the Box” went into effect on August 18^th.  This regulation in addition to when an employer can inquire about past criminal records also requires the employer to perform an individualized assessment, and post and distribute notices.   The required notices are attached to this compliance update. 

Other important sections from this ordinance that impact employers:

SEC. 4905. NOTICE AND POSTING REQUIREMENTS FOR EMPLOYERS

Bills Seek To Dull EEOC Activities

Rep. Tim Walberg (R-MI), Chairman of the House Subcommittee on Workforce Protections, introduced two bills on September 10 aimed at curbing the Equal Employment Opportunity Commission's authority.

The first measure, the Litigation Oversight Act of 2014 ( H.R. 5422), would require the EEOC to approve, by majority vote, all lawsuits or interventions in lawsuits involving multiple plaintiffs or an allegation of systemic discrimination or a pattern or practice of discrimination. The new legislation would make it more difficult for the EEOC to pursue this initiative, although it is not expected to advance.

The second measure, the Certainty in Enforcement Act of 2014 ( H.R. 5423), takes aim at the EEOC's updated 2012 enforcement guidance on criminal background checks. Many in the business community have faulted the EEOC's stance regarding an employer's consideration of an applicant's criminal record in making hiring decisions. 

Illinois Enacts "the Job Opportunities for Qualified Applicants Act" (Ban the Box)

Illinois becomes the 5th state to "ban the box" for private/publicly traded employers, joining Hawaii, Massachusetts, Minnesota, Rhode Island, Baltimore, MD, Buffalo, NY, Rochester, NY, San Francisco, CA, and Seattle, WA.  Other cities/states have passed similar laws that impact state and/or city employees.

The law was signed by Illinois Governor Patrick Quinn on July 19, 2014 and becomes effective on January 1, 2015.  The law applies to all private and publicly traded employers and/or employment agencies in the state of Illinois with 15 or more employees.

Popular Hotel Class Action Suit for FCRA Violation

Another class action law suit was filed against an employer for violation with the Fair Credit Reporting Act.  This suit was filed against a popular national hotel chain for alleged violation of the Fair Credit Reporting Act.  The allegation against the hotel was that the hotel did not obtain proper disclosure and authorization to obtain consumer reports on job applicants.

Other recent lawsuits have been filed for similar violations against a national grocery chain, national retail chain, and national trucking company.

What Should Employers Do

Employers Must Comply with the Fair Credit Reporting Act

Employers must take certain steps before you can obtain a consumer report, and before and after you take an adverse action based on that report.

Before You Get a Consumer Report

Employers must:

Rochester, NY Passes "Ban the Box" for All Private Employers

On May 22, 2014, the City of Rochester, NY, became the 11th U.S. jurisdiction to "ban the box" by passing legislation restricting private employers from inquiring into the criminal history of job applicants.  Rochester, NY joins other states/cities as follows:   Buffalo, N.Y., Newark, N.J., Philadelphia, PA, Seattle, WA, and San Francisco, CA, Hawaii, Massachusetts, Minnesota, and Rhode Island.

The Rochester law forbids inquiries into criminal history before an employer makes a conditional offer of employment. Rochester's law goes into effect on November 18, 2014 and applies to all employers with 4 or more full time employees.

The EEOC and FTC Provide Additional Guidance to Employers

It is important for employers to be aware of the best practice recommendations that both the Federal Trade Commission and the Equal Employment Opportunity Commission are providing clients.  The two organizations are responsible for regulations that relate to background checks among other areas such as equal employment opportunity and consumer protection.  Please note the guidance and the best practices are available for employers at either site titled “Background Checks: What Employers Need to Know.“ Aurico encourages employers to review these documents as well as review their own policies on background screening with their own legal counsel.  

Automatic Disqualification of Applicants Prohibited

Four background check companies signed agreements in New York State to avoid illegal hiring practices, the New York State Attorney General's Office announced.

The deals prohibit the agencies from automatically disqualifying applicants with criminal records, according to the Attorney General's Office. The deals also call for the agencies to defer hiring decisions to employers, who must conduct an individualized consideration of candidates in accordance with New York law.

Employers Continue to Win Against the EEOC

Since the new EEOC Criminal Guidance was issued, the EEOC is finding it difficult to win cases, and the courts are siding with the Employers for many reasons, but one that stands out most recently was with the case of the Freeman Companies, where the Federal Court Dismisses EEOC Title VII Disparate Impact Suit Over Alleged Discriminatory Background Checks Without Trial without a trial based largely on flaws in the EEOC’s expert report. The court’s opinion acknowledges the legitimate, and even “essential,” business reasons for conducting background checks. The court’s opinion also highlights significant challenges the EEOC faces when prosecuting such suits.

Other cases where the EEOC failed to prevail in their claim that the employer had unlawful, discriminatory impact was with Kaplan Higher Education Corp.   In this case, the court determined that the EEOC had failed to provide reliable statistical evidence of discrimination and, therefore, “failed to satisfy its threshold burden of proving that Kaplan’s use of credit history information resulted in a disparate impact on protected class members.”

The Background Backlash Continues - Texas Sues the EEOC Over its Criminal Background Guidance

For the second time in less than six months, the EEOC finds itself on the wrong side of a lawsuit. The State of Texas has sued the EEOC in the Northern District of Texas seeking declaratory and injunctive relief against the EEOC for issuing its 2012 arrest and conviction guidance (the 2012 Guidance). In short, the Texas complaint argues that the EEOC did not have the authority to issue this rule. The lawsuit also claims that the EEOC's position that Title VII trumps conflicting state laws violates its state sovereignty.