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FTC Data Security Settlement
House Passes Fair Chance Act
The U.S. House of Representatives passed legislation prohibiting federal agencies and federal contractors from asking about job applicants’ criminal history until after making a conditional employment offer.
“This legislation will remove the steep hurdles that deny individuals who have paid their debt to society from finding a job and allow them to have the dignity of work,” said Sen. Cory Booker, D-N.J., a leading co-sponsor of the bill.
Federal ‘Ban-the-Box’ Law Would Apply to Agencies, Contractors
The Fair Chance Act would apply to the executive, legislative and judicial branches, including the U.S. Postal Service. It would also apply to private-sector companies with federal contracts. The legislation expands the prohibition to millions of federal contractors for the first time and codifies existing Office of Personnel Management policy at federal agencies. It also mandates that the federal government collect data on those with criminal records who are hired—information that has been lacking in the states that have enacted fair chance hiring reforms.
What Employers Need to Know About Ban-the-Box Laws
As of July 2019, more than 150 cities and counties, as well as 34 states, have passed ban-the-box or fair chance laws. The dilemma for HR and hiring managers lies in finding the balance between giving applicants with a criminal history a chance to be evaluated on their qualifications and being liable for negligent hiring.
Ban-the-Box Laws by State and Municipality
Some jurisdictions prohibit an employer from asking if an applicant has been convicted of a crime until a specified point in the hiring cycle. Several states also have laws restricting an employer’s ability to use credit history in making employment decisions. Find out more about your jurisdiction with this SHRM resource.
House Committee Passes Bill to Ban Employment Credit Checks
The House Committee on Financial Services on July 11 passed legislation that would prohibit employers from using credit reports for employment decisions, except when required by law or for a national security clearance. The bill would also prohibit hiring managers from asking questions about applicants’ financial past during job interviews or including questions about credit history on job applications. Opponents of the practice say that it blocks upward mobility, disproportionately affects minority job seekers and can be an invasion of privacy. On the other hand, those in favor of credit checks on job candidates argue that the information is an indicator of a person’s judgment and potential risk to the organization, especially for certain positions involving finances and accounting.
Credit Checks Harm U.S. Workers
The legislation is a component of a multi-bill overhaul of the credit-reporting industry brought forward by Rep. Maxine Waters, D-Calif., chair of the committee. She said that she’s been very concerned about the use of credit checks for employment purposes because too often qualified candidates have been denied a job because of inaccurate reporting or due to financial hardships from years ago. In addition, “an individual’s credit history has been shown not to predict their job performance,” she said. “Nevertheless, credit information is increasingly used by employers. People who have been unemployed for an extended period of time, and whose credit standing has been damaged because they were unable to pay their bills, cannot secure a new job to end their financial distress because prospective employers conduct credit checks as part of an application process.”
Chi Chi Wu, staff attorney at the National Consumer Law Center based in Boston called the practice of using credit checks for employment “absurd” and said that credit reports were designed to predict the likelihood that someone will miss a loan payment, and not whether they will steal in the workplace.
The Bill Is Too Broad
Employer groups such as the U.S. Chamber of Commerce and the Society for Human Resource Management (SHRM) oppose the bill because it overreaches. SHRM believes employers must have the ability to enact policies and procedures that best meet the needs of their individual organizations.
“The bill puts restrictive prohibitions on companies who may be using it in a correct, limited manner for a job-related purpose,” said Pamela Devata, a partner in the Chicago office of Seyfarth Shaw. “Many employers don’t use credit checks for their entire workplace but potentially would use it for certain positions—executive-level positions or for people who have unfettered access to a company’s finances in accounting and finance roles.”
SHRM data backs that assertion up, indicating that employers primarily use credit checks for applicants seeking employment in either financial, security or fiduciary roles within an organization. “This layer of protection reduces organizational exposure to financial losses and legal liability, while protecting the security of customer and company information,” Taylor said. “Given the increase in state and local laws passing credit check laws, as well as the EEOC’s stance on the use of credit checks—that credit checks create a disparate impact on certain minority groups—there appears to be a trend of all employers decreasing the number of credit checks that they conduct,” Devata said. She explained that the Fair Credit Reporting Act (FCRA) does not bar employers from using credit reports when making employment decisions, but other applicable laws may.
Currently ten states (California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington), the District of Columbia, and the cities of Chicago, New York City and Philadelphia have passed laws restricting the use of credit reports used by employers for employment purposes, with several more jurisdictions poised to join the trend, she said.
New York and New Jersey Are Most Recent Jurisdictions to Ban Salary History Inquiries
New York State and New Jersey are poised to become the two most recent jurisdictions to adopt bans on inquiries about salary history.
New York’s legislature recently passed a bill, which would bar New York employers from seeking wage or salary history information from an applicant, employee, or applicant’s former employer. Governor Andrew Cuomo is expected to sign the bill, and it will take effect 180 days thereafter. The statewide bill is similar to the ones already in effect in New York City and Suffolk, Westchester, and Albany counties.
If passed, the bill would prohibit employers from:
- Relying on the wage or salary history of an applicant in determining whether to offer employment to such individual or in determining the wages or salary for such individual;
- Orally or in writing, seeking, requesting, or requiring the wage or salary history from an applicant or current employee as a condition of being interviewed, or as a condition of continuing to be considered for an offer of employment, or as a condition of employment or promotion;
- Orally or in writing, seeking, requesting, or requiring the wage or salary history of an applicant or current employee from a current or former employer, current or former employee, or agent of the applicant or current employee’s current or former employer;
- Refusing to interview, hire, promote, otherwise employ, or otherwise retaliating against an applicant or current employee based on prior wage or salary history;
- Refusing to interview, hire, promote, otherwise employ, or otherwise retaliating against an applicant or current employee because the individual did not provide wage or salary history in accordance with the law; or
- Refusing to interview, hire, promote, otherwise employ, or otherwise retaliating against an applicant or current or former employee because the individual filed a complaint with the State’s department of labor alleging a violation of the law.
Applicants and employees may voluntarily disclose or verify their salary history. An employer would also be able to confirm salary history if, at the time an offer of employment is made, the applicant or employee responds to the offer by providing prior salary history to support a salary higher than that offered by the employer. The bill does not interfere or alter rights enjoyed by an applicant or employee under a collective bargaining agreement, nor does it affect any laws which require the disclosure of salary history information.
New Jersey has a similar bill pending in the legislature that would ban salary history inquiries. New Jersey’s bill would amend the Law Against Discrimination, N.J.S.A. 10:5-1, et seq., and prohibit any employer from:
- Screening a job applicant based on the applicant’s wage or salary history, including by requiring the applicant’s prior wages, salaries, or benefits satisfy any minimum or maximum criteria, or relying on the applicant’s salary in determining a salary amount for the applicant at any stage in the hiring process, including finalizing the employment contract;
- Inquiring, in writing or otherwise, about the salary history of a job applicant, including, but not limited to, the applicant’s compensation and benefits, except that the employer may seek the history if the prospective employee voluntarily, without employer coercion, provides the employer with a written authorization; and
- Taking reprisals against any employee for disclosing to any other employee or former employee of the employer information regarding the job title, occupational category, rate of compensation, the gender, race, ethnicity, military status, or national origin of the employee or any other employee or former employee of the employer.
Currently, the bill has been referred to the Labor Committee for review and is still pending.
The Bottom Line
In light of the pending legislation, employers should ensure all employees involved in the interviewing and hiring process are aware of the new laws’ requirements. Employers should also review their employment applications to remove any questions regarding salary history
New Jersey Adds to Recent Flood of Salary History Ban Laws
Continuing the recent deluge of salary history ban laws, on July 25, 2019, New Jersey Lieutenant Governor Sheila Oliver signed Bill A1094 into law. Like other recent laws limiting salary history inquiries, New Jersey’s law prohibits employers from screening job applicants based on the applicant’s prior salary history, which includes prior wages, salary or benefits. In addition, employers may not require that an applicant’s salary history satisfy any minimum or maximum threshold to be considered for a job. The new law takes effect on January 1, 2020. The law provides for a private right of action as well as civil penalties from $1,000-$10,000 per violation depending on the circumstances. The law does not expressly define what conduct will be considered as a single “violation” for purposes of calculating penalties. Fortunately for employers, New Jersey’s law contains examples of expressly permitted activities and exceptions from coverage in certain key areas:
- Employment Application: If an employer has a multi-state employment application that includes operations outside of New Jersey, the employer is allowed to have a salary history question with a disclaimer that an applicant for a position located in whole or in substantial part in New Jersey is instructed not to answer the question.
- Voluntary Disclosure: If an applicant voluntarily discloses (defined as without prompting or coercion) his or her salary history, the employer may both: (1) verify that the information the applicant provided was accurate and (2) use the information to determine the applicant’s compensation.
- Post-Offer Verification: An employer may obtain written authorization from the applicant to confirm salary history after an offer of employment that contains an explanation of the offered “overall compensation package.”
- Internal Transfers or Promotions: The law does not apply to applications for internal transfer or promotion.
- Background Checks: If an employer informs its background check vendor that salary history information is not to be disclosed to the employer, but for some reason the background check includes a disclosure, the disclosure will not violate the law. However, the employer will have to destroy the salary history information and not use it.
- Incentive and Commission Plans: Employers are allowed to discuss the “terms and conditions” of incentive and compensation plans the applicant was subject to at a prior employer, provided that: (1) the employer does not ask about the specific dollar amounts involved in the plans and (2) the job the applicant applied for with the prospective employer includes an incentive or commission component.
New Jersey’s law also contains perhaps the most nuanced approach to employment agencies compared to similar salary history laws. The law provides that (a) applicants may disclose salary history information and information regarding the applicant’s experience with incentive and commission plans to employment agencies the applicant is using to search for work and (b) the employment agency may provide that information to employers as long as it has the applicant’s express written consent. Employers will have to await further guidance as to how courts and the N.J. Commission of Labor and Workforce Development will interpret the specifics of this provision given the overarching prohibition on employers’ using salary history information to screen applicants otherwise.
Finally, unlike some recent laws and ordinances, New Jersey’s law does not require that the employer affirmatively disclose a wage scale for applicants.
The Illinois Artificial Intelligence Video Interview Act: Requiring Notice Prior to Use of Artificial Intelligence in Video Interviews
The use of artificial intelligence, or “AI,” in the hiring process might sound futuristic, but many U.S. companies already use AI to streamline hiring and make the process more objective, including scanning résumés, scheduling interviews, and recently, actually conducting the first round of job interviews. These AI interviewing programs have different algorithms and methods, but essentially they measure an applicant’s facial expression, word choice, body language, and vocal tone, among other factors. On May 29, in response to these developments, Illinois legislators unanimously passed HB 2557 (“The Artificial Intelligence Video Interview Act”). Should the Act become law, it will require employers who use artificial intelligence to analyze applicant-submitted videos to comply with the following:
- Notice: Employers will have to inform potential employees that they are using AI to analyze their videos. (A provision requiring written notice was removed from the bill.)
- Explanation: Employers will be required to explain to the applicant how their artificial intelligence program works and what general characteristics the program uses to evaluate applicants.
- Consent: Employers will be required to obtain the applicant’s consent before using AI to analyze the video.
- Keep Confidential: Employers will be permitted to share the videos only with persons whose expertise or technology is needed to evaluate the applicant.
- Destroy Copies: Employers must destroy both the video and all copies within 30 days after an applicant requests such destruction (and instruct any other persons who have copies of the video to destroy their copies as well).
Provided the Governor does sign HB 2557 into law (he has 60 days in which to do so), several questions remain about how it will function:
- What is “artificial intelligence”? The bill itself does not define artificial intelligence, and there is no settled definition of this term in the law.
- What kind of “explanation” is sufficient? The bill does not provide specifics on what level of information is sufficient to meet the statute’s explanation requirement.
- Will there be a private right of action? The bill does not prescribe any penalties for violating it, which leaves open questions of enforcement.
- What type of damages and how much? The bill does not specify what types of remedies are available, nor does it quantify available damages.
Despite the increasing prevalence of this new technology, governments on whole have been slow to regulate AI. Illinois, comparatively, has not. Illinois has already demonstrated a willingness to engage on privacy and technology issues, most notably as the first state to enact a biometrics statute, the Biometric Information Protection Act (“BIPA”). BIPA requires private entities to, among other things, obtain consent from individuals before collecting their biometric information (data like fingerprints or facial scans) and develop a written policy for the storage and destruction of the biometric information. BIPA creates a private right of action for enforcement.
What New Jersey’s New Medical Marijuana Law Means for Employers Wondering How to Deal with Employee Cannabis Use
On July 2, 2019, New Jersey Governor Phil Murphy signed a much-anticipated bill into effect that expands and revises the state’s existing medical cannabis program, the Compassionate Use of Medical Marijuana Act (CUMMA). For employers faced with employees and job applicants who use cannabis, New Jersey Assembly Bill A20 provides certain job protections for medical cannabis users. This is a significant change for employees and employers, since CUMMA previously did not explicitly contain such protections, and guidance from courts was inconclusive and slow-developing. These changes are summarized below.
The CUMMA Amendment
Breaking with the previous version of CUMMA, Assembly Bill A20 now contains a non-discrimination provision which provides that an employer cannot take an adverse employment action against an employee “based solely on the employee’s status as a registrant” for medical cannabis. Unlike the previous draft of the now aborted adult-use cannabis bill, there is no carve-out in Assembly Bill A20 allowing an employer to discriminate against a medical cannabis user if there is a “rational basis” for doing so.
Although Assembly Bill A20 permits employers to maintain drug testing programs, it sets forth procedures to be followed if an employee or job applicant tests positive for cannabis:
- The employer must give written notice to the employee of the positive test.
- The notice must inform the employee of his or her right to “present a legitimate medical explanation for the positive test result.”
- The employee has three working days from receipt of the written notice to “submit information to the employer to explain the positive test result,” or the employee may request a retest at the employee’s expense.
- As part of his or her explanation for the positive test, the employee may present a doctor’s authorization to use medical cannabis or proof of registration under CUMMA.
Like several other state medical cannabis laws across the country, Assembly Bill A20 allows employers to discipline or fire an employee for possession or use of medical cannabis “during work hours.” There is also a carve-out permitting an employer to discriminate against a medical cannabis user if the failure to do so would result in the employer’s violation of federal law or loss of a federal contract or funding.
Employers’ Bottom Line
Adding job protections for cannabis users is a sea change from the previous version of CUMMA, which did not require employers to “accommodate the medical use of marijuana in any workplace.” Employers that traditionally relied on “zero tolerance” drug policies will need to update their policies and practices accordingly.
Hawaii Decriminalizes Marijuana Possession
Hawaii decriminalized marijuana this month, becoming the 26th state in the nation to legalize or decriminalize the drug. Hawaii’s legislature approved the bill and sent it to Gov. David Ige in May. Ige has not signed the bill, but did not veto it effectively letting it become law Tuesday, Vox reported. Ige had until Tuesday to veto bills. If no action is taken, it becomes law without his signature, according to the governor’s office release. The bill will make possession of three grams or less of marijuana punishable by a $130 fine, effective Jan. 11, 2020. It is the smallest amount of any state to decriminalize, or legalize, possession marijuana, the Marijuana Policy Project said in a statement. But the group said it’s still an “improvement” from current Hawaii law which allows “a tiny amount” of cannabis possession to be punishable up to 30 days in jail and fined up to $1,000. Decriminalization is not the same as legalizing. Twelve states, including Washington, D.C., have legalized marijuana. In Vermont and D.C. marijuana is legalized, but not allowed for sales for recreational purposes.
California Pay Data Reporting Advances: EEOC May Not Be Alone for Long
The recent focus on the EEOC’s new Component 2 to its EEO-1 Report has been undeniable. It requires employers report on the race, ethnicity, sex, job type, pay, and hours worked data of its employees. OMB approved this data collection during the Obama Administration. Then, under President Donald Trump, the OMB reversed course, staying the obligation. In response, the National Women’s Law Center sued to reinstate it. Earlier this year, the District Court overturned the stay—requiring employers, again, to disclose employee pay. While the OMB has appealed this decision, EEOC is on track to begin collecting this detailed race-, ethnicity-, and sex-based pay data soon. With all this activity at the national level, it would be easy to miss the other mandatory EEO pay data reporting obligations advancing.
California—estimated to be the fifth largest global economy—is quietly advancing its own race- and sex-based pay data reporting requirement. Introduced in January 2019, Senate Bill 171 passed the California Senate on May 22. On June 26, it began its path through the Assembly with hearings in the Labor and Employment Subcommittee. In its current form, SB 171 would require private employers with at least 100 employees to submit an annual report for each establishment to the California Department of Fair Employment and Housing (DFEH). The bill would require the DFEH to make the reports available, upon request, to the California Division of Labor Standards and Enforcement, the state agency tasked with enforcement of the state’s wage and hour laws. Much like the EEO-1 Report’s Component 2, each proposed California report would contain employee pay data broken down by race, ethnicity, and sex within specified job categories. In fact, the two requirements are so similar that, in its current form, SB 171 would permit employers to submit their EEO-1 Report Component 2 to satisfy the contemplated state-level reporting obligation.
Toledo, Ohio Passes Ban on Salary History Inquiries
Toledo, Ohio is the latest jurisdiction (and the second city in Ohio) to enact a law that will prohibit employers from asking job applicants about salary history. The ordinance, which is scheduled to take effect on June 25, 2020, will apply to employers with fifteen or more employees in Toledo, and will prohibit such employers and their agents from:
- inquiring about the salary history of an applicant for employment;
- screening applicants based on their current or prior wages or other benefits or compensation, or requiring that salary history satisfy minimum or maximum criteria;
- relying on salary history in deciding whether to extend an offer of employment, or in determining the salary, benefits, or other compensation for an applicant during the hiring process, including the negotiation of an employment contract; and/or
- refusing to hire or otherwise retaliating against an applicant for not disclosing his or her salary history.
In addition, upon the reasonable request of an applicant who has received a conditional offer of employment, an employer will be required to provide the pay scale for the position. For purposes of the ordinance, “applicant” is defined broadly to mean any person applying for employment to be performed within Toledo or whose application, in whole or in part, will be “solicited, received, processed, or considered in the City of Toledo, regardless of whether the applicant is interviewed.” “Salary history” means an applicant’s current or prior wages, benefits, or other compensation, but does not include any objective measure of the applicant’s productivity, such as revenue, sales, or other production reports.
While the term “inquire” includes oral or written requests as well as searches of publicly available records, employers may verify an applicant’s non-salary related information or conduct a background check, so long as they do not consider or rely upon any salary history information that may inadvertently be obtained. Notably, the ordinance’s prohibitions do not apply to “voluntary and unprompted” disclosures of salary information by applicants. The ordinance further permits employers to engage in discussion with applicants about their expectations with respect to compensation, including but not limited to unvested equity or deferred compensation that may be subject to forfeiture or cancellation. The ordinance also excludes from coverage: (1) applicants for internal transfer or promotion; (2) positions for which compensation is determined pursuant to collective bargaining; (3) actions taken by an employer pursuant to any federal, state or local law that specifically authorizes the reliance on salary history to determine an employee’s compensation; and (4) former employees who are re-hired by the same employer within five years of termination, provided that the employer already has any past salary history information regarding the applicant from the individual’s previous employment. Applicants alleging a violation of the ordinance will have a private right of action. Available remedies will include compensatory damages and attorney’s fees and costs. In advance of the June 25, 2020 effective date, employers in Toledo should begin taking steps to ensure compliance by training human resources and other relevant personnel on these new requirements.
What New York Employers Need to Know About the State’s New Equal Pay and Salary History Laws
Below is a summary of the equal pay and salary history bills that Governor Cuomo signed into law:
The equal pay bill dramatically expands New York’s equal pay law to cover not only sex-based pay disparities but also pay disparities based on any characteristic protected by the state’s human rights law. This means that all employees—regardless of their age, race, creed, color, national origin, sexual orientation, gender identity or expression, military status, sex, disability, predisposing genetic characteristics, familial status, marital status, or domestic violence victim status—must be paid the same.
The bill also lowers the burden of proof for comparator evidence. Under existing law, an employee has to show that she is being paid less than the comparator employee for “equal work.” Under the new law, the employee will have to show only that he or she and the comparator performed “substantially similar work.”
Although the new law is expansive, employers can still use traditional defenses to defeat a pay-equity claim: seniority system, merit system measuring earnings by quality and quantity, and a bona fide factor that is job-related and consistent with business necessity—such as education, experience, geography, or training.
The new equal pay law will take effect October 8, 2019.
The salary history bill prohibits all employers from asking applicants, or current employees seeking promotion, about their salary histories. More specifically,
- An employer cannot rely on the salary history of an applicant in deciding whether to extend an employment offer.
- An employer cannot rely on the salary history of an applicant or current employee in determining salary.
- An employer cannot seek, request, or require an applicant or current employee’s salary history for interview, employment, or promotion purposes.
- An employer cannot seek, request, or require salary history information from a current or former employer except to confirm salary history when voluntarily provided by the applicant or current employee.
- An employer cannot retaliate against an applicant or current employee for refusing to provide salary history information.
- An employer cannot take adverse action against an applicant or current employee (for example, by refusing to interview, hire, or consider for promotion) based on salary history.
There is a key exception: it is lawful for an applicant or current employee to voluntarily, and without any coercion or prompting, disclose or verify his or her salary history for purposes of negotiating salary.
The new salary history law will take effect January 6, 2020.
Companies with New York operations should review their pay practices and consider a pay equity audit that takes into account not just gender-based pay disparities but disparities based on other protected characteristics. These companies should also review their interview and hiring policies and practices to ensure that they comply with the salary history law. Twelve other states, including California, have laws restricting salary history questions.
Oregon Requires Employers to Provide Notice to Employees Prior to I-9 Inspections
A new Oregon law will require employers to notify their employees when they (the employers) are contacted by a federal agency that intends to audit, among other things, employer records and employment eligibility documentation. Senate Bill (SB) 370 was enacted on June 6, 2019 but does not become operative until January 1, 2020.
What does SB 370 require?
It requires that, upon receipt of a notice of inspection by a federal agency, employers notify their employees that an inspection will take place.
When is SB 370 triggered?
SB 370 is triggered when an employer receives notice from a federal agency requiring the employer to provide access to records of forms and any other documentation (such as Form I-9) used by the employer to verify the identity and employment eligibility of its employees.
When must an employer provide notice?
An employer must notify employees within three days of receiving the notice of inspection by a federal agency.
What steps must an employer take to provide notice?
An employer must:
- post a notice in a conspicuous and accessible location, in English and in the language the employer typically uses to communicate with the employees; and
- make reasonable attempts to individually distribute notifications to employees in the employee’s preferred language.
What information must the notice include?
The notice must include the following:
- A copy of the federal agency’s notice of inspection received by the employer
- The date of the inspection
- The scope of the federal agency’s inspection (to the extent of the employer’s knowledge)
- What information has been requested pursuant to the federal agency’s notice of inspection
- A telephone number for a hotline operated by an organization that provides information and advocacy related to immigrant and refugee worker’s rights
Are there templates available that employers can use to provide notice?
Oregon’s Bureau of Labor and Industries, more commonly referred to as “BOLI,” will provide templates that employers can use to comply with the terms of SB 370. Once finalized, the templates will be posted on BOLI’s website and will be available in English as well as the five most common non-English languages in Oregon. Oregon’s labor commissioner will update the available languages, as necessary, every five years.
U.S. – New Mexico Joins the Nationwide Movement to ‘Ban the Box’
New Mexico has expanded its prohibition on inquiring into applicants’ criminal history on employment applications to include private sector employers.
On April 3, 2019, New Mexico expanded the state’s ‘Ban the Box’ law to include private employers. ‘Ban the Box’ is a nationwide effort to eliminate the checkbox on employment applications inquiring into applicants’ criminal history. Over the last few years, 34 states have joined the movement to ‘Ban the Box.’ Among these states, twelve (California, Connecticut, Hawaii, Illinois, Massachusetts, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, and Washington) as well as the District of Columbia have passed Ban the Box laws for private employers. In a press release, New Mexico Governor Michelle Lujan Grisham said ‘[i]t is our responsibility to ensure that we create a pathway for individuals to contribute to our economy and to our communities.’ This seems to be the consensus among more than 150 cities that have also enacted their own version of Ban the Box laws.
Implications of Removing the Box
Effective 14 June 2019, New Mexico’s ‘Criminal Offender Employment Act’ prohibits private employers from inquiring into applicants’ arrest or conviction history at the preliminary application stage. Under the law, any private employer with four or more employees is prohibited from asking about an applicant’s criminal history on a written or electronic employment application. The amendment does not preclude employers from considering an applicants’ criminal history later on in the hiring process. However, employers must first review the prospect’s application and ‘discuss’ employment with him or her before consideration of the arrest or conviction record.
The amendment does not prevent an employer from notifying the public that the law or the employer’s policy could disqualify an applicant who has a certain criminal history from employment in particular positions with that employer. However, another newly enacted New Mexico law, which takes effect 1 January 2020, permits individuals with certain arrests and convictions (including certain felonies) to petition the court for expungement. An individual who has received an order of expungement generally may deny having an arrest or conviction record in response to an inquiry by an employer, with certain exceptions for employment with a financial institution. Thus, even though employers may inquire about an applicant’s criminal history prior to making a final hiring decision, certain applicants will never be required to disclose their expunged record at any point during the employment process and/or relationship.
New Mexico employers should review their initial employment application and remove the criminal history ‘box.’ Practically speaking, employers may ask job applicants about their criminal record, but only after an interview-like discussion has occurred. Employers should also keep in mind that even if having a criminal background is an immediate disqualification under the law or the employer’s policy, they cannot use a criminal history question as an initial screening device on an employment application.
Courts Are Siding with Employees Who Use Medical Marijuana
Marijuana, a Schedule 1 drug under the federal Controlled Substances Act (CSA), is the most commonly detected illicit drug in employment drug testing. According to Quest Diagnostics, in 2018, approximately 3% of urine-based workplace drug screenings tested positive for marijuana. Notwithstanding marijuana’s illegality under federal law, 33 states and the District of Columbia have legalized marijuana for recreational or medicinal use. And it is big business. The Colorado Department of Revenue recently revealed that its tax, license and fee revenue from marijuana has reached $1.02 billion. Legal marijuana appears here to stay in the United States.
Many state and local jurisdictions have enacted anti-discrimination laws concerning marijuana use. Generally, such laws prohibit employers from taking adverse action against an employee who uses marijuana in conformance with the local jurisdiction’s marijuana laws, so long as the employee does not consume cannabis at work and is not impaired while on the job. But because of the way the human body metabolizes cannabis—traces of marijuana can persist in a person’s body for as long as 30 days after it was last used—it is difficult for employers to determine, much less prove, whether an employee is actually impaired by marijuana on company time, as opposed to outside of work on personal time. That difficulty creates liability for employers who act on a positive drug test. Even if an employee is impaired at work, proving so can be challenging, and employers therefore need to proceed carefully when executing their drug policies.
In the first wave of employment cases concerning marijuana use since marijuana legalization began, the courts tended to side with employers. In California, employers can terminate workers who test positive for cannabis so long as the employer complies with its “drug-free” policy. In Colorado, the Colorado Supreme Court in 2015 unanimously affirmed a lower court decision that a company was within its rights to terminate an employee for using marijuana. According to the Colorado Supreme Court, the state’s medical marijuana law did not preempt the company’s “zero tolerance” policy.
The tide, however, is turning. Recent decisions in federal and state courts indicate that employers need to proceed with caution when they make employment decisions concerning drug tests for cannabis use. In Arizona, for example, a federal judge decided a case concerning a customer service supervisor at a nationwide retailer. The supervisor had been leveling bags of ice in an ice machine when a bag fell on her wrist. The injury resulted in a trip to an urgent care center, and company policy therefore required the employee to submit to a drug test. As a registered user of medical marijuana pursuant to the Arizona Medical Marijuana Act (AMMA), the employee inevitably tested positive for cannabis metabolites. The company terminated her for failing a drug test and, as a result, she had difficulty accessing workers’ compensation to cover her medical treatment. AMMA, however, makes it illegal for an employer to terminate an employee because of a “positive drug test for marijuana components or metabolites, unless the patient used, possessed or was impaired by marijuana on the premises of the place of employment or during the hours of employment.” The employee filed a lawsuit against her former employer, alleging discrimination and wrongful termination in violation of the AMMA, the Arizona Civil Rights Act, and the state’s worker compensation law. Earlier this year, the United States District Court for the District of Arizona sided with the employee and determined that the employer wrongfully terminated her. Before the court made any decisions concerning damages or reinstatement, the parties notified the court that they had settled the matter.
A Delaware state court recently faced facts similar to those at issue in the Arizona case. The court held that a medical marijuana user may proceed with a lawsuit against his former employer after his employment was terminated due to a positive post-accident drug test result for marijuana. The plaintiff relied on the anti-discrimination provision of the state’s medical marijuana law, while the employer argued that federal law preempted the state law because marijuana is illegal under the CSA. According to the Delaware court, the Controlled Substances Act “does not make it illegal to employ someone who uses marijuana, nor does it purport to regulate employment matters within this context.” The court further stated that the anti-discrimination provisions of the state medical marijuana law do not pose an obstacle to the objectives of Congress and do not require employers to participate in illegal activity. Rather, the state medical marijuana law prohibits employers only from discriminating against employees based upon medical marijuana use. The court therefore rejected the employer’s preemption argument.
Not long ago in Connecticut, a rehabilitation center offered someone a position as its recreation therapy director. The job applicant then disclosed that she used medical marijuana, solely at bedtime, to treat post-traumatic stress disorder that she suffered as the result of a car accident. The applicant was a “qualified patient” under the Connecticut Palliative Use of Marijuana Act, but the employer withdrew the job offer anyway. The applicant then sued the company for discriminating against her based on her marijuana use. Last month, a federal judge ruled that the employer violated an anti-discrimination provision of Connecticut’s medical marijuana law when it withdrew the job offer.
New Jersey courts are protecting medical marijuana users, too. For example, a New Jersey state appellate court recently held that a disabled employee may sue his former employer under the New Jersey Law Against Discrimination (NJLAD) for alleged discrimination based on the employee’s use of medical marijuana. Although the New Jersey Compassionate Use Medical Marijuana Act (NJCUMMA) does not prohibit employment discrimination based on medical marijuana use, the court held that the NJCUMMA does not immunize “employers from obligations already imposed elsewhere [such as under the NJLAD].”
Local legislatures also are stepping in to protect workers who use marijuana lawfully under local law. In April of this year, the New York City Council passed a law that prohibits employers from testing applicants for marijuana and, starting in 2020, employers in Nevada cannot refuse to hire someone for failing a marijuana test. Gov. Steve Sisolak signed the bill on June 5 after state lawmakers approved it. “As our legal cannabis industry continues to flourish, it’s important to ensure that the door of economic opportunity remains open for all,” he said.
In light of the wave of legislative and judicial developments across the nation concerning legal marijuana use, employers need to stay aware of recent court decisions and legislative developments as they create and implement their workplace drug use policies. Moreover, employers should appreciate the limitations of marijuana testing and how those limitations affect their practices and policies. In the meantime, suffice to say that judges are siding with employees who use medical marijuana, outside of work, in conformance with local law.
New Jersey Supreme Court Will Review Employer’s Obligation to Accommodate Medical Marijuana Use
This week, the New Jersey Supreme Court announced that it would consider whether the New Jersey Law Against Discrimination’s (NJLAD’s) protection of employees’ use of prescription medication trumps the New Jersey Compassionate Use Medical Marijuana Act’s (CUMMA’s) statement that employers are not required to “accommodate the medical use of marijuana in any workplace.” In March, we wrote about the appellate court’s decision in Wild v. Carriage Funeral Holdings, Inc., et al, Docket No. A-3072-17T3 (App. Div. March 27, 2019), in which the panel of judges held that the NJLAD may require an employer to provide an accommodation to a medical marijuana user, despite New Jersey’s medical marijuana laws providing that such an accommodation is not required. The case involved a funeral director who was fired after a positive drug test and a violation of the employer’s drug use policy. The plaintiff claimed that he only used medical marijuana at night, after work, to treat symptoms of his cancer. The plaintiff claimed that the CUMMA permitted his use of prescribed marijuana, and the NJLAD required his employer to accommodate that prescription use. The trial court dismissed the NJLAD claim, relying primarily on the CUMMA’s statement that “nothing in this act shall be construed to require…an employer to accommodate the medical use of marijuana in any workplace.” N.J.S.A. 24:6I-14.
The Appellate Division disagreed, essentially holding that the statement in the CUMMA that it does not “require” an employer to accommodate marijuana use does not supersede another law’s requirement. The panel stated that to the CUMMA’s statement that it does not “require” an accommodation “does not mean that the [CUMMA] has immunized employers from obligations already imposed elsewhere. It would be ironic indeed if the [CUMMA] limited the [NJLAD] to permit an employer’s termination of a cancer patient’s employment by discriminating without compassion.”
The New Jersey Supreme Court’s decision in this case will provide employers with further guidance regarding employees’ legal use of medical marijuana. Until that decision is issued, and unless the New Jersey Supreme Court reverses the Appellate Division’s decision, employers should be wary of any employment actions that treat medical marijuana users differently than employees using other legally prescribed medication.
$1.3M Settlement Reached in Criminal Background Check Suit
Plaintiffs Clint Millien and Felipe Kelly sued Madison Square Garden for its hiring practices relating to applicants’ failure to disclose previous criminal activity when applying for food preparation positions. The plaintiffs claim that Madison Square Garden imposed too strict of requirements for criminal disclosures that had a disparate impact on minority applicants. The parties agreed to settle the case for $1.3 million. The plaintiffs’ claims are based on two main theories of liability. First, they contend that Madison Square Garden’s practice of revoking conditional employment offers based on a failure to disclose previous criminal history had a discriminatory impact on African-American and Latino applicants. Second, they claim that Madison Square Garden routinely failed to provide applicants with copies of their background screening reports before denying them employment, as required under the Fair Credit Reporting Act and the New York Correction Law. Madison Square Garden denies any wrongdoing. The proposed settlement awards $200 to all individuals denied employment at Madison Square Garden based on the content of their background screening reports within the last four years. The settlement further provides $1,700 to applicants who submit a valid claim demonstrating that they would have been eligible for employment had they fully and accurately disclosed their criminal history on their original job application. In total, Madison Square Garden agreed to pay $519,800 in relief to putative class members and $750,000 in attorneys’ fees. The settlement also provides injunctive relief to the class and requires that Madison Square Garden make substantial changes to its hiring policies. Among other changes, Madison Square Garden will now only require applicants to disclose criminal convictions that occurred within the past five years. It will no longer revoke conditional employment offers based on a failure to disclose open warrants, nor require applicants to disclose marijuana convictions (unless convicted of intent to sell). Madison Square Garden also committed to providing applicants with copies of their screening reports before denying any job applications. Finally, Madison Square Garden agreed to shorten its previous lifetime ban on individuals reapplying for positions after being disqualified for their failure to accurately disclose their criminal history. The parties filed their motion for preliminary approval on June 24 and are awaiting the Court’s approval of the proposed settlement. This settlement highlights important issues companies must consider when designing and implementing their policies for screening potential job applicants.
6th Cir. Rejects FCRA ‘Credit File Disclosure’ Claim for Lack of Spokeo Standing
The U.S. Court of Appeals for the Sixth Circuit recently held that a plaintiff lacked Article III standing to sue a consumer reporting agency under the federal Fair Credit Reporting Act (FCRA) for allegedly failing to disclose all information in his file. In so ruling, the Sixth Circuit held that the alleged deprivation of information had no consequences for the consumer and imposed no real risk of harm to establish injury in fact. A copy of the opinion in Huff v. TeleCheck Services, Inc. is available at: link to opinion. The consumer reporting agency (CRA) advises merchants on whether it should accept a check from a retail customer. The merchant sends the bank account number on the check and the customer’s driver’s license number, called identifiers, to the CRA to run each identifier through the CRA’s system. The merchant refuses the customer’s check if the CRA recommends a decline. On the other hand, if the CRA approves the transaction, the merchant accepts the check.
The customer requested a copy of his file from the CRA under the federal FCRA and provided a copy of his driver’s license. The FCRA creates a cause of action that has three elements: (1) duty—a consumer agency must disclose “[a]ll information in the customer’s file” upon request; (2) breach of duty—any consumer agency that fails to meet this requirement is liable to the affected individual; and (3) damages—the affected individual may recover statutory damages of $100 to $1,000 for a willful violation. 15 U.S.C. §§ 1681g(a)(1), 1681n(a)(1)(A). The CRA’s report contained 23 transactions in which the customer presented his driver’s license alongside the check. The report did not contain two transactions because those checks were not presented with the customer’s license. The report contained a disclaimer indicating that the CRA had additional information not included in the report and invited the customer to contact the CRA for more information. Although the CRA had never advised a merchant to decline any of the customer’s checks, the customer filed a complaint alleging that the CRA violated FCRA and moved for class certification. The CRA moved for summary judgment based on lack of Article III standing. The trial court dismissed the case for lack of standing. The Sixth Circuit affirmed the trial court’s dismissal order.
Delta Airline Settled FCRA and ICRAA lawsuit
Delta Airline settled a lawsuit for alleged violations of the Fair Credit Reporting Act (FCRA) and California law (ICRAA / CCRAA) regarding the notice provided to job applicants alerting them to a background check. Plaintiffs alleged that the airline violated the FCRA because the notice to job applicants that a background check would be run was not a “standalone disclosure” because it contained extraneous information about state rights and medical information. The class settlement is for $2.3 million and the judge granted final approval of the class settlement on July 16, 2019 (Schofield vs Delta Airlines, Inc.).
GDPR: Record British Airways Fine Shows How Data Protection Legislation is Beginning to Bite
The UK’s Information Commissioner’s Office has declared that it intends to fine British Airways a record total of £183.4m because of a data breach it suffered during the summer of 2018. The airline fell victim to a cyberattack that saw hackers gain access to personal information and credit card data of hundreds of thousands of its customers in an incident believed to have begun in June last year. The attack, apparently by the notorious cybercriminal group Magecart, only came to light in September—it’s believed that over 500,000 customers purchasing flights on the British Airways website and mobile application had their data stolen in the attack. Following an investigation, the ICO declared that customers’ personal data was compromised as a result of “poor security arrangements” by the airline. British Airways said it was “surprised and disappointed” by the fine and said there has been “no evidence of fraudulent activity on accounts linked to the theft”—but that hasn’t prevented the ICO from making plans to issue the record penalty. British Airways is appealing against the prospect of the fine, but as it stands, the £183m figure is four times the size of the previous largest fine—that €50m penalty was issued to Google by the French data protection authority for a lack of transparency in its advertising. The £183m figure also eclipses the ICO’s previous biggest fine of £500,000, which it issued to Facebook for its role in the Cambridge Analytica scandal. The move by the ICO is a significant milestone, not just because the planned fine is so much larger than others, but also because it represents the first major penalty notice issued on a wide-scale cyberattack that affected a multinational organization and hundreds of thousands of its customers. The ICO has yet to release its full report on why it has issued such a large fine, but it’s likely the way in which this incident was so high-profile, and impacted so many people, has played some role in the decision. By announcing plans to issue such a large fine, the ICO is also sending a message—not only to British Airways, but to other organizations—that GDPR is here and is a force to be reckoned with. Under GDPR, they’re already obligated for this to be the case, but the sheer scale of the proposed fine is undoubtedly going to act as a wake-up call for many companies. It’s worth remembering that GDPR isn’t designed to exist as a bogeyman for catching organizations out, it’s there to ensure that data protection is taken seriously. It’s entirely possible for an organization to fall victim to a data breach and not receive a fine—so long as protection authorities and customers are informed of the breach within 72 hours of it coming to light and that the organization is found to have done all it can to protect against and mediate the breach. It’s also worth noting that, while huge, the ICO’s intended fine isn’t the maximum. For British Airways, the potential fine amounts to 1.5% of its annual turnover in 2017, under half of the maximum GDPR penalty of 4% of annual turnover. If the ICO had deemed it appropriate, it could have issued a fine of over £450m. British Airways has 28 days to appeal against the decision—and parent company International Airlines Group intends to do so.
Many companies will be stunned to see such a potentially huge fine being issued so soon after the arrival of GDPR. But to ensure that they don’t risk similar fines, organizations should look at their cybersecurity and data protection policies and ensure they are as strong as possible, sooner rather than later.
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This information has been prepared by Validity Screening Solutions for informational purposes only and is not legal advice. The content is intended for general information purposes only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have.