Criminal Background Checks –Legal Update & Recommended

Best Practices

Presented By:Muira Mishra, Esq.MKM Law Group

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Current Landscape• In general, employers may (but are not

required to) conduct criminal background checks on applicants

• Health care exceptions:– Medi-Cal provider agreement section 16– 42 CFR 418.114 — condition of participation for hospice

• Most criminal conviction information is vetted through licensing agencies

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Current Landscape (cont.)• Various federal, state and local laws govern

criminal background checks• Employers must ensure practices are in

compliance with all laws

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Current Landscape (cont.)• Movement to increase employment

opportunities for individuals with criminal convictions– https://lac.org/what-we-do/criminal-justice/reducing-

criminal-record-barriers-to-employment/– http://nelp.org/campaign/ensuring-fair-chance-to-work/

• Increased enforcement action by EEOC, including several multimillion dollar settlements

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Current Landscape (cont.)• EEOC’s 2012 Guidance

– Permits employers to conduct background checks, but outlines “best practices” to avoid policies/practices that may have a “disparate impact” on applicants with protected characteristics, including race, national origin or disability

– Recommended best practices• Avoid asking applicants to self-disclose criminal record on

employment application (“ban the box”)• Employment decisions should not be made based solely on

criminal history• Conduct an “individualized assessment” before rejecting an

employee because of a conviction 5

Current Landscape (cont.)• Individualized assessment factors

(“Green Factors”)– Nature and gravity of the offense or conduct– Time that has passed since the offense or conduct, and/or

completion of the sentence– Nature of the job held or sought

• EEOC Guidance is currently subject to legal challenge

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Current Landscape (cont.)• Fair Credit Reporting Act (and CA equivalents)

– Imposes detailed and technical authorization and notice requirements on employers contracting with third-party vendors to conduct background checks

– California prohibits background check vendor from reporting convictions greater than seven years old

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Current Landscape (cont.)• CA Labor Code 432.7

– Prohibits all employers from asking about (i) arrests or detention that did not result in a conviction, (ii) a referral to or participation in a pre-trial or post-trial diversion program, or (iii) a conviction that has been judicially dismissed, sealed or expunged

– Exception for health care employers – may ask about arrests• For sex offenses, if the applicant would have access to patients• For drug offenses, if the applicant would have access to drugs

– Recent amendments preclude inquires into juvenile adjudications• Same health care exceptions

• CA Labor Code 432.8– Prohibits employers from asking about specified marijuana misdemeanor

convictions and infractions that are more than two years old8

Current Landscape (cont.)• CA Labor Code Section 432.9 (“Ban the Box”)

– Prohibits public employers from asking criminal history questions on job applications – must wait until determination that applicant meets the minimum employment qualifications as stated in the job posting

• Local Ordinances– Example: San Francisco Ordinance (Article 49, SF Police Code)

contains both “Ban the Box” provisions as well as limits on use of criminal conviction history

– Similar ordinance pending in Los Angeles

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FEHC Proposed Regulations• Based heavily on the EEOC’s 2012 Guidance• Employers remain able to conduct background

checks on applicants per current standards, but are faced with additional obstacles

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FEHC Proposed Regulations (cont.)• Prohibits employers from asking about any

non-felony possession of marijuana convictions older than 2 years old

• Prohibits employers from considering criminal history in employment decisions if doing so would result in an adverse impact on individuals within a protected class

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FEHC Proposed Regulations (cont.)– Job applicant/employee bears initial burden of proving

employer’s background screening policy has an adverse impact on a protected class – may rely on general statistical evidence

– Employer will then be required to show that policy/practice of considering criminal convictions is “job-related and consistent with business necessity”

• Policy/practice must bear a “demonstrable relationship to successful performance on the job and in the workplace, and measure the person’s fitness for the specific job, not merely to evaluate the person in the abstract”

• Incorporates “Green” factors 12

FEHC Proposed Regulations (cont.)– Bright-line disqualification policies or practices,

not including an individualized assessment and including convictions more than seven years old, create rebuttable presumption that practices are not job-related and consistent with business necessity

– Even if employer demonstrates job relatedness, applicant can still prevail if he/she can demonstrate a less discriminatory policy/practice that serves the employer’s goals as effectively

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FEHC Proposed Regulations (cont.)• Requires employers to give applicant/employee

notice of the disqualifying conviction before taking adverse action, and opportunity to present evidence that conviction information is factually inaccurate – Notice obligation applies irrespective of who

conducted background search

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FEHC Proposed Regulations (cont.)• Provides exception for employers who are

subject to federal/state laws or regulations that prohibit individuals with certain criminal records from being employed in certain positions, or require/permit employers to screen for such records (e.g., CA Labor Code sections 432.7, 432.9)

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FEHC Proposed Regulations (cont.)• Current Status

– Second proposed version was released Sept. 7; comment period closed Sept. 23

– Next FEHC meeting is scheduled for Nov. 15; unclear whether this issue will be on the agenda

– CalChamber and other employer groups are strongly opposing regulation, particularly given uncertainty of EEOC Guidance upon which this regulation is based

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What Should Employers Do?

• Eliminate questions pertaining to criminal history on employment applications

• Comply with FCRA and other state/local law requirements

• If using background check vendor, ensure they are knowledgeable, thorough and compliant

• Ensure job descriptions reflect tasks that employees are actually performing

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What Should Employers Do? (cont.)• Train managers on proper legal standards• Make individualized assessments based on job duties• Document reasons for any decision in which

applicant is refused a particular job due to a criminal conviction

• Consider conducting a privileged review of criminal record screening practices/policies to determine potential disparate/adverse impact risks

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Other Considerations

• Re-evaluate current practices with respect to responding to reference inquiries– CA Civil Code section 47 provides privilege to an employer

who is requested to respond to an inquiry regarding an applicant’s job performance or qualifications for employment and does so (i) based upon credible evidence and (ii) without malice

– Specifically allows employer to answer whether it would rehire a current or former employee

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Profiling Game Process of Screening Current Trends and Best Practice Q & A

Kate KearnsSenior Account Executive

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Kidnapping

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◦ Using data found in credit headers and other sources associated with an applicant’s social security number◦ Provides two main areas of interest Current and historical address information  AKA (alias) names ◦ Information may not have been disclosed by the applicant◦ Useful research tool to identify additional names and locations for further research

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Description◦ Search for felonies and misdemeanors — county courthouse Current and pending cases, convictions, dismissed cases (if reported) 

◦ Access to court records in more than 3,300 U.S. county courts ◦ All checks conducted in person/real time◦ Federally approved search – Fair Credit Reporting Act (FCRA) At least seven‐year search Search method: First and last name Secondary identifiers: DOB and SSN

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Description◦ Not all states have statewide criminal database (CA, LA, NV, OH, WV, WY)◦ County information (when reported up)◦ Varies from state to state in scope/completeness◦ Not always known for “completeness and turnaround” Computer problems, lack of arrest or incident numbers, state ID numbers and state budget cuts affect data collection

◦ Search for felonies and misdemeanors  Current/Pending cases, convictions, dismissed cases (if reported)  Class requirements of reporting (e.g., Class A‐E, I‐V, 1‐4)

◦ At least seven‐year search Identifiers, including first and last name (primary), DOB and SSN

◦ Florida, Texas, South Carolina and Washington

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Court process◦ Most federal offenses likely will not show up on county court or state criminal records/data◦ Crimes may include: Mail fraud – credit card fraud Kidnapping – Internet porn Federal property offense – counterfeiting Tax evasion – extortion Interstate crimes – certain drug crimes

Cases: Murder, grand theft, drug trafficking

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USA CriminalSearchTM (national criminal database search) ◦ Criminal history data from statewide court repositories in 22 states, and department of corrections records from 45 states, resulting in coverage across 45 states plus the District of Columbia. Additional court data from more than 180 individual counties

USA OffenderSearchTM (nationwide sex offender registry)◦ Includes more than 240 million criminal, sex offender and security threat records from an unequalled 320 data sources

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USA SecuritySearchTM (terrorist watch list) ◦ Office of Foreign Assets Control (OFAC), Specially Designated Nationals List (SDN) and many other national security databases

Omar Mateen (Orlando Shooter) 2013‐2014

Fully Compliant with Section 613(a) of the FCRA◦ All information re‐verified with the original jurisdiction to be sure it is “complete and up‐to‐date”

Calvin Klein ‐ $716,400 settlement

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OIG/General Services Administration (GSA) (Excluded Parties List System (EPLS)/System for Award Management (SAM))

Fraud & Abuse Control Information System (FACIS) I, II, III◦ Search on candidates, contractors or business entities◦ Fast turnaround time◦ All information vetted prior to reporting

Re‐Screen program

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Description◦ Reviewing first two letters of first name in court index search Catching variants of the first name (Tim vs. Timothy) Where available◦ Importance due to court identifiers first/last name A more comprehensive search than “exact name match”

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Description◦ Additional names used by individuals that are recorded into data, such as credit, legal documents and criminal records Cultural Accidental For the purpose of hiding true identity◦ Applicants becoming more savvy in how to use their aliases Catching aliases on Social Security Trace and run with criminal services (i.e., County Criminal, USA CriminalSearch™, OIG/GSA)

Driving record search

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Laws restrict the information a consumer reporting agency can report:

*Note: Nine states established greater limitations than federal law

May 2015 (NC) – Screening firm class action lawsuit for using “over 7‐year” negative information ($900K settlement)

Data Federal LimitationsConvictions No Federal Limit*

Non‐Convictions 7‐Year Federal Limit*

Bankruptcies 10 Years

Other “Negative” Information 7 Years

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State Time Limit Convictions Only Exemption?

California 7 Years Yes None

Kansas 7 Years No $20,000

Kentucky None Yes None

Maryland 7 Years No $20,000

Massachusetts 7 Years No $20,000

New Mexico None Yes None

New York 7 Years Yes $25,000

New Hampshire 7 Years No $20,000

Washington 7 Years No $20,000

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Review of degree/history for authenticity◦ Primary source verifications◦ Successful completion of the verification

Article ◦ “Rising Tide of Bogus Degrees” (May 2015)

◦ Bust in Pakistan running 370 education websites◦ Columbiana, Barkley, Mount Lincoln school degrees◦ 3,300 unrecognized universities nationwide◦ More than 50,000 PhDs “purchased” every year

Society for Human Resource Management research◦ More than 46% of resumes contain falsifications◦ 70% of college students surveyed would lie on resume◦ 26.5% stated they would or did lie on a resume (AOL study)

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Description◦ Records in all 50 states plus Washington D.C., Puerto Rico, and all Canadian provinces and territories

◦ Most driving record reports review 36 months of activity◦ Includes information about a person’s character: Significant traffic violations Previous suspensions and court‐ordered actions Drug offenses that occur in the car (DUI, DWI, in possession of …)

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New York City, 2016: Man pulled over for speeding on an upstate highway has nearly 80 driver's license suspensions and revocations. 57 suspensions of his license, which has been revoked 20 separate times.

Mercy of the court/Antiquated courts◦ Mail in letter to obtain information, furloughs, one order at a time, layoffs

Common name and limited identifiers◦ Vetting multiple hits or additional information as per federal law

Database is down or corrupt◦ Certain database streams temporarily down Article July 2015: “Background checks taking longer than expected in Tehama, CA.” 

“… the courthouse stated background checks should only take five to seven business days.”

Seasonal lag time ◦ Summer, vacations, spring break, winter storms

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The information contained in this presentation is not intended to provide legal advice. Universal is not legal counsel; we cannot and do not provide legal advice. Please consult with your legal counsel, risk management or compliance officer regarding your organization’s specific legal obligations.

FederalCriminalDatabase

MotorVehicleReports

PrimarySourceVerifications

OIG/GSA/FACIS— Sanctions

Multi‐JurisdictionalCriminalDatabase

50State+D.C.SexOffenderDatabase

County2County1StateA

AdditionalDue

DiligenceLevels

FCRALevel

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All

Juris

dict

ions

All A

liase

s

StateB

FingerprintsDOJ*

*July 2013 - Many FBI criminal background checks for employment contain faulty information (National Employment Law Project)

June 2015 —73 airport workers

with possible terrorism ties passed TSA background

checks

U.S. Department of Justice testified before Congress that the FBI's voluntary fingerprint database contained only 75 percent of all crimes committed in the U.S. Even more important, it contained the final dispositions of less than half of those in the database.

43% surveyed stated “reducing delays” in hiring process is top screening challenge◦ Employers will sacrifice accuracy and depth if screening solution based on turnaround time◦ “Screen Scraping” is a common tool – problem is integrity of electronic data (not equivalent to going to courthouse)

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Kalamazoo shooting: Here’s how Uber does its background checks (Feb. 2016 — LA Times)◦ “(Background Screening Company) runs the applicant’s name, address and Social Security number against the National Sex Offender Public Website and other databases. If a criminal record is identified, the (background screening company) sends someone to review it in person at the relevant courthouse or pulls the record digitally.” 

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March 28, 2016 – District attorney in Uber's hometown of San Francisco has called the ride‐booking firm's process "completely worthless" 

April 8, 2016 – Uber settles for $10 million for misleading passengers over the quality of its driver background checks

2014 – Lyft settles government lawsuit for poor quality background checks for $500K

Federal Trade Commission (FTC) investigations increase and focus on compliance◦ Screening Firm 1 (2012): Justice Department — 665,000 (40%) 

fraudulent/“sloppy” checks Email: “Flushed everything like a dead goldfish” $30M settlement recently – filed for bankruptcy

◦ Screening Firm 2 (2016): Class action current/pending – multiple cases “… lied about using official court records … obtained info from a bulk data collection” “Using arrest and citation (non‐conviction) information going back 20 years” (3.4M 

settlement)

◦ Screening Firm 3: $10M settlement; $13.5M settlement (2013) Lack of security with 160,000 records compromised Aggregating information without a person’s knowledge/selling personal records possibly 

out of date

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◦ Screening Firm 4: $2.6M Did not take adequate steps to verify accuracy of criminal checks Failed to provide consumers copies of their reports or investigate disputes 

◦ Screening Firm 5: Pending (2015) Obsolete information and duplicative reporting 

◦ Article (Sept. 14, 2015): “Who’s Doing Background Checks on Job Applicants? In South Florida, Convicted Felons!” (Insurance fraud, writing phony pain‐pill prescriptions)

◦ 100+ investigations — investigators filing fraudulent/falsified records

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Issue◦ Lack of consistency with background screening program A la carte items ordered on some applicants, but not 

others going out for same position Risk of perceived discrimination and potential litigation

Solution                        ◦ Keep process consistent through ordering packages◦ Reduce chances of human error by automation

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How does someone get excluded?◦ Felony: Patient abuse, sexual assault, fraudulent billing◦ Criminal convictions related to Medicaid/Medicare program◦ Engaging in kickback arrangements◦ Failure to pay Health Education Assistance Loans  ◦ Misdemeanor: Controlled substances – discretionary  ◦ License revocation (#1 reason for exclusion)

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OIG researchers found between March 2011 and August 2014, a total of 27,000 high‐risk providers were allowed to 

enroll without completing the background checks

The nurse licensing systems in Colorado, Wisconsin, New York, Vermont, Maine and Hawaii rely on self-disclosure and complaints. The porous process allows nurses disqualified from obtaining licensure in other states to obtain a license in one of the six states with less scrutiny. June 2016

Best practices – health care screening: Medicaid exclusion lists◦ U.S. Department of Health and Human Services/OIG To avoid civil monetary penalty (CMP) liability Routinely check the Excluded Individuals and Entities for new hires 

and current staff Each violation found: May be subject to a CMP of $10,000 for each item or service furnished 

during the period the person or entity was excluded Plus treble damages for each item and/or service May jeopardize future reinstatement into federal health care programs

December 2010 – American Senior Communities settled with the OIG for $376,000 for employing seven providers who were not directly involved in patient care

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Increase in investigations/litigation◦ Significant increase in investigations over the last 3 years Average of $197,000 per claim/person◦ More than 200 agents nationwide◦ Usually involve a single excluded party◦ 37 states (including CA) with their own sanctions searches

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2015 ◦ More than 45 cases from OIG (false fraudulent claims)◦ $23M+ in penalties◦ Loss of federal funding (no warning)

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Muira MishraMKM Law Group, P.C.muira@mkmlawgroup.com(310) 937‐1662

Kate KearnsUniversal Background Screening, Inc.kkearns@universalbackground.com  (877) 263‐8033 x3218

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