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August 2003            Vol. 3, No. 8

Employment Screening Resources (ESR) Newsletter and Legal Update

1. Major FCRA Legislation Passes Congressional Committee

2. New Tool for Employers-Multi-jurisdiction Database Search Covering Millions of Criminal Records

3. Illinois Federal Lawsuit Demonstrates What Employers Should NOT do When Hiring

4. Hiring Airport Screeners: ESR Featured in Workforce Magazine Article

1. Major FCRA Legislation Passes Congressional Committee

As reported in previous editions of the ESR Newsletter, Congress is taking up crucial issues this year concerning the federal Fair Credit Reporting Act (FCRA). 

On July 24, 2003, the Financial Services Committee of the House of Representatives passed HR  2622, the Fair and Accurate Credit Transactions Act of 2003, dated June 26.  This bill marks significant additions to the FCRA.  The bill is expected to be considered by the full House in September of 2003. 

Altogether the bill is still subject to changes as it continues through the legislative process, it has three major thrusts:

1. The bill "reauthorized" the FCRA so that a nationwide standard will remain in effect, preventing states from passing their own laws affecting certain credit and financial information rules.  Advocates of the bill argued that a nationwide standard was needed.
2. The bill adds significant new identity theft protections.
3. The bill allows employers to hire third parties to investigate claims of employee misconduct by current employees, without being handicapped by all of the notice and procedure rules of the FCRA.  This was in response to the FTC  "Vail" letter that interpreted the FCRA as applying third-party investigations of current employees.

The bill can be viewed at http://www.cbanet.org/issues/FCRA/documents/FACTbill.PDF

>ESR will continue to follow and report on the progress of the proposed legislation, as well as provide analysis on the practical effect of this bill on employers

2. New Tool for Employers-Multi-jurisdiction Database Search Covering Millions of Criminal Records

New technology has given employers a valuable new tool for safe hiring.  Employers now have access to a high-speed, multi-jurisdictional search of state and county criminal records databases, which currently includes data from 36 states (over 76 million offense records.)  These searches quickly return offender information in a condensed and easy to comprehend format.  Searching is based upon matching last name, the date of birth and the first three letters of the first name.

Here are the Pros and Cons:  The advantage of these new searches is that they cover a much larger geographical area then traditional county-level searches.  It allows employers to search across multiple jurisdictions and can pick up possible records that a county search can miss if a particular court is not searched.

However, it is critical to understand that statewide database searches are a research tool only, and under no circumstance is a substitute for a hands-on search at the county level. Not all states have a database that is available to employers.  Databases in each state are compiled differently.  There are a number of reasons that database information may not be accurate, timely or complete.  Because of the nature of databases, the appearance of a person's name on a database is not an indication the person is criminal any more than the absence of a name shows they are not a criminal. Any positive match MUST be verified by reviewing the actual court records.  Any lack of a match is not the same as a person being "cleared."

However, a database is a valuable tool in helping employers cover a wider area and know where to search for more information. Contact ESR for more information on these new searches.  For more details, see http://www.esrcheck.com/services/services_detail.php

3.  Illinois Federal Lawsuit Demonstrates What Employers Should NOT do When Hiring

An opinion recently issued by the US District Court in the Northern District of Illinois provides a case study on why employers need to be concerned about the legal aspects of safe hiring. (Socorro vs. IMI Data Search and Hilton Hotel Corp, No. 02 C 8120 (April 28, 2003)).  The case alleged violations of the FCRA and Illinois state laws. The case was before the court to determine what state claims could be brought in federal court.

According to the plaintiff's allegations filed in the case, the plaintiff was contacted by Hilton Hotels and offered a position. On his first day, he completed several forms, including an employment application where he truthfully stated he had no criminal record. The application contained an authorization for a background check that the plaintiff did not initial. There was no indication in the court's summary that any separate disclosure was provided as required by the FCRA. 

After employment began, Hilton hired a screening firm to do a background check. The screening firm mistakenly reported that the plaintiff had been convicted of a misdemeanor and served six months in jail. The plaintiff denied having a criminal conviction. Hilton did not do further investigation, and the plaintiff was terminated. 

To make matters worse, the plaintiff alleged that after he was fired Hilton told third parties that he was fired because he lied on his application and spent time in jail. The plaintiff eventually found a new job, but at substantially lower compensation.   

Assuming the facts alleged by the plaintiff were true, how many mistakes did the employer and the background firm arguably make?  Here are some of them: 

1. Failed to provide a separate Disclosure for the background check under the FCRA and written authorization.
2. Failed to comply with the adverse action notice rules under the FCRA.
3. Failed to re-investigate when told information was wrong.
4. Although the reasons for the mistaken criminal records were not clear, the question arises if reasonable procedures were used in obtaining the background data.

The case demonstrates the importance of understanding the legal requirements for a screening program.  To determine if an employer is legally compliant, contact ESR for an audit of your program, or see the ESR Safe Hiring Audit at http://www.esrcheck.com/articles/article.php?article_id=Safehiringaudit.htm Also, see an article by ESR called, The FCRA in Four Easy Steps for Employers at http://www.esrcheck.com/articles/article.php?article_id=article9.html 

4. Hiring Airport Screeners: ESR Featured in Workforce Magazine Article 

Virtually overnight, the Transportation Security Administration had to hire more than 55,000 workers. Its problems with mishires and layoffs illustrate the issues inherent in fast large-scale hires.  This article by Workforce Magazine discusses the issues in depth, and quotes ESR President Lester S. Rosen on the inherent problems in locating criminal records, and the need for using multiple approaches in a pre-employment screening program.  An additional article asks industry experts how they would have hired 55,000 airport screeners, also quoting ESR. 

See:  http://www.workforce.com/section/06/feature/23/49/38/index.html

Educational opportunities where ESR is participating include: 

November 10, 2003- Tampa, FL-National Convention of Background Screening Firms-"Legal Update-- What Every Background Firm Needs To Know About the FCRA and Laws Effecting Pre-Employment Screening." (For background firms and record retrievers only). Details to be announced. 

October 21-23, 2003--Chicago, Illinois and Detroit, Michigan--Pre-employment Screening, Safe Hiring and Homeland Security."  Full-day seminars on safe hiring and due diligence by ESR in conjunction with the HR Screener, a new national publication on pre-employment screening and safe hiring for HR professionals.  October 21 in Chicago, and October 23 in Detroit. See the HR Screener>>>. 

October 10, 2003-Dallas-Ft. Worth, TX-The FCRA: Avoiding the Traps" Presented at the HRSouthwest Annual Conference.  See http://www.hrsouthwest.com

September 30, 2003--Oakland, CA-- "Safe Hiring Audit-Implementing and Measuring Due Diligence in Your Hiring."  Northern California Human Resources Association (NCHRA) Annual Conference.  (See www.NCHRA.org)

September 18, 2003--Los Angeles, CA.--"Safe Hiring Audit-Implementing and Measuring Due Diligence."  2003 Professionals in Human Resources Association (PIHRA) Annual Conference.  (see www.PIHRA.org)

August/September, 2003--"Pre-employment Screening and Safe Hiring."  Full-day seminars on safe hiring and due diligence by ESR in conjunction with Lorman Educational Services at five locations in California:  8/22 San Diego; 8/27 Santa Barbara; 9/5 San Francisco; 9/23 Sacramento and 9/26 Stockton.  Contact ESR for further details.

Please feel free to contact Jared Callahan at ESR at 415-898-0044 or jcallahan@esrcheck.com if you have any questions or comments about the matters in this newsletter. Please note that ESR's statements about any legal matters are not given or intended as legal advice.

Employment Screening Resources (ESR)
www.ESRcheck.com  
1620 Grant Avenue, Suite 7
Novato, CA 94945
415-898-0044

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