On June 25, 2021, the Supreme Court of the United States issued a ruling that provides additional guidance related to the Fair Credit Reporting Act (FCRA), a federal law that regulates the collection of consumers’ credit information and access to their credit reports. In the employment context, the FCRA most frequently applies to background checks, including class actions alleging the most common background check claim—unlawful disclosure and authorization screens/forms (usually because of too much or too little information)—resulting in an informational injury.
In May 2019, the Michigan Supreme Court issued rules that when implemented generally would prohibit Michigan courts from releasing personal identifying information (PII), such as birthdates, on court records. The rules were set to go into effect on July 1, 2021. Because consumer reporting agencies (CRAs) use PII to confirm the identities of the subjects of records and to comply with verification standards set forth in the Fair Credit Reporting Act (FCRA), CRAs would have been affected by the restrictions on access to court files, potentially impacting the timely and accurate release of background check information in Michigan.
On April 1, 2021, Arizona Governor Doug Ducey signed into law House Bill (H.B.) 2067, which amends Arizona Revised Statute (A.R.S.) Section 13-905 to allow the courts to issue an order for a “Certificate of Second Chance” for individuals “whose judgment of guilt is set aside” after a criminal conviction. H.B. 2067 allows individuals who receive a Certificate of Second Chance the opportunity to apply for and obtain occupational licenses in Arizona, and provides some additional protections to employers, among other things.
In 2021, the Illinois General Assembly passed Senate Bill (SB) 1480, which amends the Illinois Human Rights Act, the Illinois Equal Pay Act, and the Illinois Business Corporation Act. On March 23, 2021, Governor J.B. Pritzker signed the bill into law.
The COVID-19 pandemic continues to affect the global economy, and employers are increasingly considering which are the most and least employer-friendly places new offices, distribution centers, and operational locations, both during the pandemic and after emerging from it. The Arizona State University Center for the Study of Economic Liberty recently released Doing Business North America 2020 (DBNA), a report analyzing and comparing data indicative of the regulatory context for business activity in a number of metropolitan areas. The report ranked 130 cities across Canada, Mexico, and the United States, based on 111 variables for determining where the best places to do business are currently (although given the ever-changing local, state, and federal landscapes, the assessment may change frequently). The variables underlying the rankings fall into six broad categories: starting a business; employing workers; obtaining electricity, land and space use; and paying taxes and resolving insolvency.
On December 10, 2020, the New York City Council amended New York City’s Fair Chance Act (FCA), also known as the “ban the box” law. The recently enacted amendments will take effect on July 29, 2021.
Employers can expect an active 2021 Connecticut General Assembly since the 2020 legislative session was cut short. (The session lasted a little over a month before it was suspended on March 12, 2020, due to the pandemic and then officially adjourned on May 6, 2020.)
On August 7, 2020, the San Francisco Office of Economic and Workforce Development (OEWD) published guidance regarding the City of San Francisco’s “Temporary Right to Reemployment Following Layoff Due to COVID-19 Pandemic Emergency Ordinance.” Also known as the “Back to Work” emergency ordinance, the ordinance took effect on July 3, 2020, requiring San Francisco employers with 100 or more employees to offer reemployment to eligible employees laid off because of the COVID-19 pandemic when the employers rehire for the same or similar job classifications.
Despite all that is going on in the world, the California legislature has been busy this year. Below is a summary of the major employment law bills that are working their way through the state Assembly and Senate.
On July 24, 2020, the Federal Deposit Insurance Corporation (FDIC) released a final rule to revise and codify into the agency’s regulations the FDIC’s Statement of Policy (SOP) on Section 19 of the Federal Deposit Insurance Act. Section 19 generally prohibits any person from participating in banking who has been convicted of a crime “involving dishonesty, breach of trust, or money laundering, or who has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for any such offense,” without first obtaining written consent from the FDIC. The SOP provides guidance relating to Section 19 and the FDIC’s application of the statute.
COVID-19 has certainly not slowed down legislators in Annapolis. Far from sitting idle, the Maryland General Assembly recently passed a broad array of workplace legislation without the governor’s signature. In addition to a significant expansion of Maryland’s Worker Adjustment and Retraining Notification (WARN) Act, three new employment laws are set to take effect on October 1, 2020.
The Ninth Circuit recently issued two mostly pro-employer federal Fair Credit Reporting Act (FCRA) background check decisions.
In recent years, California employers have faced an increasing number of class action lawsuits related to background check practices commonly used in the hiring process. These lawsuits arise from the Fair Credit Reporting Act (FCRA), a federal law that regulates the collection, dissemination, and use of consumer information.
On April 12, 2020, Virginia Governor Ralph Northam signaled his approval of—but has not yet signed—legislation (House Bill 972) that would decriminalize simple possession of marijuana. The impact of decriminalization on Virginia’s criminal process has been the highlight of the legislation, but the bill would also include restrictions that impact the application process for employers operating in the Commonwealth.
On August 6, 2019, in State of Texas v. Equal Employment Opportunity Commission, the U.S. Court of Appeals for the Fifth Circuit ruled that the Equal Employment Opportunity Commission (EEOC) overstepped its limited rulemaking and enforcement power when it issued its 2012 Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964.
On May 28, 2019, Colorado governor Jared Polis signed into law the Colorado Chance to Compete Act (House Bill 19-1025), more commonly known as “ban the box” legislation. The recently signed Act is another example of pro-employee legislative change that has taken place since the Democrats gained control of the state legislature in 2018.
On April 3, 2019, New Mexico governor Michelle Lujan Grisham signed into law two bills related to criminal background checks that may affect employers operating in the state. The first is a ban-the-box law that prohibits private employers from inquiring about an applicant’s criminal history on an employment application. The second allows certain individuals to petition the court for expungement of criminal records.
Wisconsin employers deciding whether to hire an applicant with a criminal background often find themselves between a rock and a hard place. If they fail to take reasonable care screening the applicant, they may face a negligent hiring claim. But if they screen too stringently, they may face a claim that they violated the Wisconsin Fair Employment Act, which prohibits discriminating against applicants with a conviction record that does not substantially relate to the job.
Westchester County, New York, which is located on the outskirts of the New York City metropolitan area, has enacted a ban-the-box law that places limits on an employer’s ability to make preemployment inquiries into and statements about a job applicant’s criminal history.
The disclosure requirement of the federal Fair Credit Reporting Act (FCRA) remains one of the most contentious and expensive litigation areas for employers. The case law from various federal district courts has been a mixed bag, leaving employers to question what it means to provide a “clear and conspicuous” disclosure in a writing that “consists solely” of the disclosure.
On October 13, 2018, the Massachusetts legislature amended the state’s Criminal Offender Record Information (CORI) law. Many other U.S. territories and localities have passed ban-the-box laws over the last decade that limit employer inquiries into an applicant’s criminal history.
On November 10, 2018, the U.S. Virgin Islands joined the “ban-the-box” movement by enacting legislation regulating employers’ use of the criminal records of applicants and employees.
On October 1, 2018, San Francisco’s amendments to its Fair Chance Ordinance (FCO) took effect. The FCO is San Francisco’s “ban the box” equivalent that regulates employers’ use of applicants’ and employees’ arrest and conviction information.
On September 24, 2018, the U.S. Equal Employment Opportunity Commission (EEOC) reaffirmed the importance of following its 2012 enforcement guidance on employer use of criminal history information—specifically the EEOC’s targeted screening process and individualized assessment process–when it announced a voluntary agreement with large furniture retailer Rooms To Go.
On September 12, 2018, the Consumer Financial Protection Bureau (CFPB) issued an interim final rule updating its A Summary of Your Rights Under the Fair Credit Reporting Act form, (“Summary of Rights”) which is required to be given by employers to applicants and employees at various points in the background check process.
Twenty years ago, on a warm summer day, Hawaii enacted a restriction on employer inquiries into an applicant’s work history until after a conditional offer of employment. Intended to give applicants with criminal histories a fair shot at employment, the law—the first state “ban the box” law—crystalized a movement that, in time, would yield similar restrictions in 12 states and 17 localities (for private employers). The result is a crisscrossing jumble of requirements with little uniformity, putting employers in a difficult position when dealing with applicants (and sometimes even existing employees) in different jurisdictions.
Courts have ruled that sweeping and overbroad employer-initiated disqualification policies must be struck absent business justification. But where is the line on what constitutes an overbroad and impermissible policy when applicant and employee disqualification is mandated by federal law?