States are Changing Their Hiring Laws, are You Affected?

All across the U.S. there are civil rights activists fighting for employees who are being discriminated against during the hiring process. There are arguments about the use of criminal records and credit history before an applicant has been interviewed, and how much of an impact the information should have on the decision for employment. Some states have already approved new legislation limiting what employers may ask or research before hiring a new employee, while others are in the review process.

In order to protect your business, be sure to keep up with changes your state might be making that will require a change to your employment policy.

Violations of Ban-the-Box law in Seattle, Washington

In Seattle, WA Ban-the-Box was voted into law on November 1st, 2013 to restrict employers on the use of criminal record information prior to offering an initial interview.  Within the last year there has been 40 businesses charged with allegedly violating this law, known as the Seattle Job Assistance Ordinance. The law is very particular about how companies must represent themselves to applicants so as not to discriminate prior to having an initial interview. One example of this came from a company advertising an opening online that included a requirement to pass a background check. The act of making this a requirement discouraged people from applying who felt they would not pass, and violated the ordinance.  The recommended policy is to omit any requirement or request for information about criminal histories before allowing all qualified applicants the opportunity to interview. Once an interview has been conducted then a background check may be processed.

Proposed Removal of Credit Checks from Pre-Employment Screening in the U.S.

Massachusetts senator, Elizabeth Warren, is introducing the Equal Employment for All Act as a proposed modification to the FCRA. If passed, the Act will prohibit employers from accessing consumer credit reports on applicants to assist in making a hiring decision. The Act will apply regardless of whether the applicant provides consent to the credit check performed by the employer. The bill also does not change disclosure requirements related to the consumers’ employers’ access of these reports. There are a handful of exceptions to the Act that would permit employers to request credit reports:

  1. Employment that requires national security or Federal Deposit Insurance Corp. (FDIC) clearance.
  2. Employment within the state or local government agencies that require use of a consumer credit report.
  3. Supervisory, managerial, professional or executive positions at financial institutions.
  4. When otherwise required by law.

New Law Bans the Use of Credit Histories in Pre-Employment Screening in New York

An amendment to the New York City Human Rights Law (NYCHRL) now prohibits employers from requesting, or relying upon, the consumer credit history of an applicant or employee for employment purposes, including hiring and compensation decisions. In most situations employers are now prohibited from requesting the credit history on applicants and employees, however there are exceptions that apply.

  1. There has been a lawful subpoena, court order or law enforcement investigation requiring review of the credit history.
  2. State or federal law and regulations that require the use of an employee’s credit history.
  3. Positions for law enforcement personnel.
  4. Positions that require a background investigation by the NY Department of Investigation.
  5. Positions the employer requires employees to be bonded under city, state or federal law.
  6. Positions that require security clearances.
  7. Non-clerical positions that have regular access to trade secrets, intelligence information or national security information.
  8. Positions that have signatory authority over third-party funds or assets valued at $10,000 or more.
  9. Positions involving a fiduciary responsibility to the employer with authority to enter into financial agreements valued at $10,000 or more on behalf of the employer.
  10. Positions with regular duties that allow the employee to modify digital security systems to prevent the unauthorized use of the employer’s or a client’s networks or databases.

Pennsylvania seeks to “Ban the Box”

House Resolution 430, introduced in July 2015, urges the Office of Administration to adopt the same policy being used by many other states in the country. The new policy would remove pre-screening questions on the application related to criminal history so as to avoid discrimination against ex-convicts.

Use of Credit is now prohibited in New Jersey pre-employment screening

Passed on June 29th, 2015, Senate no. 524 now prohibits the practice of requiring a credit check as a condition of employment. This is becoming more common across many states with positions that do not require fiduciary responsibilities. Employers who violate the new policy are subject to civil penalties as high as $5,000 for initial violations, and $10,000 for subsequent violations.

While some of these changes may feel commonplace at this point, make no mistake that there are firms searching for companies in violation that can make easy targets for a lawsuit.  The time it will take for you to check your policy and make necessary updates is invaluable for reducing liabilities.  While you are at it, check to see whether your state is one of the 18 that has fully adopted “Ban the Box” so far.

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