EmployeeScreenIQ Blog

Massachusetts attorney Michael S. Kraft was kind enough to correct me on the entry I posted last week about the state’s new data security regulations.  According to Mr. Kraft, not only do organizations based in the state of Massachusetts need to draft a policy to protect personal information, but any business that has any employee or consumer customer located in Massachusetts.

I checked out his blog and also found other helpful advice for how employers can comply with these guidelines.

The new Massachusetts data security regulation goes into effect on Monday, March 1. If you have not yet begun to plan for the deadline, then likely either you are unaware of the requirements, or you are feeling overwhelmed by them. And who would blame you in light of the seemingly endless list of tasks:

• Develop a written information security plan (WISP);
• Identify all foreseeable risks in your organization by examining every nook and cranny where data enters, leaves or is stored;
• Implement security policies and procedures and train your employees
• Secure all paper and electronic records; provide encryption
• Obtain written assurances from all vendors that they are compliant
• Regularly monitor and review to insure compliance

You know that it is vitally important, both because it’s legally required and because it’s the right thing to do to protect your customers.  But where to begin? Do you need professional assistance – a lawyer or specialized IT firm to accomplish this task?  That really depends on the size and nature of your business, the data that requires protection and how much time and energy you are willing to devote to the process.  Many businesses are probably capable of accomplishing a lot on their own. For the most part, the regulation is a straightforward recitation of the tasks needed to comply. But is that the best use of your time? Noted author and business consultant Andy Birol would caution business owners to judge very carefully those tasks that they choose to do by themselves and those that are properly delegated.

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Please note that the Massachusetts Data Security Regulations take affect on March 1, 2010.  This impacts all employers in the state that collect personal identifying information such as a person’s name and any or all of the following: Social Security Number, drivers license or state ID number, financial account or credit number.  Most employers gather at least a portion of this information during the on-boarding process and certainly need it if they conduct background checks.

In order to comply,  employers must have in place a written information security program (”WISP”) by 3/1/10.

View Press Release from MA Office of Consumer Affairs

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In response to what it perceives as a barrier to people getting jobs, the Oregon Senate has introduced a bill to curb employers’ use of credit reports.

Oregon Senate Bill 1045 would prevent most employers from using a prospective candidate’s credit history into pre-employment screening, promotion or other employment-related decisions.  According to The Oregonian “[the] bill would continue to allow businesses to look into an applicant’s criminal and employment history and do other background checks. And certain employers could continue to consider credit histories, such as banks, law enforcement agencies and other businesses that can show credit checks are necessary to evaluate candidates for specific positions.

The proposal will be reviewed by Governor Ted Kulongski and is expected to pass.  Oregon is among the states with the highest unemployment rates in the country and is well-known for its liberal policies and practices.  Opponents are stating that this law would be anti-business by limiting the information employers can use to make an informed hiring decision.

If the law is passed, Oregon would join Hawaii and Washington as the only states that limit the use of credit reports.

We anticipate that NAPBS will advocate on behalf of employers on this issue and will keep you posted.  We are, of course, opposed to this bill.  As long as credit reports are used legally and without discrimination, employers should have the ability to exercise the rights granted under the Fair Credit Reporting Act (FCRA).

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It is indeed a rare day when I will applaud legislation that aims to restrict those who provide employment background checks. We’ve just learned that the California legislature has introducedSenate Bill 909 which would mandate that a background screener “that prepares or processes in any manner an investigative consumer report, or portion thereof, outside of the United States or its territories to make specified disclosures to the potential user of this information, including, but not limited to, the country or countries where the report, or portion thereof, will be prepared or processed. The bill would also prohibit an investigative consumer reporting agency from transmitting a consumer’s social security number, except for the last 4 digits, outside of the United States or its territories.”

I support this bill because as an industry, we have an obligation to protect both our clients and their employees, and or prospective employees.  Identity theft is rampant in our society today and we all strive to ensure that the personal information that is provided to us in order to conduct a background check is held in the strictest of confidence.

There are some in our industry that choose to off-shore this information because let’s face it, it’s cheaper than paying someone to do it stateside.  Of course, once the information leaves the direct control of the screening company, what could happen next is anyone’s guess.

This law would obligate companies that off-shore this information to disclose that fact.  According to the bill, it would also, ”prohibit an investigative consumer reporting agency from transmitting a consumer’s social security number, except for the last 4 digits, outside of the United States or its territories. The bill would require these agencies to adopt and publish a privacy policy relating to information contained in reports that are prepared or processed outside of the United States, as specified. The bill would provide that an investigative consumer reporting agency is liable to a consumer who is harmed by any act or omission that occurs outside the United States or its territories, as specified.

Lastly, it is important to note that this bill exempts these requirements for those conducting background checks on individuals that live outside of the United States.

This bill is a win/win for employers and consumers.  We know that this effort will not be popular with those in our industry engaged in this practice, but it is efforts like these that will ultimately benefit the industry at-large.  We hope that it passes and would like to see similar legislation on a federal level.

Read the California SB909

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Last year, the state of New York amended their general business laws to force businesses to consider certain factors in their hiring decisions when their job applicants had criminal conviction records.  (New York State Correction Law Article 23-A, Section 753 “Licensure and Employment of Persons Previously Convicted of One or More Criminal Offenses”.) The law was aimed to help former convicts get jobs.  To comply, businesses that conduct background checks have to follow guidelines set forth in Article 23-A before taking adverse action.  The guidelines focus on the seriousness or severity of crimes, job relatedness of the criminal activity, how old the record was, if the person was a repeat offender, etc.

All has been pretty quiet since the law was enacted . . . until now.  Check out this editorial we found in today’s New York Times.  Clearly, they are prepared to begin enforcement.  If you are interested in learning more about Article 23-A, check out our podcast with Seyfarth Shaw’s, Pam Devata.

Denied A Chance for Honest Employment

Among the leading causes of recidivism are employment policies in the private and public sectors that discriminate against former offenders and too often drive them back to jail. New York State first addressed this problem more than 30 years ago with laws protecting the employment rights of people with criminal convictions. But two investigations by Attorney General Andrew Cuomo suggest that some companies are finding ways around these laws.

Employers in New York can, of course, review an applicant’s history. But they cannot deny an applicant a job on the basis of a conviction without considering whether the offense bears a relationship to the job being sought. New York law also forbids employers from shutting out qualified applicants because of convictions that are sealed or dismissed, minor infractions like speeding tickets or for arrests that do not lead to conviction.

In a recently completed investigation, the attorney general found that ChoicePoint, a nationally known employee screening company, was involved in creating an online job application system for employers that automatically disqualified thousands of applicants who disclosed criminal convictions. Moreover, investigators found that the company had recommended to employers that they disqualify applicants based on sealed or dismissed convictions and legal outcomes that are regarded as violations — not crimes — under New York law. One ChoicePoint client violated state law by withdrawing conditional job offers after information that should not have been taken into account turned up in background checks.

In a separate investigation, the attorney general found that RadioShack also had ignored the law by rejecting job applicants whose violations had been sealed, set aside or deemed to be minor. Both companies have agreed to pay financial penalties and to obey the law, without admitting or denying wrongdoing. But the cases raise the disturbing possibility that the practices they engaged in may be more widespread than supposed in a state that has been a national model in giving former prisoners a chance at honest work.

View Full Article

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Great blog posting out of HRMorning.com yesterday about the EEOC and employment background investigations.

When the Equal Employment Opportunity Commission started noticing an increase in discrimination suits based on background checks, the agency decided to warn employers about practices that could get them in trouble.

The EEOC program designed to combat discriminatory practices tied to background checks is called E-RACE (Eradicating Racism And Colorism from Employment). It started when the agency noted, in the last few years, a steep climb in complaints from applicants who said they were unfairly excluded from competing for a job because of information that showed up on a background check.

What sort of information? On the face of it, nothing extraordinary — a criminal record or a poor credit rating. The problem came when applicants were able to show that the criteria used had a negative impact on hiring opportunities for black and Hispanic males, who statistically have higher arrest rates and lower credit scores than white males.

Here are two background-check practices that have caused the biggest headaches — with the EEOC and in court — for employers:
Blanket policies against hiring anyone with a criminal record or poor credit score. The sticking point for such policies is that, without knowing it, an employer could routinely give preference to whites. What to do: Check to see if your practices exclude most blacks and Hispanics, whole opening the door to white applicants. If you see a pattern, the EEOC may see one, too.

Failing to show the correlation between background checks and the job itself. The EEOC and the courts generally recognize that some background material may have some bearing on the applicant’s suitability for the job. In the most obvious instance, for example, you wouldn’t be expected to hire a convicted embezzler to handle cash. There are other situations that apply — contact with customers, driving company vehicles, dealing with minors, etc. You’re on safer ground if you can show those correlations between background checks and suitability.

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The FTC’s “Red Flag” mandate to curb identity theft is set to take effect on November 1, 2009, one full year after the original policy was to be enforced. It appears that after many delays, the government is finally ready to take action.
Creditors and Financial Institutions must develop and implement a written Identity Theft Prevention Program.

Further, all employers that conduct background checks are supposed to have a policy in place to handle “Red Flag” Address Discrepancy Notifications from the National Consumer Reporting Agencies (mainly credit bureaus). This rule has been in effect since last November and we are still unclear what such notifications will look like when and if they occur.

For more information on these guidelines and how to comply check out:

Users of Consumer Reports Have New Responsibilities as of November 1
EmployeeScreenIQ Offers Free Webinar on New FTC Guidelines

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In a monumental decision this weekend the Obama administration is changing the governments course on federal marijuana laws.  According to the Associated Press:

Federal drug agents won’t pursue pot-smoking patients or their sanctioned suppliers in states that allow medical marijuana, under new legal guidelines to be issued Monday by the Obama administration.

This puts many U.S. Employers and the U.S. Government as an employer in an ethical quandary.  Many employers use extensive background screening services such as EmployeeScreenIQ to screen potential candidates.  As part of this process substance abuse testing may be included.  Many employers use the Department of Transportation’s (DOT) drug free workplace policies as a standard.  With fourteen states already allowing medical marijuana one can only wonder how these employers are supposed to react to these new policies.

This blog is not intended to start a “for or against” type of debate but more so to see how employers will react to the news.  In Ohio we don’t have medical marijuana but its gaining momentum.  Ohio is has great incentives for employers to create drug free workplaces.  Should it pass here it could create a tidal wave of questions from employers!

Feds to Issue New Medical Marijuana Policy

WASHINGTON – Federal drug agents won’t pursue pot-smoking patients or their sanctioned suppliers in states that allow medical marijuana, under new legal guidelines to be issued Monday by the Obama administration.

Two Justice Department officials described the new policy to The Associated Press, saying prosecutors will be told it is not a good use of their time to arrest people who use or provide medical marijuana in strict compliance with state law.

The guidelines to be issued by the department do, however, make it clear that agents will go after people whose marijuana distribution goes beyond what is permitted under state law or use medical marijuana as a cover for other crimes, the officials said.

The new policy is a significant departure from the Bush administration, which insisted it would continue to enforce federal anti-pot laws regardless of state codes.

Fourteen states allow some use of marijuana for medical purposes: Alaska, California, Colorado, Hawaii, Maine, Maryland, Michigan, Montana, Nevada, New Mexico, Oregon, Rhode Island, Vermont and Washington.

California is unique among those for the widespread presence of dispensaries — businesses that sell marijuana and even advertise their services. Colorado also has several dispensaries, and Rhode Island and New Mexico are in the process of licensing providers, according to the Marijuana Policy Project, a group that promotes the decriminalization of marijuana use.

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In October, 2008 California Governor Arnold Schwarzenegger vetoed Assembly Bill 2918, a law aimed to ban the employers from using employment credit reports when conducting background checks. At the time, he said, “This bill would significantly increase businesses’ exposure to civil actions over the use of credit checks. Further, the bill would increase administrative costs to those employers who must legitimately use credit reports as a screening tool by requiring that the employer first abide by its onerous requirements. California employers and businesses have inherent needs to obtain information about applicants for employment. The bill would become a new employer obstacle to the use of available information needed to make hiring decisions.”

Well, here’s hoping that the Governor hasn’t changed his mind. It looks like the House Assembly is at it again with AB943, a bill which is the mirror image of its predecessor.

According to the Consumer Federation of California, “This bill would prohibit an employer, with the exception of certain financial institutions, from obtaining a consumer credit report for employment purposes unless the information is (1) substantially job-related, meaning that the position of the person for whom the report is sought has access to money, other assets, or confidential information, and (2) the position of the person for which the person is sought is a managerial position, a position in a city, county, or both city and county, that of a sworn peace officer or other law enforcement position, or a position for which the information contained in the report is required to be disclosed by law or to be obtained by the employer. ”

The National Association of Professional Background Screeners (NAPBS) has drafted the following letter and asked its members to send it to the Governator. Check out the letter and feel free to send one of your own. Feel free to take whatever language you’d like. We’ll continue to keep you posted.

Governor Arnold Schwarzenegger State Capitol Building Sacramento, CA 95814

Dear Governor:

We strongly oppose California AB 943, and we urge a veto.

We are a member of the National Association of Professional Background Screeners (NAPBS) which represents over 600 member companies and seeks to foster awareness of issues related to consumer protection within the background screening industry. The background screening industry is governed by the federal Fair Credit Reporting Act (“FCRA”) under the scrutiny of the Federal Trade Commission (“FTC”). Background screeners are classified as Consumer Reporting Agencies (“CRAs”) by the FCRA and differ from private investigators who may conduct investigations covertly.

Background screening companies receive personal data provided by the applicant with that person’s written consent to utilize it and CRAs follow the FCRA regulated process for verifying and reporting results. This includes the right of the applicant to review and dispute adverse information reported in the background check. In addition, applicants applying for jobs in California have additional protections granted under California state law.

NAPBS has numerous member companies in California that provide employment and tenant background screening services to both California employers and property management companies; these services may include providing a consumer credit report. Additionally, NAPBS membership spans each state in the nation and members based outside of the state of California also provide such services to California employers and property management companies.

AB 943 would enact an unreasonable prohibition against the use of information that is critical in many business situations. In fact, this bill may have the unintended consequences of increasing identity theft and embezzlement. This is due to the fact that AB 943 eliminates a business’s ability to reasonably access critical information that may indicate the prospective employee’s level of responsibility with respect to financial management over time.

NAPBS and its members are aware that in these trying times, many Californians may be experiencing financial hardship, which might result in negative information in a credit report; however, credit reports generally cover information for a 7 year period and, as such, problems that are not endemic to this current situation but represent a longstanding pattern of behavior on the part of the applicant should be apparent to an employer. Moreover, in the employment context, prior to taking an adverse action based on information in a consumer report, an employer must under federal law provide the applicant an opportunity to explain or dispute information.

Conclusion: The continued use of credit reports is important to our business and those of our clients. We obtain a consumer credit report only after the consumer has provided written authorization. We believe that many of the concerns raised with respect to the current financial crisis are misplaced given the process provided to applicants to dispute and explain as well as the length of time for reported information. We strongly urge a veto on California AB 943.

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I found the article,  Official: E-Verify changes in the works on NextGov.com and felt compelled to weigh in on the future of E-Verify.

Yes, the E-Verify program is set to expire at the end of this month if is not renewed. With the new Federal Contractor Rule finally in place, there is no chance of this happening. E-Verify will absolutely be extended.

What does the future hold for E-Verify? In my opinion, the contractor rule is a primer for future legislation which requires all U.S. employers to confirm workers’ employment eligibility status through E-Verify. But I don’t believe that E-Verify is ready to handle that type of capacity now or any time in the near future. Further, both the Social Security Administration and theDepartment of Homeland Security need to clean up their databases a bit more to be ready for “primetime”.

Are biometrics likely to be used in the future? Sure, eventually we might get there, but considering the time and cost involved, we are a long, long way off.

Conclusion:
Get used to E-Verify. It’s not going away. It’s going to expand and sooner, rather than later it will affect your organization if it hasn’t already.

Also, if you haven’t yet, check out our E-Verify podcast with Stu Lawrence from Form I-9.

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