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If your company’s background check disclosure form includes a release of liability, take it out.

Less than a year after a federal district court in Pennsylvania ruled that Closetmaid violated the Fair Credit Reporting Act (FCRA) by including release language in its background check disclosure form, the Publix supermarket chain agreed to pay nearly $6.8 million to settle a similar lawsuit.

In both lawsuits, the employers used background check disclosure forms that not only disclosed to applicants that a background check would be performed, but also asked the applicant to release the company from any liability in connection with the background check process.  The FCRA, which is the federal law that governs pre-employment background checks, requires that employers provide a disclosure to applicants before conducting a background check.  Simple enough, but the FCRA also requires that this disclosure be made in writing and “in a document that consists solely of the disclosure.” 15 U.S.C. § 1681b(b)(2).

The latter requirement is where both Publix and Closetmaid allegedly fell short.  The Publix form included a short disclosure statement and a consent section, which the statute does allow to be included with the disclosure, but it also included the following release:  “I release Publix Super Markets, Inc., its employees, its authorized agents and representatives from any liability in connection with any decisions made concerning my employment based on information reported.”

The named plaintiffs, along with more than 90,000 potential class members, stand to take home $48 each, despite no harm having been proven or alleged.  The FCRA authorizes statutory penalties for willful violations of $100 to $1,000 per consumer, and these penalties can be imposed even if nobody suffered any harm.  Faced with the irrefutable content of the disclosure forms, Publix elected to settle.

The Federal Trade Commission (which enforced the FCRA until recently) had previously opined that it is permissible to include, on the disclosure form, “minor additional items” that do not distract from the nature of the form.  Examples of additional items that can be added to the form include a place for the applicant to write identifying information or the inclusion of a notice that the background check may include information obtained through interviews with individuals (i.e., an investigative consumer report).  The FTC’s primary concerns were that the disclosure not be diminished in importance by the inclusion of unrelated information and that the disclosure not be buried in small text at the end of an employment application, where it could be missed by an applicant.

At least two district courts have recently ruled that release language is not the kind of “minor additional item” that an employer is permitted to include on the disclosure form.  Although the Publix case settled before the court entered a ruling on the merits, employers should heed the warning sounded by this settlement and take steps to ensure that their disclosure forms do not include release language.

One option employers may wish to consider would be to separate the disclosure form from the consent, and to divert all extraneous items from the disclosure form to a separate consent form.  The FCRA contains no limitations on what other information can be included with the consent form.

Postscript:  On October 23, 2014, at about the same time the Publix settlement was being submitted to the court for approval, a district court in California granted a motion to dismiss a similar FCRA lawsuit, ruling that there is some ambiguity in the FCRA as to whether release language is strictly barred from the disclosure form.  The district court in California opined that, at the very least, the company’s decision to include release language with the disclosure may be a reasonable interpretation of the Act and therefore the willfulness penalties cannot apply.

With the federal district courts now split on this issue, guidance from the U.S. Courts of Appeal would be welcome.  But in the meantime, the damages for a violation can be so high that employers would be wise to take the cautious approach and remove the release language from their disclosure forms.

The Bottom Line:  Employers whose background check disclosure forms contain release language may find themselves the target of class action lawsuits, where statutory damages can easily reach seven figures, even where no one is harmed.

·        Baker & Hostetler LLP

·        Todd H. Lebowitz


Employer Concerns About Liability Loom As Push for Ban-the-Box Policies Spreads

Monday, August 18, 2014

from Human Resources Report



By Rhonda Smith

Aug. 4 - The push to remove from job applications questions about whether a prospective employee has been convicted of a crime is gaining momentum nationwide, advocates and opponents of this effort told Bloomberg BNA.

Many employers continue to push back against blanket approval of ban-the-box policies, arguing that they have an obligation to keep workplaces safe and avoid negligent hiring or employment discrimination claims. In some cases, they are working with advocates to hammer out a proposal that holds appeal for both sides.

"The potential for lawsuits, that's really what this is about," Jack Mozloom, a spokesman for the National Federation of Independent Business's New England and mid-Atlantic region, told Bloomberg BNA July 31.

"Most of these proposals we've seen make it easier for employers to be sued on the basis of some discriminatory action if they refuse to hire people with a felony record," he said. "That's an enormous danger for small business owners."

Hawaii was the first state to approve a ban-the-box law, in 1998, according to the National Employment Law Project, which is tracking the developments.

Today, more than 60 cities and counties and 12 states have enacted laws and policies that require public or private employers, or both, to remove the question about criminal history from job applications, NELP said in its latest update , released in July and titled "Statewide Ban the Box: Reducing Unfair Barriers to Employment of People With Criminal Records."

New Jersey is set to become the thirteenth state to enact a ban-the-box law, with Gov. Chris Christie (R) having signed legislation ( A. 1999 ) Aug. 11 that will bar public and private employers in the state from inquiring about a job applicant's criminal record until after the first interview is completed, unless the applicant voluntarily discloses such information. The Opportunity to Compete Act, which will take effect March 1, 2015, applies to most employers with 15 or more employees.

Advocates said efforts to gain approval of ban-the-box policies are unfolding in Texas, Ohio, Georgia and Nebraska, as well as in the localities of Indianapolis and Louisville, Ky.

The laws generally allow employers to ask about a job applicant's criminal conviction record later in the hiring process, such as during the interview phase or when a job offer is made. In addition, they frequently exempt employers that are required to conduct criminal background checks or when the position involves minors or other vulnerable populations.

NELP said about 70 million people in the U.S. have some sort of criminal record, and nearly 700,000 return to communities annually after being released from jail or prison.

When job-seekers convicted of a crime can't find a job, they end up either "going back to jail or working under the table," Marina Streznewski, executive director of the D.C. Jobs Council, told Bloomberg BNA July 22.

"Some get lucky," she said, "because they encounter people willing to give them a shot."

Stigma Tied to Criminal Record

Many, however, are not so lucky, proponents of ban-the-box laws said.

"There's a lot of stigma with a criminal record; too often an employer doesn't hear beyond that," Michelle Natividad Rodriguez, a senior staff attorney at NELP's office in Oakland, Calif., told Bloomberg BNA July 22. "By delaying the question, you give the person an opportunity to show who they are and what their skills are."

NELP said in its state update, "In an era of extreme mass incarceration, these fair chance campaigns provide a platform to educate the public about the stigma of a criminal record and the real consequences to our society of depriving millions of Americans with past convictions of economic stability."

"There's a lot of stigma with a criminal record; too often an employer doesn't hear beyond that," said Michelle Natividad Rodriguez, a senior staff attorney for NELP.

The nonpartisan organization also said that "many advocates embrace as the next step in the evolution of these policies" more ban-the-box initiatives geared toward private employers.

Five states-Hawaii, Illinois, Massachusetts, Minnesota and Rhode Island-now prohibit private as well as public employers from posing questions about a job applicant's conviction history until later in the hiring process, NELP said.

Illinois Gov. Pat Quinn (D) recently signed "fair hiring" legislation that will bar most employers from making inquiries into job applicants' criminal histories until the interview phase of the hiring process.

The District of Columbia Council unanimously approved a bill recently that would bar most private employers from asking about a job applicant's criminal conviction record until a conditional job offer is made. D.C. enacted a law in 2011 that restricts public employers' inquiries about a job applicant's criminal history until later in the hiring process.

Ban-the-Box Laws Vary

Ban-the-box laws are not identical. Some, such as the city of Baltimore's law, involve harsher penalties than most of their counterparts in other locations.


( Click above graphic to enlarge .)

Baltimore's Fair Criminal-Record Screening Practices ordinance, approved in April by the city council and signed May 29 by Baltimore Mayor Stephanie Rawlings-Blake, covers the majority of employers in that city that have 10 or more employees. Like most of the other laws, it excludes facilities or employers that provide programs, services or direct care to minors or vulnerable adults.

It also bars employer questions about a job applicant's conviction history until after a conditional job offer is made. In addition, the law provides administrative and judicial review of and remedial relief for violations.

"Uniquely, the ordinance provides for misdemeanor criminal charges and a fine to be levied against employers who violate the law," NELP said in a resource guide that highlights ban-the-box laws in U.S. cities and counties.

The fine must be no more than $500 or imprisonment for no more than 90 days, or both a fine and imprisonment for each offense.

Rawlings-Blake released a statement in April that said passage of the ordinance would be a critical component to "not only helping to reduce unemployment, but also improving public safety by addressing recidivism."

"When it comes to the crime fight, we have to use every tool available, which includes creating opportunities for those who have paid their debt to society and want to turn their lives around," she said. "Access to a good job can make the difference between a repeat offender or a productive member of society."

Business Leaders Urge Caution

Business leaders contend that, if such legislation is not hammered out carefully, it might do more harm than good.

"All businesses have very legitimate concerns about workplace safety and potential liability for making a bad hire," Beth Milito, senior executive counsel for the National Federation of Independent Business, told Bloomberg BNA July 31. The NFIB has 350,000 members, primarily employers with fewer than 10 employees, she said.

"The real risk for the employer is a discrimination claim by the individual or the EEOC, claiming the employer is using a job applicant's criminal history to discriminate," Chicago-based management attorney Brian Arbetter, a partner with Sheppard, Mullin, Richter & Hampton LLP, told Bloomberg BNA July 30.

In 2012, the EEOC approved updated enforcement guidance on potential discrimination resulting from employers' use of individuals' arrest and conviction records to make hiring and other employment decisions.

The guidance states that although Title VII of the 1964 Civil Rights Act does not bar use of criminal background checks, employers may violate Title VII if they intentionally discriminate among individuals with similar criminal histories or if their policies have a disproportionate adverse impact based on race, national origin, or another protected category, and employers cannot demonstrate "business necessity."

Milito said many ban-the-box policies exempt employers that have 10 employees or less, but some do not.

In Minnesota, for example, all employers, regardless of how many employees they have, are covered under that state's law.

In addition, Milito said the laws can prove time-consuming, especially for small businesses, which often don't have human resource personnel to oversee the hiring process.

"It can be challenging for a small business to make nuanced hiring decisions or postpone a background check until later in the process," she said, "particularly if public safety is paramount."

Arbetter echoed Milito. "Because of these types of laws, it's possible employers will waste time by getting much deeper in the hiring process with a candidate who has a criminal history and who could be disqualified, but the employer won't know that immediately," he said.

If a job candidate's criminal history subsequently disqualifies him or her for a job, he added, "the employer has spent a lot of time and has to start its hiring process over."

Tips and Pointers

Arbetter advises affected employers to change their job applications to remove criminal history inquiries.

"If it's an interview position, don't ask about criminal history until after the interview," he said.

"The real risk for the employer is a discrimination claim by the individual or the EEOC, claiming the employer is using a job applicant's criminal history to discriminate," management attorney Brian Arbetter said.

If it involves a non-interview position, such as for a data-entry or computer-coding job, he said, "make the offer letter conditional. Say, 'To qualify for the position, we will have to conduct a criminal history background check.' "

Arbetter also said if an employer uses a third-party vendor to conduct criminal background checks, and the vendor begins its vetting process electronically based on the job application, "work with vendors to make sure criminal history elements are not pulled up automatically."

In addition, he said, "From a discrimination protection standpoint, it's always good to try to have a good reason why you're picking someone for a job over other people." Having a written note explaining that "probably can help," in case an applicant not selected alleges employment discrimination, he said.

"When defending companies over hiring and not hiring," he said, "the paperwork-retaining the files-is always what matters the most."

Some Businesses More Open to Policy Change

By design or default, some employers are adopting ban-the-box policies quicker than others.

Rodriguez cited Target Corp., Wal-Mart Stores Inc. and Bed Bath & Beyond as examples of national retailers that no longer ask about an applicant's conviction record during the initial phase of the hiring process.

In April, Bed Bath & Beyond agreed to take steps to comply with New York laws barring automatic disqualification of job candidates with criminal convictions.

A state investigation of the company began in May 2013 after the attorney general's office learned that an HR manager for the New Jersey-based business had told participants at a job fair that it doesn't hire individuals with felony convictions, regardless of any evidence of rehabilitation.

Bed Bath & Beyond said at the time, and in a written statement it sent July 29 to Bloomberg BNA: "Although the Settlement does not include any admission that we violated any of these laws, we are in agreement with the Attorney General that employment opportunities should remain open to individuals with criminal histories that have been rehabilitated. In advancement of that goal, we fully cooperated with the Attorney General's investigation and as part of our agreement will continue to share information with the Attorney General that demonstrates our continued compliance with these laws."

In Minnesota, Ben Gerber, manager of energy and labor/management policy at the Minnesota Chamber of Commerce in St. Paul, told Bloomberg BNA July 31: "A lot of our members have had amazing success hiring convicted felons. But that doesn't take away from the fact that there's always the risk of negligent hiring lawsuits later on."

The National Association of Criminal Defense Lawyers said in a report released in May, "There should be meaningful tax credits for hiring or housing those with convictions."

Other recommendations the NACDL made in "Collateral Damage: America's Failure to Forgive or Forget in the War on Crime" included:

• free bonding to provide insurance to cover employee dishonesty for those who hire individuals with convictions; and

• immunity from negligent hiring liability relating to an opportunity or benefit given to a person with a conviction if the decision maker complies with federal, state and local laws and policies limiting the use of criminal records.


Gerber said immunity from negligent hiring liability is "actually what we would have liked to have seen" in the Minnesota law.

The NACDL report said, "Government at all levels must find creative ways to give employers, landlords and other decision-makers affirmative incentive to offer opportunities to those with convictions."

Bipartisan Push for Ban-the-Box Laws

In some cities, bipartisan efforts are under way to gain approval of ban-the-box policies.

The Minnesota chamber initially opposed that state's proposal, Gerber said, but ultimately remained neutral on it.

"Even when we opposed it, it had bipartisan support," he added. "Liberals and conservatives feel it's a religious duty to reintegrate people back into society."

Sarah C. Walker, founder of the Minnesota Second Chance Coalition, echoed Gerber. The coalition is made up of advocates for criminal justice reform policies and helped lead the effort in that state to pass laws that cover public and private employers. The law affecting private employers took effect Jan. 1.

"Most organizations have moved away from tough-on-crime to a smart-on-crime stance," she told Bloomberg BNA July 31. "They say, 'We don't want people to come out of prison and never be able to work.' " Walker said efforts to gain approval of ban-the-box policies are unfolding in Texas and Ohio.

In Georgia, Gov. Nathan Deal (R) "has indicated that the state will set an example for private sector employment by not automatically dismissing job applicants with a criminal history," NELP said.

"Gov. Deal has said he's going to issue an executive order to take the question off the application," Rodriguez told Bloomberg BNA.

She added that lawmakers in Nebraska recently passed ban-the-box legislation that affects public employment. Bipartisan efforts to gain approval of such policies also are under way in Indianapolis and Louisville, Ky., she said.

"Being able to see common ground on criminal justice reform is really hopeful," Rodriguez said.


To contact the reporter on this story: Rhonda Smith in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

Illinois Enacts Limits on Employers' Use of Background Checks During Hiring

Posted July 21, 2014, 3:34 P.M. ET

Illinois Gov. Pat Quinn (D) July 19 signed so-called “fair hiring” legislation, which will bar most employers from making inquiries into job applicants' criminal histories until the interview phase of the hiring process.

Quinn signed H.B. 5701, creating the Job Opportunities for Qualified Applicants Act. The new law (Public Act 98-0774) prohibits employers and employment agencies from inquiring about an applicants' criminal record until the applicant has been determined qualified for a particular position and selected for an interview. In cases where an interview is not required, criminal record inquiries are prohibited until a conditional offer of employment is made.

H.B. 5701 exempts some employers from this requirement. The law would not apply to employers hiring for positions where federal or state law prohibits hiring an individual with criminal convictions, or where the applicant must be licensed under the Emergency Medical Services Act.

Finally, H.B. 5701 grants new authorities to the Illinois Department of Labor to investigate alleged violations and impose civil penalties. The department would have authority to impose penalties of up to $1,500 for repeat violations. The new law becomes effective on Jan. 1, 2015. CFPB Issues Guidance For Receiving Favorable Treatment In Enforcement Actions



David M. Bizar, Scott M. Pearson


On June 25, 2013, the Consumer Financial Protection Bureau issued a bulletin advising that companies may be able to secure more favorable outcomes in CFPB enforcement proceedings by engaging in certain “responsible business conduct.”  The favored activities include self-policing, self-reporting, voluntary remediation and cooperation.  

Although it expressly disclaimed any promises of leniency, the Bureau indicated that these activities could, for example, help avoid public enforcement actions, reduce the number of charges pursued, or reduce the sanctions and penalties sought by the Bureau.

Notably, the bulletin was issued two days before the Bureau announced consent orders against U.S. Bank and Dealers’ Financial Services.  In its press release announcing those orders, the Bureau noted that it agreed to the limited redress contained in those orders (including no civil monetary penalties) because both companies “engaged in the sort of conduct the CFPB expects from companies found to have violated consumer financial laws” by “proactively altering problematic aspects of the . . . program [at issue] and readily working with the Bureau to provide refunds . . . .” 

Seyfarth Shaw represented Dealers’ Financial Services in its dispute with the CFPB.  If you are interested in the latest intelligence on the CFPB’s evolving approach to enforcement actions, please feel free to contact David Bizar or Scott Pearson, the co-chairs of Seyfarth’s Consumer Financial Services Litigation group.


E-Verify Connection
A publication of U.S. Citizenship and Immigration Services (USCIS)

March 2013 Issue XII

Welcome to E-Verify Connection, an e-newsletter from U.S. Citizenship and Immigration Services (USCIS) for U.S. employers and workers. Each issue will bring you updates about E-Verify’s advances and activities, as well as other useful information related to employment eligibility verification. A PDF version of E-Verify Connection is available 


USCIS Releases a Revised Form I-9- March 8, 2013
A new EmploymentEligibilityVerification Form I-9is now available for your immediate use. The new design and revised instructions assist employers and employees. See the
USCIS press release.

Changes to the Form


  • New expiration date (03/08/2013 N) and expiration date (03/31/2016)
  • Instructions for Form I-9 are six pages (formerly 3) with links to resources
  • Form I-9 is now two pages
  • Fillable with drop down menus for date and country of issuance
  • Data field titles are clearer
  • Section 1- New Fields:
    • E-mail address and phone number (optional)
    • Alien Authorized to Work
    • Foreign passport and country of issuance
  • Section 2:
    • Employee’s name on top of form
    • New fields for List A document combinations

Federal Register Notice – 60 days
Employers should begin using the revised Form I-9 immediately.  However, because some employers may need time to update processes, USCIS is allowing 60 days from March 8, 2013 - the date of the Federal Register Notice - during which employers may continue to use prior versions of the form: (Rev.02/02/09)N and (Rev. 08/07/09)Y.  Beginning May 7, 2013, only the new Form I-9 with revision date March 8, 2013 may be used.

Revised Form I-9 Available in Spanish
Formulario I-9 is on the USCIS website and can be filled-in by employers and employees in Puerto Rico ONLY. Spanish-speakers in the 50 states and other U.S. territories may use the Spanish version for reference, but must complete the English version of the form only.

Form I-9 Webinars - New Form, Updated Information!
Do you have questions?  Join your colleagues across the country in a Free Form I-9 Webinarand get answers to your questions about the new Form I-9. MORE HAVE BEEN ADDED TO MEET THE DEMAND!

I-9 Central has the Updated M-274
On I-9 Central, you can learn all about the latest Form I-9 enhancements. The Handbook for Employers, Guidance for Completing Form I-9, has been updated with information about the new form. Find it on I-9 Central. To stay up-to-date on I-9 news, subscribe here.

Job Seekers and Form I-9
Do you know that every employer is required to complete and retain Form I-9 for everyone hired, including U.S. citizens? You completed Section 1 of Form I-9 every time you started a job with a new employer since 1986. Learn more about worker's rights and responsibilities in an employee rights webinar.  

Form I-9 History
Form I-9 was introduced in 1986 to respond to provisions in the Immigration Reform and Control Act of 1986 (Section 274a) that require employers to verify the identity and work eligibility of all new persons hired.  Since the first version was issued, there have been 10 revisions.  See more about Form I-9 regulations and legislation on I-9 Central.

E-Verify Highlighted at Congressional Hearing
On February 27, Soraya Correa, USCIS Associate Director, Enterprise Services Directorate, testified at the House Judiciary Committee’s Subcommittee on Immigration and Border Security about E-Verify. Ms. Correa discussed the improvements in accuracy and efficiency, growth in E-Verify’s users, high customer satisfaction, and more. Read the testimony here.

High Scores for E-Verify
The results are in! E-Verify received an overall customer satisfaction rating of 86 in the America Customer Satisfaction Index Survey, 19 points higher than the federal average. Employers are highly satisfied with the tutorials, registration, ease of use, and photo matching processes. Read it here.

E-Verify Listens – Still Going Strong
Have you heard? You can still contribute to E-Verify Listens, an online community where users submit and discuss ideas, as well as vote for their favorite ideas to help frame the evolution of E-Verify. VisitE-Verify Listens. 


Click here 
to subscribe to E-Verify Connection
Have an idea about E-Verify? We’re listening. Share yours at

Friend us on 
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Employee Hotline: 1-888-897-7781
Employer Queries: 1-888-464-4218

E-Verify is a registered trademark of the U.S. Department of Homeland Security
M-1011, E-Verify Connection 

Employers Must Begin Using New Fair Credit Reporting Act Summary of Rights Form by January 1, 2013


Beginning January 1, 2013, employers will be required to provide a new version of the form entitled Summary of Your Rights Under the FCRA (Summary of Rights) to individuals before taking any adverse action based on the contents of a consumer report. Fortunately, the adverse action process that employers are to follow under the Fair Credit Reporting Act (FCRA) has not changed, only the Summary of Rights form. A copy of the new Summary of Rights is available here.

As a reminder, the FCRA applies when an employer causes a “consumer report” (e.g., a criminal background check, credit check, etc.) to be prepared by a third party and the employer uses that consumer report for employment purposes, such as evaluating a job applicant. Before procuring such a report, the FCRA requires an employer to give a written disclosure to the individual and obtain his/her written consent. Many employers forget that this consent must be a stand-alone document and not simply a paragraph added at the bottom of an application or other document. The disclosure and consent requirements under the FCRA have not changed as a result of this recent rulemaking.

The FCRA further requires that five business days before taking adverse action, based in whole or in part on a consumer report, an employer must provide an individual with: (1) a copy of the consumer report; and (2) the Summary of Rights form. These two requirements remain unchanged. However, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Pub.L. 111-203, H.R. 4173) transferred the rulemaking and enforcement powers over the FCRA, which were previously vested in the Federal Trade Commission (FTC), to the newly created Consumer Financial Protection Bureau (CFPB). In light of this change, the CFPB recently issued a new Summary of Rights directing individuals to contact the CFPB, instead of the FTC, or to go to the CFPB’s website for more information about their rights under the FCRA. Additionally, the list of contacts included at the end of the Summary of Rights has been updated and expanded.

Prior to January 1, 2013, employers should replace the old Summary of Rights form with the new form available at the above web address. While this is the first change to the FCRA announced by the CFPB, we anticipate more changes in the future.

As you can see below from the recent letter from the attorneys at Seyfarth Shaw, in Chicago, there are major changes taking place in the credit industry. The main purpose this legislation is to provide identity protection for consumers. Our advice is to contact your own attorney about the use of credit reports for potential hires, but we feel that if you restrict your credit request to managerial and financial personnel that you will not be in conflict with the changes in the various state and federal law. Please feel free to contact us here at Pre-Check if there should be any specific questions that you have concerns with.


Strategy and Insights: How Should Employers Use Criminal History in Employment Now That The EEOC Has Issued Enforcement Guidance?



Pamela Q. Devata, Kendra K. Paul


Criminal history information can be a crucial tool in the employment decision process. During the past few years, federal agencies and state governments have been limiting, employers' use of criminal history information in the employment process through regulation, litigation, and legislation. Two days ago the Equal Employment Opportunity Commission ("EEOC") issued new guidance in an effort to limit employers' options with respect to their use of this tool. The EEOC's new Enforcement Guidance on Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (the "Guidance") passed today by a 4-1 vote of the EEOC's Commissioners. See



California Joins Other States in Placing Restrictions
on Employers’ Use of Credit Checks

On October 10, 2011, Governor Brown signed into legislation Assembly Bill No. 22, which generally prohibits employers from
using an applicant’s or employee’s credit history in making employment decisions. Prior to this legislation, employers could
request a credit report for employment purposes if they provided prior written notice of the request to the person for whom
the report was sought. Assembly Bill 22 significantly changes this landscape by prohibiting employers from using credit
reports for employment purposes unless the report is used for one of the limited purposes enumerated by the statute.

Effective January 1, 2012, Employers in California may only use a consumer credit reports for employment purposes if the
report is sought for one of the following:

1. A managerial position;

2. A position in the state Department of Justice;

3. A sworn peace officer or other law enforcement;

4. A position for which the information contained in the report is required by law to be disclosed or obtained;

5. A position that involves regular access to confidential information such as credit card account information, Social security
number, or Date of birth;

6. A position which the person can enter into financial transactions on behalf of the company;

7. A position that involves access to confidential or proprietary information; or

8. Aposition that involves regular access to cash totaling ten thousand dollars ($10,000) or more of the employer, a
customer, or client, during the workday.

If an employer procures a consumer report for one of the limited exceptions outlined in the statute, it must provide the person
for whom the credit report is sought with written notice informing him or her that a report will be requested, the specific
reasons for obtaining the report as provided in the statute, and a check box allowing the applicant to request a copy of the
credit report at no charge.

• October 10, 2011


One Minute Memo®


California is the seventh state to enact legislation restricting employers’ use of credit reports joining Washington, Oregon,
Hawaii, Illinois, Maryland, and Connecticut. Similar legislation is pending in several other states. Accordingly, employers who
use credit information as part of employment screening or other hiring purposes should evaluate their policies in light of the
recent momentum against using such information in employment decisions.

By: Pamela Devata and Jeffrey Sand

Pamela Devata is a partner in Seyfarth’s Chicago office and Jeffrey Sand is an associate in the firm’s Atlanta office. If you would
like further information, please contact your Seyfarth Shaw LLP attorney, Pamela Devata at or Jeffrey
Sand at

Attorney Advertising. This One Minute Memo is a periodical publication of Seyfarth Shaw LLP and should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents
are 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. Any tax information or written tax advice
contained herein (including any attachments) is not intended to be and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer. (The foregoing legend has
been affixed pursuant to U.S. Treasury Regulations governing tax practice.) © 2011 Seyfarth Shaw LLP. All rights reserved.


This new Guidance's roots can be traced back to the Unites States Supreme Court's 1971 opinion in Griggs v. Duke Power Company and the more recent EEOC E-RACE (Eradicating Racism and Colorism in Employment) Initiative, which seeks, among other things, to address "21st century manifestations of discrimination" under Title VII of the Civil Rights Act of 1964. According to the EEOC, studies reveal that people of certain races, colors, and national origins are arrested more frequently than others outside of those groups. In 2011 alone, 50,060 charges of discrimination alleging race/color/national origin-based discrimination were filed with the EEOC, which accounted for 50% of the charges filed that year. See The new Guidance also supports its reasoning by citing studies finding that criminal history information is often incomplete and inaccurate.

The EEOC's Unilateral Move

The EEOC did not release a draft of this new Guidance for public notice and comment before finalizing it. Based on this unilateral move, many industry groups have protested against the issuance of new Guidance. It remains to be seen how far such challenges will go.

Some employer guidance was gleaned during a recent March 2012 conference where EEOC Commissioner Victoria Lipnic cautioned employers to avoid blanket policies on their use criminal history information (e.g., policies that prohibit individuals who have committed certain crimes from even being considered for employment). According to Commissioner Lipnic, employers with blanket policies will be targeted by the EEOC for investigation and even litigation. This statement was confirmed in the EEOC Guidance. Although not every EEOC investigation results in a lawsuit, an investigation alone can exhaust an employer's time, energy, and finances. This is especially true given that Commissioner Ishimaru stated in his remarks at the public meeting that the EEOC was currently investigating hundreds of cases where employers illegally used criminal history information in employment decisions.

The EEOC's History Of Enforcement

Because the EEOC did not allow for public comment, it is unclear whether or not the EEOC's new Guidance will be upheld by the courts. Unlike Congress, the EEOC does not have the authority to create statutes or issue non-procedural regulations under Title VII. Regardless, however, the EEOC can make it difficult and costly for employers that choose not to follow this new Guidance through its investigations, enforcement actions and subsequent litigation. Either employers will face substantial costs in following the new Guidance or fighting it in court. As part of its E-RACE Initiative, the EEOC has already filed several lawsuits against companies it believes use criminal history information in a manner that creates a disparate impact on race, color, or national origin. For example:

  • In January 2012, the EEOC entered into a conciliation agreement with Pepsi Beverages for $3.13 million based on allegations that Pepsi Beverages racially discriminated against African American applicants based on their criminal history information. According to its press release, the EEOC stated that its investigation revealed that Pepsi had a policy of not hiring applicants with pending criminal charges that had not resulted in convictions; and failed to hire applicants with arrests or minor conviction records.
  • In September 2009, the EEOC filed a complaint against Freeman Companies (Case No. 09-CV-2573) in the District of Maryland alleging that the company's use of credit histories and criminal backgrounds as selection criteria has a "significant disparate impact on [African American] applicants and that [the company's] use of criminal history information has an adverse impact on Hispanic and male applicants." This is a nationwide class action lawsuit under Title VII that is still pending.
  • In September 2008, the EEOC filed a complaint against Peoplemark, Inc. (Case No. 08-CV-0907) in the Western District of Michigan alleging that the company maintained a blanket no-hire policy that denied hiring or employment to any person with a criminal record and that such policy had a disparate impact on African American applicants. This was a nationwide class action lawsuit under Title VII. After many months of expensive discovery, it became clear that the EEOC did not have a statistical expert to rebut Peoplemark, Inc.'s expert, so the case was voluntarily dismissed in March 2010.

State And Local Laws Addressing Criminal History Information

Many states have their own laws concerning "job relatedness" requirements for an employer's use of criminal history information, including Hawaii, Kansas, Missouri, New York, Pennsylvania, and Wisconsin. Other states do not even permit employers to inquire about criminal history information on the initial written application form, subject to a couple of narrow exceptions. Although most of these states (California, Connecticut, Hawaii, Massachusetts, Minnesota, and New Mexico) apply this prohibition to public employers, both the Hawaii and Massachusetts laws also cover private employers. Some 27 cities and counties in California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, and Washington also have this prohibition. Again, while these local laws apply mostly to public employers, private employers in cities in Connecticut, Massachusetts and Philadelphia are also impacted. Some of these state and local laws, such as Hawaii's law, also prohibit employers from inquiring about an applicant's criminal history information until after a conditional offer of employment is made. Additional states, cities, and counties have similar legislation currently pending.

The New EEOC Guidance

The EEOC's new Guidance consolidates and supersedes the EEOC's 1987 and 1990 policy statements concerning employers' use of criminal history information. The following are the key highlights of the new Guidance.

What An Employer Can Ask

The EEOC recommends as a best practice that employers not ask about convictions on applications. According to the EEOC, inquiries about convictions, if made, should be limited only to those that are job-related. Many employers currently ask about convictions in a blanket fashion or with minimal exclusions required by state or local laws. Per the new Guidance, employers should review their job applications and pre-employment inquiries. Even when considering convictions to determine job-relatedness, however, it is very difficult for an employer to establish whether a given conviction is job-related, and employers may need to rely on outside experts to make such an analysis.

Arrest Records

The new Guidance makes clear that use of arrest records "is not job related and consistent with business necessity." The new Guidance goes on, however, to state that an employer may make a decision on the underlying conduct if the conduct makes the individual unfit for a position. The new Guidance does not specifically discuss how, if at all, pending records are different from arrests, except to state that a person can be placed on an unpaid administrative leave while an employer investigates the underlying facts.

Factors To Consider When Evaluating Criminal History Information

It is no surprise that the EEOC reinforced its earlier guidance that bright line policies relating to the use of criminal history information will be unlawful. The good news is that the new Guidance does not contain any rule specifically limiting how far back in time an employer may consider recent criminal history information, or only a specified list of offenses—which many thought would be contained in the new Guidance. Rather, the new Guidance gives more insight into the factors that were originally set forth in the EEOC Policy Statement on the Issue of Conviction Records Under Title VII,, as well as adding some additional factors to be considered. Based on the new Guidance, employers should consider the following factors when evaluating criminal history information and making an individualized assessment to determine:

  • the nature and gravity of the offense or offenses (which the EEOC explains may be evaluating the harm caused, the legal elements of the crime, and the classification, i.e., misdemeanor or felony);
  • the time that has passed since the conviction and/or completion of the sentence (which the EEOC explains as looking at particular facts and circumstances and evaluating studies of recidivism); and
  • the nature of the job held or sought (which the EEOC explains requires more than examining just the job title, but also specific duties, essential functions, and environment).

Individualized Assessment

One of the biggest areas of change in the new Guidance is that the EEOC recommends that an "individualized assessment" can help employers avoid Title VII liability. Reading between the lines, although the new Guidance states that "Title VII does not necessarily require individualized assessment in all circumstances," employers may be challenged by the EEOC or private litigants if they do not do so. But, according to Commissioner Lipnic's opening statement at the public meeting yesterday, there may be instances "when particular criminal history will be so manifestly relevant to the position in question that an employer can lawfully screen out an applicant without further inquiry. A day care center need not ask an applicant to "explain" a conviction of violence against a child, nor does a pharmacy have to bend over backward to justify why it excludes convicted drug dealers from working in the pharmacy lab."

The EEOC sets forth a number of individual pieces of evidence that an employer should review when making an individualized determination including:

  • The facts or circumstances surrounding the offense or conduct;
  • The number of offenses for which the individual was convicted;
  • Age at the time of conviction, or release from prison;
  • Evidence that the individual performed the same type of work, post conviction with the same or a different employer, with no known incidents of criminal conduct;
  • The length and consistency of employment history before and after the offense or conduct;
  • Rehabilitation efforts, e.g., education/training;
  • Employment or character references and any other information regarding fitness for the particular position; and
  • Whether the individual is bonded under a federal, state, or local bonding program.

This is perhaps the most concerning area of the new Guidance. Clearly, this list is extremely burdensome and will cause employers to spend time and resources in evaluating criminal history information. One saving grace is the new Guidance indicates if the applicant does not respond to the employer's attempt to gather data, the employer can make the determination without the additional information. Employers will need to evaluate if there are any criminal offenses that have a "demonstrably tight nexus to the position in question" such that an individualized assessment may be circumvented. These will likely be in rare instances.

Compliance With Other Laws

The new Guidance acknowledges that compliance with "federal laws and regulations" disqualifying convicted individuals from certain occupations is a defense to charges of discrimination. For example, convictions of theft and fraud that disqualify in the financial services industry. Also recognized as a defense in the new Guidance: denying employment based on failure to obtain a federal security clearance—if the clearance is required for the job. However, the EEOC opines that compliance with state and local laws and regulations will not shield employers from Title VII liability due to Title VII pre-emption of state and local laws. Employers should therefore evaluate whether other laws on which they may be relying as a defense to run specific criminal history or eliminate an applicant/employee are preempted by Title VII.

Next Steps For Employers

Based on the new Guidance, employers should evaluate their pre-employment and hiring practices. Because the EEOC will be enforcing Title VII with this new Guidance in mind, employers are well advised to consider adjusting their use of criminal history information in accordance with it. Whether or not the EEOC prevails in any of its enforcement actions or lawsuits, the employers in these actions will be forced to spend substantial financial resources to defend and resolve them. The new Guidance itself sets forth a few employer "best practices:"

  • Employers should eliminate policies or practices that exclude people from employment based on any criminal record.
  • Employers should train managers, hiring officials, and decision-makers about Title VII and its prohibition on employment discrimination.
  • Employers should develop a narrowly tailored written policy and procedures for screening for criminal history information. The policy should: (i) identify essential job requirements and the actual circumstances under which the jobs are performed; (ii) determine the specific offenses that may demonstrate unfitness for performing such jobs (i.e., identify the criminal offenses based on all available evidence); (iii) determine the duration of exclusions for criminal conduct based on all available evidence (i.e., include an individualized assessment); (iv) record the justification for the policy and procedures; and (v) note and keep a record of consultations and research considered in crafting the policy and procedures.
  • Employers should train managers, hiring officials, and decision-makers on how to implement the policy and procedures consistent with Title VII.
  • When asking questions about criminal history information, employers should limit inquiries to records for which exclusion would be job related for the position in question and consistent with business necessity.
  • Employers should keep information about applicants' and employees' criminal history information confidential and only use it for the purpose for which it was intended.

By: Pamela Devata and Kendra Paul

Pamela Devata is a partner in Seyfarth's Chicago office, and Kendra Paul is an associate in the firm's Houston office. If you would like further information, please contact your Seyfarth Shaw LLP attorney, Pamela Devata at or Kendra Paul at 

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