Legal protections often lag behind technology, and nowhere is this more true than in the area of workplace privacy. Employers literally have the world at their fingertips, able to explore every aspect of a potential hire’s life history through internet searches and background checks. It’s not just HR departments one must worry about; the world wide web deputizes every line manager to dig around in a candidate’s social media and online profiles on Facebook, Instagram, and beyond.
Changes are coming, however. The law already imposes significant obligations on credit reporting and background check companies (and the employers who use them). For example, the Fair Credit Reporting Act (FCRA) requires companies to provide certain disclosures to job candidates before running a credit report, consumer report, or background check on them. Many employers do not understand that the term “consumer report” is extremely broad—covering not only traditional credit reports but also any written or oral communication of any information that bears on a person’s character, general reputation, or personal characteristics that is used as a factor in deciding a person’s eligibility for employment. The broad definition of consumer report may make it unlawful for an employer to use online sources of information to the extent they include personal data (including employment history) of a candidate. Currently, employers who violate the requirements of FCRA—for example, by failing to give proper notice to applicants or allow them to explain the adverse information before making a hiring decision—face significant penalties. And Congress is considering changes to FCRA that will expand worker protections by limiting the use of credit reports for employment decisions. For example, The Equal Employment for All Act of 2015 (H.R. 3524) would prohibit credit reporting agencies from providing consumer reports to an employer “if the employer seeks to use such information in a denial of employment.” As it stands, employers who use credit reporting and background checks in hiring decisions run the risk that the use of those hiring tools has an adverse impact on applicants of color in violation of state and federal anti-discrimination laws.
Now, local, state and federal agencies are setting their sights on the “box,” that pernicious question on job applications which asks whether the candidate has been arrested or convicted of a crime. According to the National Employment Law Project (NELP), 23 states already have removed criminal background questions from applications for state employment, and over 100 cities and counties have adopted “ban the box” laws that prohibit employers from considering a candidate’s criminal history at the outset of the hiring process. Seven states have similar laws governing private employers, and California may soon be joining them. For example, the San Francisco Bar Association has proposed a resolution extending the California Labor Code’s “Ban the Box” Act protection to the private sector. Should the Conference of California Bar Associations adopt the resolution, Sacramento may soon see a new “Ban the Box” bill. Further, just two weeks ago, President Obama, a longtime supporter of “ban the box,” signed a memorandum proposing a rule to bar U.S. government agencies from asking about criminal history information until the end of the hiring process.
The trend line is clear: the end of the “box” is coming. Employers that use criminal history and credit reporting information to make hiring decisions do so at great risk, and must comply with the letter of numerous laws restricting and regulating the use of such information. Employees denied employment because of the improper use of credit reporting and background check data may be owed significant penalties under a host of state, federal and local laws. Increasingly, employers had better be careful what they ask (and search) for.