Ban the Ban-the-Box? Proposed Law May Clarify Background Check Dilemma in Regulated Industries

06 October 2014 Labor & Employment Law Perspectives Blog

On the heels of the Equal Employment Opportunity Commission’s (EEOC) increased scrutiny regarding criminal history questions during the hiring process and the wave of new state ban-the-box laws, Congress has proposed legislation that actually protects certain employers when they seek to comply with the laws that regulate their industries. The “Certainty in Enforcement Act of 2014” would prevent the EEOC, state agencies and plaintiffs’ attorneys from claiming that certain employers are engaged in an unlawful employment practice when acting in accordance with federal, state or local laws. The proposed legislation notes that covered employers may include, but are not limited to, those engaged in health care, childcare, in-home services, policing, security, education, finance, employee benefits, and fiduciary duties.

Nevertheless, while the bill could be a step towards clarification for employers, it also leaves the door open for trouble because many of the background check-related requirements in these industries derive not only from the express language of various federal and state laws, but also from agency guidance and implicit requirements that may not be covered by the proposed law. Additionally, many state ban-the-box laws already carve out exemptions similar to those in the proposed law, and Congress thus might not be blazing much new ground with the bill’s passage, which would likely take a long time to actually occur, if it even occurs at all. Notwithstanding these or any potential shortcomings, the proposed legislation highlights the fact that employers are often frustrated when trying to comply with the various laws potentially inconsistent applicable to them.

In light of the foregoing, what should employers in regulated industries that must look at applicant criminal backgrounds do in the meantime? Right now it is more important than ever to review your company’s employment applications to assess whether they contain any questions regarding criminal or credit histories. If you are in a regulated industry and a ban-the-box jurisdiction, you should confirm the application addresses the industry requirements and the local BTB law contains appropriate exemptions for those industry requirements. If you are not in a regulated industry and in a ban-the-box jurisdiction, now is a key time to make sure your background inquiries do not violate the local BTB law. And if you are not in a regulated industry nor in a ban-the-box jurisdiction, it may only be a matter of time before a BTB law takes effect in your jurisdiction.

Additionally, while conducting a self-evaluation of your company’s application, it is important to keep in mind that industry-specific laws prohibiting the employment of individuals with certain criminal convictions do not necessarily apply to all of the employees who work for that company—this can be a very fact-specific analysis and a one-size-fits-all application may not work. If your company has employees in multiple locations, it is important to determine which laws apply to each location. The application for employees in one state may not be appropriate for those located in another.  In addition, it is imperative that employers who perform background checks comply with the requirements of the Fair Credit Reporting Act.

Rather than engaging in a preemption-style evaluation and analyzing whether one federal or state law trumps another regarding these background check-related issues, employers may want to seek legal guidance to help them evaluate the risks. While employment discrimination litigation under Title VII or state law is always a concern, other laws may potentially impose million dollar penalties if individuals go through the hiring process and begin working despite having certain criminal convictions, depending on the job position and industry. The potential liability and bad publicity threatened by a negligent hiring claim is always a concern to navigate as well. Having the right processes in place can go a long way to helping employers maximize their defenses to hiring-related claims.

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