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C o v e r P a c k a g ePRE-EMPLOYiVIENT SCREENiNG

C L O S E - U PO NU s e o f c r im i n a l r e c o r d sa n d c r e d i t h i s t o r i e s

i n h i r i n g d e c i s i o n sIs c o m i n g s q u a r e lyu n d e r t h e l e g i s l a t i v ea n d p o l i c y - m a k i n gm i c r o s c o p e .

By Bill Roberts

E mploy ers face a thicket of state and federal law s that govern pre-employm ent backgrou nd screening. Now , these laws are in fluxbecause legislators and policy enforcers are scrutinizing the useof criminal records and credit histories in hiring decisions.

W ith a law that took effect Ja n, 1, Illinois becam e the fourth state torestrict the use of credit histories in hiring decisions. Sim ilar m easure shave been narrowly defeated in other jurisdictions, and the previousU , S , Congress introduced a bill on the subject but did not vote on it.

In November 2010, Massachusetts became the second state, afterHaw aii , to prohibit pr ivate employers f rom asking job applicantsabout their criminal records on initial written ap plications, M assachu-setts already prohibited the question on public-sector job applications,as do several other states and more th an tw o dozen cities and counties.Th e laws and policies require employers to wait until later in the hiringprocess to ask applicants about their criminal records.

These exam ples do not constitute a complete list, and the scrutinyis not likely to subside. Behind the debates lie two fund amen tal valuesthat often conflict:T h e author, technology contributing editorr HR Magazine, is a reelancewriter

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C o v e r P a c k a g eP R E - E M P L O Y M E N T S C R E E N IN G

Em ployers' rights to main tain safe workplaces and to conductbusiness without interference.

Individ ual rights to privacy and to fair treatm ent in the jobmarket.In this uncerta in environment, the best way to avoid legal

problems is to mind your p's and q'sthe practices you followand the q uestions you ask when u sing criminal records and credithistories in hiring decisions.P e r c e p t i o n s A b o u t C r e d i t R e p o r t sEmployers com monly use pre-employment screening tools, sopolicy-makers were bound to get involvedespecially giventhe pressures they face from constituents w ho express concernsabout:

Privacy and identity theft. A proliferation of databases, which are not always up-to-da Incomplete or inaccurate courthou se records. ITie difficulty job hunters have in a weak eco nom y. Every one getting a fair shake .

The pressures are inf la ted by the Internet, where rumoabound about how credit histor ies are being usedand miusedin hir ing decisions. In the past decade, employers havincreased their use of all types of background checking, butrecent Society for Human Resource Management (SHRM) poshow s that the use of credit reports has not increased in the pafive years. Contrary to public perception, exaggerated by misiformation on the Internet, credit histories are mostly used spaingly, legally and wisely in hiring decisions. >

Improve Pract ices for Check ing Cr imina l Records and Cred i t H is tor iesEach city department in Boston conductedi ts own cr iminal background checks unt i l2002. Reacting to concerns about unfairpract ices, the city's HR professionals inves-t igated and found l i t t le consistency amongdepartments.

"With approval of the mayor, we em-barked on a path to central ize the funct ionfor cr iminal background checks, " says Bi l lKessler, assistant director of HR. "We putthrough a consistent policy. We now do itfor al l departments with the exception ofthe police, who handle their own. Our off icereviews the record and determines if therewould be a problem to proceed wi th h i r ing."

Pract ices now include the fol lowing: The applicat ion does not ask questions

about convict ions. Hiring mana gers do not cond uct a back -ground check unti l they are ready tomake an offer.

Most, but not al l , jobs require checks. A crimina l record does not automatical ly

preclude empioyment . I f a criminal record is foun d, an HR pro-

fessional talks to the candidate to makesure i t is accurate.

The HR professional decides if the candi-date is st i l l f i t for the job.

The hiring manag er gets a thum bs up orthumbs down and is not pr ivy to what 'sin the record.

"We try to be very sensit ive with the kindof checking we do," Kessler says.

Employers conduct p re -employmentcr iminal background checks to guaranteesafe workplaces and to avoid negligent hir-ing lawsuits. But i f employers aren't careful,they can attract attent ion from the U.S.Equal Empioyment Opportunity Commission(EEOC) and state attorneys gene ral.

"The integrity of the process matters,"explains Mary Bryan, vice president of HRfield operat ions for Off iceMax inc.

Procedural consistency is importantthroughout the organizat ion, and cr i ter iaconsistency Is important within job groups."Not al l janitors are background screenedthe way you screen accountants, but jan i -tors should be screened consistent ly withjanitors," explains Lester S. Rosen, chiefexecutive officer of ESR Inc.

HR professionals for the city of Aust in,Texas, review job groups once a year tomake sure they apply the right criminalcheck criterion. There's a higher standardfor employees working wi th the elder ly,youth, people with disabil i t ies or f inancesthan for employees working on a main-tenance crew, says Mark Washington, HRdirector.

"Employers get in trouble when they en -gage in automated decision -making , " Rosensays. "There always should be a human

review to make sure you're making the r ightdecision."

Many employers outsource backgroundscreening. I f chosen wisely, a partner wil lhelp establ ish protocols and consistentpract ices, and help el iminate inappropriateuse of resuits.

"By consol idat ing wi th one vendor, wegot consistency in what we backgroundchecked for," says Larry Fultz, chief HRoff icer at Vanguard Health Systems in Nash-vi l le, which has 17 hospitals and 35,000employees.

Before acquiring a partner, be sure toknow "the vendor 's abi l i ty to maintain com-pliance with the Fair Credit Report ing Act,"Bryan recommends.

The act spells out procedures for con-duct ing credi t checks and l imi ts on informa-t ion that can be reported by a screeningcompany. Many people don' t know that theact a lso covers cr iminal background checks,Rosen says. The act is specif ic about theprocedures an employer must fo l low i fdenia l of employment resul ts f rom a check.

Rosen says a good b ackgrou nd-scre eningpartner makes sure the employer is in com-pliance with the act and other laws, abidesby adverse act ion rules, conducts consistentchecks within job groups, and fol lows EEOCguidelines for using criminal reports.

Bi l l Roberts

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C o v e r P a c k a g ePRE-EMPLOYMENT SCREENING

W ho Checks Cr im ina l Records?Does your organization, or an agency hired by your organization,conduct criminal background checks for any job candidates byreviewing tbe candidates' consumer reports?

All job candidates g n 73%Sele ct j ob ca n d i d a t e s ^ 1 9%

No, my organization does not conduct this | 7%type of background cbeck

Source: Background Checking: Conducting Criminal Background Checks. SHRM poll,January 2010 .

Who Checks Credi t Histor ies?All types of screening bave increased since tbe Sept. 11,2001,terrorist attacks. But based on an analysis comparing 2010 datavi/itti 2004 data. Society for Human Resource Management (SHRM)researchers concluded tbat tbe use of credit cbecks d id not increaseduring tbat period.Does your organization, or an agency bired by your organization,conduct credit background checks for any job candidates byreviewing tbe candidates' consumer reports?

All job candidates |No, my organization does not conduct tbis |

type of background checkSelectjob candidates* I

113%140%

1 4 7 %'Ttiose with financial responsibility, those applying tor senior executive positions or thosewith access to highly confidentiai employee information.Source: Th e Impiications of Credit Background Ctwcks on Hiring Decisions. SHRM poll,August 2010.

"The percep t ion tha t employers a re o rder ing mass iveamounts of credit reports is nothing like the truth," says LesterS. Rosen, chief executive officer of ESR Inc., a background-screening company in Nova to, Calif, and author of The Safe Hi r -in g Manual (Facts on Dem and Press, 2007).

Nonetheless, employers ' use of credit reports has com e u nderfire.

Hawaii, Illinois, Oregon and Washington have laws restrict-ing the use of credit reports in hiring decisions. Similar bills havebeen or are being considered in other jurisdictions. The Califor-nia legislature app roved a bill that was later vetoed by the gover-nor. Maryland legislators narrowly voted down a bill twice.

And the Equal Employment for All Act (H.R. 3149), intro-duced in the last Congress, would have amended the Fair CreditRepo rting Act of 1970 to further restrict the use of credit reports.The latter already mandates a clear process for checking credithistory that includes candidate authorization and other protec-tions. For instance, employers cannot use a numerical consum ercredit score in hiring decisions.Colleen Parker Denston expects the restrictive bill to be pro-

a small number of employers that do not follow the better pratices most employers u se when they check credit . As the legilative affairs director for SHRM's Maryland State Council, shhas testified at Maryland hearings and before a subcommittee ithe U.S. House of Representat ives , sum ming up the argumenoffered by opponents, including SHRM's lobbyists.A r e th e L a w s R e a l ly N e c e s s a r y ?Here's the gist ofthat argument: The Fair Credit Reporting Aadequately protects against inappropriate use of credit historieMost employers understand that only candidates for positionwith significant financial or fiduciary responsibility might neecredit checks, and many employers never check credit . Thosthat do usually wait until after a contingent job offer has beema de. Mo st discuss unfavorable reports with candidate s to checaccuracy and understand the context, and most discount defrom medical bills, student loans and foreclosures. Rarely credit history cause for denying employment.

Not every employer uses common sense with credit checkbut "the majority do the right thing," Denston insists.

She says only three of her school 's 120 full- and part-timjobs would require credit checksbusiness manager, businemanager's assistant and Denston's position. Even the headmater would be exempt because "the he adm aster has no fiduciarresponsibility," she explains.

For some occupat ions , credi t checks are required by s taagencies, bonding agencies or custom ers. Police recruiters typcally run them on everyone to ferret out candidates susceptiblto bribes.

But in places where one might assume they are used, theoften aren't . OfficeMax Inc., an office supplies retailer witabout 30,000 employees, conducts no credit checks, even thougthousands of i t s workers handle money, according to MarBryan, vice president of HR field operations.

Many other retailers similarly do not run credit checks. Evethough clerks handle a lot of money , they have to balance the casregisters at the end of each day, says Laura R anda zzo, chair the National A ssociation of Professional Background Screeners Morrisville, N.C ., and vice president of global services for Accurate Background Inc. in Lake Forest, Calif "I don't ha ve any clents in retail wh o do credit histories for store clerks," she notes.

Randazzo says 95 percent of her cl ients check criminarecords but less than 10 percent check credit.

At the U.S. House hearing, Denston says, supporters of H.R3149 were concerned about discrimination against minoritiewh o are mo re likely to have credit problems because of the recesion. She says secretarial positions also seemed to be a focus concern. Yet according to Denston, Randazzo and others, secrtaries rarely bec ome subjects of credit checks.

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We also need to look at all those who have stolen, em bezzledor committed fraud and see whether they had credit problems."The next step: Commissioners must decide whether to issuenew guidance on credit reporting, Berrien says.C r im i n a l R e c o r d s : W h a t to A s k , W h e nFederal and state officials want to know whether asking aboutcriminal history on job applicat ions has any discriminatoryeffect. Several public-sector employers think it does and have"banned the box," a reference to removing the check boxes onapplications tha t ask if the applicant has ever been arrested orconvicted of a crime.The city of Boston, with 17,000 employees, banned the boxin 2006. Its recruiter s do not check crim inal records for all jobs.'We are telling applicants criminal background doesn't mat-ter for large nu mb ers of jobs. So why ar e we still asking thequestion? " asks Bill Kessler, assistant director of HR. Kesslerconcluded that affirmative answers had "an effect on decision-making" too soon in the hiring process. He adds, "We don' twant a city that creates an underclass or keeps people out ofwork."

More than two dozen cities and counties and at least five.states have narrowed questions on their app lications to coveronly felony convictions or have stopped asking entirely about

employees, want to know early if there are felonies. "You can-not have a crime of theft or of abuse or violence, nor a drug-distribution type crime" to be considered for employment, saysJohn Higgins, S PHR , vice president of talent acqu isition.N e w R u le s , O l d R u le sPrivate employers in Massachusetts will need to change theirjob applicat ions. They must now comply with the sta te lawthat prohibits asking questions on an "initial written applica-tion form" about "criminal charges, arrests and incarceration."Lawyers o pine that questions w ould be allowed later in the pro-cess, but the law is not precise.The fact that Massachusetts and Hawaii have ban-the-boxlaws for the private sector and 48 states do not illustrates anoverarching problem: There is little consistency among statelaws for the use of criminal records and credit reports in hiring .This is one reason most m ultistate employers hire b ackground-screening partners. Walters says, "It is a full-time j o b to stay intune with legislation."

Maurice Emsellem, an at torney and policy co-director inthe Oakland, Calif., office of the National Employment LawProject, applauds the Massachu setts law. In addition to remov-ing the stigma of having a crim inal record, "it requires employ-ers to take a new look at their policies."

F e d e r a l a n d s t a t e o f f ic ia ls w a n t to k n o w w h e t h e r a s k i n g a b o u tc r im in a l h is to r y o n j o b a p p l ic a t io n s h a s a n y d i s c r i m i n a t o r y e f f e c t .

criminal history. Some, including Boston, apply the policy tocontractors.Th e ci ty coun cil of Au stin, Tex as, a c i ty with 12,000

employees, voted unanimously to ban the box in 2008 in sup-port of efforts to rehab ilitate 25,000 ex-felon residents. T he citywants every applicant on equal footing at the start of the hir-ing process. Austin does not check crim inal records for a l l jobs,and uses such checks only when the hiring manager is readyto make an offer. "Th ere was a desire to remove barriers thatwould prevent ex-offenders from reintegrating into the work-place," says Mark W ashington, HR director.Screening experts note that local governments bear thefinancial brunt for the failure to reintegrate ex-felons into soci-ety. "W ith 'ban the box', applicants can be considered w ithoutpre-judging," Rosen says. "From a government point of view,

it makes sense to get people back to work and to avoid the e xtracosts of social services. Private em ployers prefer t o ask upfront."For example, recruiters for Ceridian Corp. in Minneapo-

Emsellem says he encounters m any em ployers, especiallylarge companies, that fa i l to comply with the Fair CreditReporting Act, Title VII, and federal and state anti-discrimi-nation laws. "D on't have blanket policies that someo ne with afelony can't work," he advises.

In 2008, the EE OC filed a class-action suit against People-mark Inc. , an employment agency in Grand Rapids, Mich. ,alleging that it discriminated by refusing to hire any personwith a criminal record, thereby creating a disparate imp act onblack applicants. The case was voluntarily dismissed in 2010without explanation.In 2010, the New York attorney general's office settled outof court with Radio Shack regarding unlawful discrim inationagainst job applicants for rejecting employment applicationsand withdraw ing conditional offers based on criminal historieswithout considering several factors required under state law.Emsellem urges employers to pay attention to these cases and"take a new look at procedures to make sure they are fair and

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