So what do you really know about the candidates

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1 44 PROFITABLE RESTAURATEURS ARE ALWAYS LEARNING

2 IN-HOUSE COUNSEL Do Ask, Do Tell Vetting Employee Applicants Without Breaking the Law Questions on an employment application that could elicit information within the protection of these statutes could become a liability for a business if an employment decision is made based on protected information. By Tracy Glanton, Esq. So what do you really know about the candidates you are considering for your next general manager? What about the friendly young sous-chef who just moved into and wants to join your kitchen staff? If you ve ever been burned by a hire that has stolen from the business or subjected you to unreasonable liability, you have learned to be cautious. And with a lot of information about everyone as close as your computer keyboard, you might feel empowered to dig deep into your applicants past and present. In light of employers legal duty to protect employees and clients from harm, background checks are a necessary part of the hiring process. Employers also have a desire to vet candidates for those who are most qualified and who do not impose a risk of liability to the company or its assets. An independent business can be particularly vulnerable to bad actors, especially if the owner is not overseeing every aspect of the organization. Large companies can hire human resources managers to govern the hiring process, including conducting background checks. And yet even sophisticated organizations can be caught off-guard by risky hires and violations of employment law. Now, more than ever, employers must be mindful of the laws applicable to their hiring practices to ensure the lawful vetting of prospective employees with lawful being the key word. Employment Applications The employment application is usually the first time that a company gets a glimpse into the life of a potential member of its workforce. If your application is dated or, forbid, homemade by someone not qualified in this area, you might want to update the form. (See Just a Few Words On Employment Applications: Always Get One! on Page 00.) For example, some employment applications request too much information. While certain information is necessary to vet the applicant and ensure the applicant meets the minimum qualifications for the job, requesting certain information could be problematic and even unlawful. As most are aware, employers cannot discriminate against applicants based on certain protected characteristics. Title VII, for example, prohibits discrimination against applicants and employees based on race, color, religion, sex or national origin. The Age Discrimination in Employment Act (ADEA) prohibits discrimination based on age while the Americans with Disabilities Act (ADA) prohibits discrimination based on a disability. (For more information, see Avoiding Hiring Legal Pitfalls at Questions on an employment application that could elicit information within the protection of these statutes could become a liability for a company if an employment decision is made based on this protected information. By way of example, does your employment application request the year the applicant graduated from high school? Since most people graduate around the age of 18, an employer could, in some cases, learn that the applicant is more than 40 years old. If the employer is unable to articulate a legitimate, nondiscriminatory reason for rejecting the applicant, the applicant could argue that he or she was APRIL

3 Just a Few Words On Employment Applications: Always Get One! It s critical that every job applicant completes a proper employment application. Why all the fuss? Employment applications can give the employer a good defense for a wrongful discharge claim. A common example is the employee who lies on his application, and then raises a wrongful discharge claim against the employer. Evidence of the employee s misrepresentation on his job application can diminish or undermine his claim and protect your interests. Also, an employment application allows you to obtain written consent to perform lawful background checks. For example, before an employer can get a consumer credit report for employment purposes, it must notify the applicant in writing and get her written authorization. This allows the employee to withdraw her application if there is information she would rather not see disclosed. School records cannot be disclosed without the consent of the student. But as the main article point out, the application can be a double-edged sword if it is not carefully constructed. Employment applications have been the focal point of discrimination lawsuits against employers. The Equal Employment Opportunity Commission cautions employers to avoid questions that tend to have a disproportionate effect in screening out minorities or females. All questions in an application should only seek information necessary to judge if the individual is competent to perform the particular job. (For more detailed information on both background checks and discrimination, see the accompanying article.) To be safe, don t attempt to draft your own employment application. Either use a preprinted standard form that has been designed and reviewed by labor law and human resource specialists, or use a custom form that has been reviewed and approved by your labor attorney. In either case, applications should be periodically reviewed to make sure that the questions asked are proper and to make sure that the application protects the employer. Labor law constantly evolves in the federal and state legislatures and courts. rejected because of age in violation of the ADEA, which prohibits discrimination against individuals 40 years of age and older. To protect against such a claim, simply ask whether the applicant has a high school degree without requesting the year obtained, if, of course, the degree is job-related. Although the employer may learn that the applicant is more than 40 years old later in the hiring process, it will be able to protect itself against discrimination claims during the initial screening process. Similarly, employers have an interest in knowing whether a prospective employee can perform the essential functions of the job sought. Requesting that applicants list any accommodations that may be required to perform the job may result in the applicant providing information from which the employer would learn about the applicant s medical condition or disability. Under the ADA, employers are not entitled to receive medical information about an applicant until after a conditional offer of employment is extended. Therefore, to protect against claims for disability discrimination, applications should only ask whether the applicant can perform the essential functions of the job sought with or without a reasonable accommodation. For example, if an applicant is required to be at a prep station for several hours a day and you notice that he or she seems to have a disability that makes it difficult for him or her to stand for prolonged periods, you should only ask if they able to manage the specific tasks required to handle the tasks with reasonable accommodation, not about the disability. A reasonable accommodation might be providing the employee with a stool to sit upon while doing his or her job; however, if the accommodation requested seems excessive you might confer with an employment attorney to confirm your impression. Particularly small businesses are protected from having to make unaffordable or disruptive accommodations. If it has been some time since you have reviewed your employment applications, take the time to do so now or, better yet, hire an employment attorney with experience in these matters for a review and suggestions. Make sure that the information requested is job-related and omit questions that could elicit information about protected characteristics and that could be used by a rejected applicant as a sword against the company. Applications should request only basic information from the applicant so that the employer can determine whether the applicant is qualified for the job. Only when the initial screening process is complete should employers begin a more comprehensive background check. Before doing so, however, be sure to obtain authorization from the employee to conduct the investigation. Vetting Employees Through the Internet and Social Media After the applications are screened and those applicants who will move on in the process identified, you or your manager will likely want to conduct further investigation into applicants before calling them in for an interview. With the Internet so accessible, a hiring manager may want to conduct a quick search of the Internet for any red flags related to the applicant. What harm could result from such a simple search? For one, if you have never met the applicant, it may be difficult to verify that the information discovered relates to your applicant, particularly if the applicant has 46 PROFITABLE RESTAURATEURS ARE ALWAYS LEARNING

4 a common name. An Internet search may also reveal protected characteristics of the applicant, particularly if the applicant has posted pictures on social networking sites accessible to the employer. As previously mentioned, these characteristics cannot be taken into consideration as part of the screening process. If Internet searches are a part of your hiring practices, consider having an employee who is not involved in making the hiring decision conduct the search. If protected characteristics are revealed, that information should not be disclosed to the hiring manager in order to protect the company from claims that the applicant was not hired because of the protected trait. Furthermore, if information is discovered that causes concern about an applicant s suitability for employment, be sure to verify the accuracy of the information before rejecting the applicant outright. This may be done by talking to the applicant directly or conducting a more thorough background check, such as running a criminal history or reference check. In addition to basic Internet searches, you might have heard some employers require that applicants reveal social networking sites of which they are a member and some go so far as to require disclosure of usernames and passwords for those accounts. Lawmakers have responded with a flurry of legislation designed to protect employees Internet privacy. At least 12 states have passed legislation limiting or prohibiting employers access to social networking sites and passwords Arkansas, California, Colorado, Illinois, Maryland, Michigan, Nevada, New Jersey, New Mexico, Oregon, Utah and Washington. A majority of the remaining states have considered similar bills or have similar legislation pending. Similar bills have also been introduced at the federal level, but have not yet garnered enough votes to pass. Before reaching out into cyberspace, make sure you are familiar with any relevant state requirements that may limit your hiring practices. It is important to note, however, that although some employers will be prohibited by state law from requiring access to social networking sites and disclosure of account information, employers are not prohibited from accessing information that is readily accessible to the general public. Criminal History Checks The use of criminal history checks during the employment process has become a hot legal issue since the Equal Employment Opportunity Commission (EEOC) took the position in April 2012 that the use of criminal background checks in making hiring decisions may, in some cases, violate Title VII. The EEOC said that, statistically, African-American and Hispanic men are arrested in numbers disproportionate to their representation in the general population. Therefore, an employer who has a blanket policy prohibiting the hiring of applicants with a criminal history will, in theory, disproportionately eliminate African- American and Hispanic men from the workforce. While acknowledging that having a criminal record is not itself a protected category under Title VII, the EEOC says that a blanket prohibition on hiring convicts could effectively have a disparate impact on the hiring of certain protected groups. Likely recognizing that employers have an interest in protecting its employees, customers and assets, the EEOC has, however, provided some guidance on how employers may lawfully conduct criminal background checks in the hiring process by using a targeted screening process. This process requires that employers consider the following factors when screening applicants criminal history: > The nature and gravity of the crime. > The time that has passed since the crime. > The nature of the job held or sought. Considering these factors requires that employers think carefully whether the crime committed poses concerns to the position applied for before rejecting an applicant based on criminal history. For example, a theft conviction may reasonably concern an employer hiring for a position in which the applicant will be handling money because the employer could have concerns about the applicant stealing money from the company. In degrees of seriousness, the risk imposed by a misdemeanor shoplifting conviction would be less than a conviction for embezzlement; however, in relevance to working with cash, the shoplifting conviction might be a highly significant risk. On the other hand, a conviction for trespassing would not raise the same concern and would not likely be deemed job-related. Furthermore, the more distanced the applicant is from the crime may result in a reduced risk that the applicant would presently engage in similar behavior. Employers must also consider the nature of the job duties for the position at issue in evaluating the risk posed by the applicant. For example, the risk imposed by an applicant with a conviction for reckless driving or driving while intoxicated would not be jobrelated, or pose a risk to the employer, if the job did not require the employee to drive for work. The EEOC further provides that employers can reduce their risk of liability by making individualized assessments of employees screened out of the hiring process because of a criminal conviction. The EEOC recommends that employers notify individuals who have been screened out of the process and give them the opportunity to provide additional information that may convince the employer that the exclusion should not apply. Such information could include pointing out inaccuracies in the criminal record, discussing the facts and circumstances surrounding the conduct, looking at subsequent perfor- APRIL

5 mance history and considering rehabilitation efforts. If the applicant chooses not to provide additional information, the employer may make its hiring decision based on the targeted screen results. It is important to note that the EEOC has maintained its long-held position that eliminating applicants who have been arrested, but not convicted, is never job-related and consistent with business necessity. That is because an arrest, by itself, is not proof of criminal conduct and individuals are presumed innocent until proven guilty. The EEOC does acknowledge, however, that while an arrest record, standing alone, may not be used to deny employment, an employer may consider the conduct underlying the arrest to determine whether it makes the applicant unsuitable for the job. Nevertheless, the EEOC cautions employers to fully investigate the circumstances of an arrest before using that as a basis to reject an applicant, including confirming that the underlying criminal conduct actually occurred, as part of evaluating the applicant s fitness for the job. Since the EEOC has issued its guidance on criminal background checks, some states have jumped on the EEOC s bandwagon and have passed laws banning the box, which refers to the box on employment applications that requires an applicant to indicate whether they have been convicted of a crime. Effective January 1, 2014, Rhode Island became the fourth state to restrict private employers from asking about criminal history information on an employment application. So-called ban the box laws are spreading in cities and states across the United States. While most ban the box legislation applies only to government employers and/or contractors, states and local governments are beginning to broaden the ban. In addition to Rhode Island, Hawaii, Minnesota and Massachusetts have enacted private employer ban the box laws, and cities, such as Newark, New Jersey; Philadelphia; Buffalo, New York; and Seattle are following suit. While each law is unique, and provides various exceptions (including those instances where consideration of criminal history is statutorily required), it seems that state legislators are responding to the EEOC s stance that an employers outright ban on hiring convicts is per se unlawful. But, no state (nor the EEOC) has gone so far as to impose an outright ban on private employers consideration of an applicant s criminal history after the initial screening process. For example, Massachusetts has banned the box only from employment applications and initial screening decisions, and Rhode Island and Minnesota have banned private employers from seeking criminal history information until the first interview. In Hawaii, employers must wait for criminal history information until after the extension of a conditional offer of employment. Similarly, in Seattle and Buffalo, employers must wait until after the initial screening process to ask about an applicant s criminal history, whereas in Philadelphia, employers must wait until after the first interview before inquiring into conviction history. In Newark, a conditional offer must be made before asking about criminal history. If your state has laws specific to the investigation of applicants criminal background, be sure that your hiring practices are compliant and you are protected from liability. See Timing of Background Checks Is Important In Some States on Page 49. The Fair Credit Reporting Act Employers using an outside company often referred to as a consumer reporting agency to conduct background checks must comply with the Fair Credit Reporting Act (FCRA). The purpose of the FCRA is to protect the privacy and accuracy of information contained in consumer reports that are provided to an employer. A consumer report is any information that is collected for employment purposes that reflects an applicant s credit worthiness, character, general reputation, personal characteristics or mode of living. Examples include credit reports, criminal/civil records, driving records and reference checks. Before requesting a consumer report subject to FCRA, the employer must notify the employee of the reports that will be requested and obtain written consent from the applicant. Upon receipt of the report, be sure to review the report for any obvious mistakes (e.g., wrong name, birth date, gender). If a decision is made not to hire the applicant based on information contained in the consumer report, the employer must give the applicant a copy of the report and a summary of rights under FCRA, and allow the applicant the opportunity to contest the accuracy of any negative information contained in the report. If the applicant is ultimately rejected because of information contained in the consumer report, the employer must send the applicant a Notice of Adverse Action informing the employee of the decision. The notice must also include certain information such as contact information for the company that provided the report, a statement that the reporting agency is not the final decision maker, a statement that the applicant may obtain a free copy of the report within 60 days, and a statement of the applicant s right to dispute the report with the reporting agency. The employer must also provide another copy of the applicant s rights under FCRA. Penalties for failing to comply can be severe, including misdemeanor charges, actual damages, punitive damages, court costs and attorneys fees. Credit Checks Credit checks are likely job-related only for applicants who would be required to handle money as part of their job duties. For example, a credit history would be job-related for prospective managers at the restaurant who will have access to the safe so that an employer could determine whether the 48 PROFITABLE RESTAURATEURS ARE ALWAYS LEARNING

6 applicant would be trustworthy in handling the company s money. An applicant who has significant outstanding debt may not be as reliable in handling the company s money as someone who pays his or her bills on time. If a credit report on an applicant comes back with negative information, employers should take the extra step to discuss the negative information with the applicant and provide the applicant with the opportunity to explain his or her circumstance, particularly in light of the high unemployment rates in recent years. Employers should also consider how much time has passed since the negative information was posted to an account and whether the applicant s circumstances have changed since that time. It is important to note, however, that the Federal Bankruptcy Act prohibits employers from discriminating against applicants because of bankruptcy or bad debts they had before filing for bankruptcy. Reference Checks Finally, if you have requested information from an applicant concerning employment history and references, obtain a release from the applicant so that you can contact those individuals and verify the information provided in the application. When confirming employment history, speak directly with the applicant s current or former supervisor, if possible. Ask whether the applicant has been charged with harassment, discrimination or safety violations, whether the employee was ever dishonest or had difficulty getting along with others, and other information pertinent to determining whether the applicant is qualified for the position applied for. While obtaining this information would be ideal, former employers often refuse to disclose this information out of fear of creating a risk of liability. Even though there are laws protecting communications between former and prospective employers from claims of defamation, many employers still have a neutral reference policy in place and will only provide the positions the applicant held and dates of employment. If you are unable to obtain any additional information, ask whether the applicant is eligible for rehire. Make notes of your communications with the former employer and document your efforts to vet applicants in order to protect the company in the event the company is sued for negligent hiring. A negligent hiring suit could arise if an employee harms another within the scope of his or her employment and the employer knew or should have known of the employee s propensity to engage in the same or similar misconduct. For example, if the employee had a past history of harassment and that information would have become known had the employer contacted the prior employer during the hiring process and discovered the information, the employer could be liable for negligently hiring the employee or, in effect, causing the subsequent harassment. Timing of Background Checks Is Important In Some States In Hawaii, employers must wait for criminal history information until after the extension of a conditional offer of employment. Similarly, in Seattle and Buffalo, employers must wait until after the initial screening process to ask about an applicant s criminal history, whereas in Philadelphia, employers must wait until after the first interview before inquiring into conviction history. In Newark, a conditional offer must be made before asking about criminal history. A conditional offer of employment refers to an offer of employment that is dependent on the successful completion of certain conditions. Therefore, in Hawaii, for example, you would have to offer the candidate prior to conducting the criminal background check (or any other condition, such as drug screening). As a conditional offer of employment, the offer could be retracted if there was evidence of misconduct that would pose a legitimate risk to the business. Employer Action: Review and Refine Your Background Check Policy Now that you are able to identify potential problem areas, review your hiring practices to ensure that they are legally compliant. In conjunction, you must review any laws in your state that could affect the way you conduct your background checks. What might be legal in one state may not be legal in another. Finally, if you do not already have a written background check policy in place, consider preparing one to ensure that your hiring practices are consistently put in place and that the background checks conducted are job-related. Background checks are not one-size-fits-all. For reassurance that you are protected, consider communicating with legal counsel to have them assist you in tailoring your background check policies to the specific positions that the checks would apply. RS&G For Your General Information Only Legal advice must be tailored to the circumstances of each case, and laws often change. Nothing in this article should be used as a substitute for the advice of competent counsel. Federal laws, the laws of each state, and often each municipality vary and each may have its own procedures and time limitations that must be followed. Don t rely on any information provided here in assessing your legal rights in a particular situation. APRIL