This document discusses legal risks involved in background checks and other pre-hire inquiries. It notes that 92% of employers conduct some form of background check. Key points include: considering the job-relatedness of inquiries; ensuring proper training of those conducting checks; allowing for individualized assessments of criminal histories; and complying with laws like the Fair Credit Reporting Act when using third parties. It also addresses new "ban the box" laws preventing inquiries into criminal history until later in the hiring process.

1. Legal Risks involved in
Background Checks &
Other
Pre-Hire Inquiries
Presented By: Joseph M. Gagliardo, Managing Partner
Jill P. O’Brien, Partner
Laner Muchin
515 North State Street, Suite 2800
Chicago, IL 60654
(312) 467-9800
jgagliardo@lanermuchin.com
jobrien@lanermuchin.com
www.lanermuchin.com

2. Today’s Program
• Practical considerations arising out of
these LEGAL TRENDS related to
Background Investigations.
• Do these Laws even apply to my
organization?
• Should I conduct Background Checks in
the First Place?
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3. What do others do?
• Recent statistics show that 92% of all
employers conduct SOME form of a
background investigation for all newly
hired employees.
• Many of our clients are
RECONSIDERING their Practices.
• Every employer is encouraged to
consider the Pros/Cons involved?
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4. Why Reconsider Now?
• Costs involved in testing;
• Legal risks of improper inquiries;
• Even lawful inquiries can have Disparate
Impact on protected classes;
• Delay in putting new employees to work;
• Privacy concerns with retention and/or
misuse of the information obtained.
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5. Initial Considerations:
Q: Is there a JOB RELATED reason
to obtain this information?
Q: Do I have a BUSINESS NEED to
obtain the information?
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6. If “YES” then ask:
Q: Am I confident that the individuals on
my team who gather this information are
properly trained to obtain and use it?
Q: Do I have the proper tools in place to
track criminal history or other vulnerable
information that I obtain?
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7. An OPTION to consider…
Q: Should/can we conduct Background
Checks for some but not all jobs?
A: YES!
Be consistent; treat SIMILARLY
SITUATED EMPLOYEES similarly
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8. What questions can I ask?
The Illinois Human Rights Act has long
prohibited employers and staffing/recruiting firms
from making an INQUIRY or EMPLOYMENT
DECISION based on:
– The FACT of an ARREST RECORD; or
– a CRIMINAL HISTORY RECORD ordered
EXPUNGED, SEALED OR IMPOUNDED
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9. Outside the IHRA Prohibition
The IHRA does not prevent or limit
employers or staffing firms from obtaining
or relying on information which indicates
that the person ACTUALLY ENGAGED IN
THE CONDUCT for which the applicant
was arrested.
Ex: admissions, witness statements,
videos, photos, etc.
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10. Employment Applications
Drafting Tips based on the CURRENT laws:
1. Delete inquiries about ARREST RECORD alone.
2. Notify the candidate that he/she should NOT disclose
information about a conviction that has been
EXPUNGED or SEALED.
3. INCLUDE a DISCLAIMER MESSAGE: “A record of
a conviction alone will not automatically disqualify
any candidate from employment; we other job related
circumstances surrounding the conviction.”
4. Be wary of “canned” applications from the internet.
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11. Change is Coming…
Governor Quinn has stated that he WILL
SIGN into law:
The Illinois “Job Opportunities for Qualified
Applicants Act” applicable to employers
AND employment agencies with 15 or
more employees.
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12. “Ban the Box”
The law will bar employers and employment agencies from soliciting
criminal history information from an applicant until (with few
exceptions):
(a) AFTER the employer has made a determination that the
applicant is qualified for the position and notified the applicant
he/she was selected for a job interview, or
(b) If there is no interview, AFTER the employer has made a
conditional offer of employment to the applicant.
Anticipated effective date: January 1, 2015
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13. EEOC REGULATIONS
• The EEOC has taken the position that
employers violate Title VII when they have a
“blanket” prohibition of hiring applicants with
criminal histories (few exceptions by industry).
• To comply: employers must conduct an
individualized case-by-case assessment to
determine if the conviction is JOB RELATED
AND CONSISTENT WITH BUSINESS NEED.
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14. THE EXCEPTIONS
SOME EXCEPTIONS APPLY:
• Jobs that involve dealings with
vulnerable citizens: children & elderly.
• Nurses & caregivers can be held to
higher standard.
• Teachers and others who work in
schools, etc.
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15. “INDIVIDUALIZED ASSESSMENT”
• The “GREEN FACTORS” include consideration of
the following factors:
(1) the nature or gravity of the offense or
conduct;
(2) the time elapsed since the conviction
and/or completion of the sentence;
and,
(3) the nature of the job sought or held.
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16. RELEVANT FACTS ABOUT
NATURE OF CONVICTION
• Amount of on-site supervision;
• Amount of Contact with the public or
other employees;
• Access to property or cash (if conviction
involves theft or destruction of property);
• Prior employment history of candidate in
similar position (without incident);
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17. Retain the Info Gathered
1. Criminal history information relied on for
hiring decisions is part of an employee’s
“personnel file” under IL law.
2. Limited access to others/confidentiality
of the information obtained.
3. How long will you retain the info AFTER
the decision was made that the record
of conviction was NOT job related?
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18. “Best Practices”
• ASG Staffing and Azimuth maintain a published policy
and training program to educate their recruiters on
what information can be gathered about a candidate’s
criminal history record.
• ASG Staffing and Azimuth use a template document
prepared to properly document the relevant factors
considered when evaluating criminal history records of
all candidates. (This establishes that an individualized
assessment has occurred).
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19. The Decision maker:
Consider a Designated Decision maker
who will review all recommendations about
the disqualification of a candidate based
on a criminal history record.
What evidence will you rely on if there is a
challenge to one of your hiring decisions?
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20. MYTH #1 – not so fast…
• Employers cannot insulate themselves
from liability by suggesting that their
staffing firm engage in the unlawful
recruiting practices (on their behalf).
• Several laws prohibit employment
agencies from even “accepting a job
order” which contains prohibited non-job
related considerations.
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21. MYTH #2:
Employers CANNOT insulate themselves from
the legal risks related to background
investigations by using a Third Party Vendor to
conduct the background evaluations.
In fact, there are enhanced legal responsibilities
attach when 3d party vendors are used for this
purpose.
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22. THE FAIR CREDIT REPORTING ACT
If an employer uses a third party vendor to conduct a
background check on an applicant or employee, the
employee is required to:
• Disclose to the applicant that a consumer report/
background check will be performed;
• Obtain the individual’s authorization to proceed with
the check; and
• Provide notice to the individual if it will take adverse
action based on information discovered in the report.
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23. WHAT’S THE PENALTY?
• Employers have a variety of other obligations under
the FCRA before and after taking any adverse
employment action due to the background check
results (such as rejecting a job application or revoking
an offer of employment).
• Because the FCRA provides for statutory damages up
to $1,000 PER VIOLATION, the potential for punitive
damages, and the recovery of attorneys’ fees,
plaintiffs’ attorneys have recently filed a wave of class
action lawsuits alleging FCRA violations.
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24. FCRA Settlements
• Pitt v. K-Mart Corp., Case No. 11-CV-00697
(E.D. Va. May 2013): $3 million to resolve a
class action settlement – Plaintiffs alleged that
K-Mart willfully failed to comply with the
FCRA’s disclosure and authorization
requirements prior to obtaining consumer
reports and prior to taking adverse actions
against the class.
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25. Scary Stuff!
 Singleton v. Domino’s Pizza, LLC, Case No. 11-CV-01823 (D. Md. Oct 2,
2013): $2.5 million to resolve a class action – Plaintiffs alleged that the
consent form Domino’s used for procuring a consumer report violated the
FCRA and that Domino’s took adverse actions against applicants without
providing the required notices prior to the adverse action being taken.
 Bell v. U.S. Xpress, Inc., 11-CV-00181 (E.D. Tenn. April 2013): $2.75
million to resolve a class action – Plaintiffs alleged that Xpress violated
the FCRA because it: (a) did not ask candidates if they could obtain a
consumer report as part of the application process, (b) based their
decisions not to hire employees (in part) based on erroneous information
in the report, and (c) they neglected to send the FCRA notices until after
the decision were made.
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26. Ouch.. that stings!
 Roe v. Intellicorp Records, Inc., Case No. 12-CV-288 (N.D. Ohio Nov.
2013): $18.6 million to resolve a class action – Plaintiffs accused two
CRAs of providing inaccurate criminal background reports to employers
that caused the applicants to suffer adverse actions, and of not notifying
them at the time defendants provided the consumer reports to
prospective employers.
 Johnson v. Midwest Logistics Systems, Ltd., Case No. 11-CV-
01061 (S.D. Ohio May 2013): $452,380.00 to resolve a class
action – Plaintiffs alleged they were hired by defendant, pending
a successful criminal background check, but did not receive a
stand-alone consent form, as required by the FCRA, that the
consumer report was inaccurate, and they were denied the
position without proper notices.
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27. The Good Guys
• Before using a 3d party vendor, be sure that
they are reputable and use the proper FCRA
forms.
• Legal review of FCRA forms used by 3d party
vendors is highly recommended.
• Review written agreements with vendors to be
sure they assume appropriate responsibility for
compliance with FCRA paperwork obligations.
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28. RECENT CREDIT CHECK LAWS
• Credit checks for hiring and employment considerations have
come under attack in recent years, especially by the EEOC.
• Under the Employee Credit Privacy Act, Illinois employers cannot
use an individual’s credit history to make hiring, firing, promotion
or recruiting decisions. Further, employers are forbidden from
inquiring on an applicant’s or employee’s credit history and
obtaining a copy of their credit report.
• Industries such as banking, insurance, law enforcement, debt
collectors and state and local agencies that require credit reports
are exempt, and there are other exceptions as well.
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29. Prohibited Inquiries about
Credit History
• Under Illinois law, for example, an employer covered
under the Act is prohibited from the following acts:
– (1) failing or refusing to hire or recruit, discharging, or
otherwise discriminating against an individual with
respect to employment, compensation, or a term,
condition, or privilege of employment because of the
individual’s credit history or credit report;
– (2) inquiring about an applicant’s or employee’s credit
history;
– (3) ordering or obtaining an applicant’s or employee’s
credit report from a consumer reporting agency.
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30. Exceptions to the Law
Employees in the following positions are NOT covered by this law:
(1) the duties include custody of or unsupervised access to cash
or assets valued at $2,500 or more;
(2) the duties include signatory power over business assets of
$100 or more per transaction;
(3) the position is a managerial position which involves setting
the direction or control of the business; or
(4) the position involves access to personal or confidential
information, financial information, trade secrets, or State or
national security information.
TIP: Document basis of request for credit history info when applicable.
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31. What would you do?
The owner of the business tells you she doesn’t
care about the law….she will NEVER accept a
temporary worker or interview any candidate that
has been convicted of a FELONY of any kind in
the PAST 7 YEARS.
Q: Does it matter if a felony or misdemeanor
is involved? Is a 7-year prohibition reasonable?
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32. As if that were not enough…
ADDITIONAL LEGAL AND
PRACTICAL CONSIDERATIONS
DURING THE HIRING &
SELECTION PROCESS
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33. On Line Applications
• ADA reasonable accommodations (disabled
employees must be offered effective way to
participate in the application process.)
• Ensure that every candidate is required to
complete an application that is IDENTICAL in
form?
• Be sure that form states that “falsification or
misrepresentation thru omission is grounds for
termination (no matter when discovered)”
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34. Recruiting with Social Media
The #1 most frequently used recruiting tool for
seeking candidates is LinkedIn. Consider:
• Are minorities sufficiently represented on
LinkedIn?
• Are applicants age 40 and over sufficiently
represented on LinkedIn?
• Are the unemployed sufficiently represented?
• Does the site reveal a person’s age (graduation
year) or race (photos)?
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35. Privacy Rights
The “Illinois Privacy in the Workplace Act” makes it
unlawful to refuse to hire, discharge or otherwise
disadvantage an individual because the individual uses
lawful products off the premises of the employer during
non-working hours.
What would you do?
Your Facebook friend posts some Memorial Day vacation pictures
labeled “What happens in Vegas…stays in Vegas”. You recognize
one of your direct reports smoking cigarettes and drinking alcohol
with a bedazzled lamp shade on his head.
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36. Workers’ Compensation History
This same Illinois privacy law makes it unlawful for
employers to inquire in any manner of any prospective
employee (or the prior employers of the candidate)
whether the person has ever filed for benefits under the
workers’ compensation laws.
What would you do?
You discover a picture on line which proves that your employee is
not complying with the restrictions imposed by the doctors while on
worker’s compensation leave of absence.
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37. Limited access to Sites
Consider a Designated Social Media
“SCREENER” for recruiting purposes.
The screener should not participate in
other aspects of the hiring/decision
making process.
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38. Expansion of Privacy Law:
PASSWORD PROTECTION
• Since 2012 Illinois employers have been limited in
their ability to obtain an applicant’s or employee’s
restricted social media accounts.
• Summary: Illinois law forbids employers from
requesting or requiring log-in credentials for an
applicant’s or employee’s social networking sites.
• The law also prohibits “shoulder surfing” or in other
words, demanding that an employee or applicant show
the employer their social media profile or account
without revealing any log-in credentials.
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39. OTHER TRACKING RISKS
• Do you keep track of size, weight, strength,
appearance factors when applicants are being
considered for employment or promotions?
• For example: A manufacturing company
prefers workers who can lift 50 pounds or
more. How do you track “good lifters?”
• What would your records look like if there was
a challenge?
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40. COMPASSIONATE USE OF MEDICAL
CANNABIS PILOT PROGRAM ACT
• In January 2014, Illinois became the 20th state
to legalize medical marijuana.
• The Act prohibits an employer from
“penalizing” an individual (including refusing to
hire) based solely for his status as a
“registered qualifying patient” under the Act.
Q: Have you revised YOUR drug testing policy to
conform to this new law?
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41. EMPLOYER RIGHTS
• An employer may discipline registered qualifying
patients who demonstrate “specific articulable
symptoms” of impairment from marijuana use while at
work, as long as the employees are afforded a
REASONABLE OPPORTUNITY to contest the
determination.
• An employer may also discipline registered qualifying
patients based on a GOOD FAITH BELIEF that they
used or possessed marijuana while on the employer’s
premises or during work hours.
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42. EMPLOYER RIGHTS CONT’D
• Employers may continue to enforce their “ZERO
TOLERANCE” policies against use, possession or
impairment of medical marijuana.
• Employers must apply policy consistently for
medical marijuana and other drugs (including
lawful drugs taken contrary to prescription).
• Employers do NOT need to permit an employee to
work impaired even if the employee is a licensed
patient who may lawfully possess or use
marijuana for a qualified medical condition.
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43. WORKPLACE BULLYING
For NOW:
• Unless the conduct is based on a legally “protected
category” not a violation of the anti-discrimination
laws.
• Employees assume it is based on protected category
when they are treated mean or unfairly (perception is
reality)
• Consider: Expanding harassment policy to include this
type of bullying. Also include a prohibition against
“cyber bullying” even if off duty (private employers).
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44. CONSIDER AN HR AUDIT
AN HR AUDIT can include (among other things):
– Review of application forms
– Compliance with posting requirements
– Review of FMLA compliance obligations (spot checking)
– I-9 compliance checks
– Wage/Hour compliance – exemptions; lunch breaks, rounding
practices reviewed
– Leave policies drafted and implemented to avoid or minimize
disparate impact concerns.
– Closure memos to all complaints of harassment or
discrimination or even bullying, etc.
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45. QUESTIONS?
Thank you for your participation today.
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