Target Eliminates use of "Check the Box" in Relation to Job Applications and Criminal Background Checks

Checklist.jpgJob applications commonly have a question in the form of checking a box to indicate whether an applicant has a criminal record. If the applicant checks “yes,” the applicant is asked to explain the circumstances.

In reality, however, checking the box ends the employment opportunity for the applicant because it is likely that a prospective employer will deny the applicant employment even with a compelling explanation for the criminal record. For this reason, there has been a push to eliminate the question, which have been commonly referred to as "Ban the Box."

Target ends its use of "Check the Box"  

Target is ending on a national basis its use of its standard form question that asks if a job applicant has a criminal history. This move is in response to a Minnesota law passed enacted earlier in 2013 that requires private employers in Minnesota to remove the criminal history question off applications by the end of the year. However, Minnesota NPR reported that Target is voluntarily expanding that approach for all U.S. applicants.

Michigan and Criminal Background Checks

For Michigan employers, there are restrictions concerning what criminal background information about an applicant may be asked for in the employment application process. For example, under Michigan’s civil rights statute (the Elliott-Larsen Civil Rights Act also called the “ELCRA”) an employer cannot in connection with an application for employment or with the terms, conditions, or privileges of employment make a “request, make, or maintain a record of information regarding a misdemeanor arrest, detention, or disposition where a conviction did not result.” MCL 37.2205a(1).

In addition to Michigan or other state law, the Equal Employment Opportunity Commission (the federal agency responsible for carrying out most federal employment-related employment laws) issued guidance in April 2012 about the use of criminal background checks in employment applications. And failing to comply with the EEOC's guidance has resulted in significant monetary settlements; Pepsi previously agreed to settle with the EEOC for over $3 million for running afoul of the EEOC's policy. This guidance, however, has not been well-received by federal courts in addressing employment discrimination claims relating to criminal background inquiries.

Closing Thoughts on Criminal Background Checks

For these reasons and because of the dynamic and sometimes conflicting results reached by different courts, employers who are considering implementing a criminal background check policy should discuss the proposed policy with an experienced employment attorney to ensure compliance with federal and state law. And for more information on what may or may not be lawfully asked of job applicants, see our prior post Can An Employer Ask a Job Applicant ... The Nuts & Bolts of Legal Pre-employment Inquiries.

Feel free to contact Jason Shinn, a Michigan employment attorney who regularly addresses complying with federal and Michigan employment legal issues and litigating these issues in state and federal courts. 

Pre-Employment Criminal Background Checks: Learning from Pepsi's $3,000,000 Mistake

Pepsi.jpgOn January 11, 2012, the Equal Employment Opportunity Commission (EEOC) reported that Pepsi Beverages agreed to pay $3.13 million and provide job offers and training to resolve a charge of race discrimination. This EEOC charge is a reminder that employers considering or presently using criminal background checks in hiring must tailor the program to meet 

The EEOC Investigation

The EEOC’s investigation determined that there was reasonable cause to believe that the criminal background check policy formerly used by Pepsi discriminated against African Americans in violation of Title VII of the Civil Rights Act of 1964. 

Specifically, that investigation revealed that more than 300 African Americans were adversely affected when Pepsi applied a criminal background check policy that disproportionately excluded black applicants from permanent employment. 

Two aspects of Pepsi’s criminal background check policy were particularly damning:

  • Job applicants who had been arrested pending prosecution were not hired for a permanent job even if they had never been convicted of any offense; and 
  • Pepsi’s former policy denied employment to applicants from employment who had been arrested or convicted of certain minor offenses.

The EEOC's Policy on Using Arrest and Conviction Records in Hiring Decisions

The EEOC has long standing guidance and policy statements on the use of arrest and conviction records in employment. In fact, the EEOC issued its first written policy guidance regarding the use of arrest and conviction records in employment in the 1980s. There are also additional restrictions and requirements that employers using criminal background checks must comply with. See What Employers and Employees Should Understand About Conducting Background Checks.  

The Take Away for Employers

The use of arrest and conviction records to deny employment can be illegal under Title VII of the Civil Rights Act of 1964 if it is not relevant for the job. This is because the EEOC has determined that these arrest and conviction records can limit the employment opportunities of applicants or workers based on their race or ethnicity.

It is, therefore, important for employers to examine or re-examine their criminal background check policy to confirm the policy does not create an adverse impact based on race in violation of Title VII and the EEOC’s prohibitions against unwarranted roadblocks to employment.

Specific points under a criminal background check policy that employers should evaluate include the following:   

  • The nature and severity of the offense;
  • The time that has passed since the conviction or completion of the sentence; and
  • The nature of the job sought in order to be sure that the exclusion is important for the particular position.  

For more information about the use of criminal background checks in pre-employment inquiries see the EEOC's Pre-Employment Inquiries and Arrest & Conviction guidelines or contact Jason Shinn.    

Can An Employer Ask a Job Applicant ... The Nuts & Bolts of Legal Preemployment Inquiries

Nuts & Bolts.jpegEmployers, HR professionals, and job applicants generally understand that there are questions that can be asked during the interview process and there are questions that cannot be asked because they violate state and federal employment statutes.

For example, under Michigan law, an employer may not “use a written or oral inquiry or form of application that elicits or attempts to elicit information concerning the religion, race, color, national origin, age, sex, height, weight, or marital status of a prospective employee.” MCL 37.2206.

While there is not a specific Federal law imposing such inquiries, certain inquiries may create an inference of unlawful discrimination if the employer cannot demonstrate a legitimate, nondiscriminatory reason for each challenged inquiry.

Preemployment Questions Do's and Don'ts

The following guide is intended to assist employers and employees in understanding what is a potentially discriminatory or otherwise an unlawful inquiry in the hiring process. This guide, however, is not a substitute for an attorney’s independent judgment and analysis:

  • Age: An applicant may lawfully be asked whether he or she is 18 years of age or older but only for the purpose of determining if the individual is of legal age for employment. It is, however, unlawful to ask the applicant’s age or date of birth because of age discrimination concerns. In this regard, problems may arise when an employer requires that an applicant produce a driver’s license because it discloses the date of birth and may reveal the race of the applicant). To avoid these issues, employers should make an offer of employment before making a copy of the applicant’s driver’s license. If driving is as a qualification for the position, the offer of employment should be contingent upon an applicant producing a valid drivers license.
  • Arrests and Convictions: An employer may lawfully ask if: (i) The applicant has ever been convicted of a crime (misdemeanor or felony). If so, the employer may ask when, where, and the nature of the offense; (ii) The applicant has ever been arrested for or charged with a felony; and (iii) There are any felony charges currently pending against the applicant. It is unlawful for all employers except law enforcement agencies to inquire regarding misdemeanor arrests that did not result in conviction.
  • Birthplace: Employers cannot lawfully ask (i) The birthplace of an applicant or (ii) The birthplace of an applicant’s parents, spouse, or other relatives; (iii) The applicant to produce a birth certificate, naturalization papers, or baptismal record.
  • Citizenship: An applicant may lawfully be asked if he or she is authorized to work in the U.S. But unless asked as part of the federal I-9 process to ensure that an illegal alien is not being hired, it is unlawful to ask (i) The applicant’s country of citizenship; (ii) If the applicant is a naturalized or native-born citizen; (iii) The date when the applicant acquired citizenship, or (iv) If the applicant’s parents or spouse acquired citizenship. A request for this information must be made after a conditional offer of employment has been made. The Immigration and Naturalization Service provides information for employers that lists the documents employers may review for I-9 purposes. It is also lawful to ask about languages the applicant speaks and writes fluently.
  • Disability: Employers may lawfully ask if an applicant is able to perform the essential duties of the job, with or without accommodation. It is, however, unlawful for employers to ask questions about an applicant's physical or mental condition if that condition is not directly related to the requirements of the specific job or if the answers are used to make employment decisions in violation of the Americans with Disabilities Act (ADA) or Michigan's corresponding statute, Persons with Disabilities Civil Rights Act (PDCRA). 
  • Education: While it is certainly lawful and appropriate to ask about an applicant’s academic, vocational, or professional education and the public or private schools the applicant attended, employers should be careful about asking for dates of attendance of high school or college because such information may implicate an applicant’s age.
  • Genetic information: Under both Michigan and federal law (Genetic Information Nondiscrimination Act of 2008, also called "GINA"), it is unlawful to ask about an applicant’s genetic information or to require the applicant to submit to a genetic test or to provide genetic information. Michigan law also makes it unlawful to acquire, directly or indirectly, any genetic information concerning an applicant or the applicant’s family. See MCL 37.1201(d), (e), and MCL 37.1202(1). GINA also prohibits employers from failing or refusing to hire any employee because of genetic information with respect to the employee. 42 USC 2000ff-1(a)(1). 
  • Height/Weight: Under both Michigan and federal law, it is unlawful to inquire about the applicant’s height or weight.
  • Marital status and children: Employers cannot lawfully (i) Require an applicant to provide any information regarding marital status or children; (ii) Ask if the applicant is single or married; (iii) Ask for the name of the applicant’s spouse; (iv) Ask if the applicant’s spouse is employed; (iv) Ask if an applicant has children. Employers may, however, lawfully ask if the company employs the applicant’s spouse.
  • Name: Employers cannot lawfully ask an applicant for their original name if it has been changed by court order or the applicant’s maiden name.
  • National origin: It is lawful to inquire into languages the applicant speaks and writes fluently. It is, however, unlawful to inquire into (i) The applicant’s lineage, ancestry, national origin, descent, parentage, or nationality unless pursuant to the federal I-9 process referenced above; (ii) The nationality of the applicant’s parents or spouse; or (iii) How the applicant acquired the ability to read, write, or speak a foreign language.
  • Photograph: Employers cannot lawfully require an applicant to submit a photograph before making an offer of employment.
  • Race or color: Employers cannot lawfully inquire as to the applicant’s complexion or skin color.
  • Religion or creed: Employers cannot lawfully inquire into an applicant’s religious denomination, religious affiliations, and religious beliefs. It is also unlawful to ask what church or parish an applicant attends, who the applicant’s religious or spiritual leader is, or what religious holidays the applicant observes. 

Aside from these areas of restrictions, employers should be mindful that where a discrimination claim is made, the employer will generally have the burden of proof to demonstrate that information sought during preemployment interviews was necessary for legitimate business reasons and is not used to make discriminatory hiring decisions. While seeking such information to evaluate an applicant’s qualifications for employment does not guarantee an employer will not ever be charged with discrimination, making sure that all information sought is job-related will significant increase an employer's odds for successfully defending a discrimination claim.

Proposed Michigan Legislation Would Restrict Use of Credit Reports in Employment Decisions

Credit Reports.jpgConnecticut recently joined five other states that restrict the use of credit report information in employment decisions. These five other states are Maryland, Illinois, Oregon, Washington, and Hawaii. 

Proposed Michigan Legislation 

Michigan does not presently have similar legislation in place. But State Representative Jon M. Switalski is the primary sponsor of House Bill 4362 (PDF), which would create similar restrictions under the proposed Job Applicant Credit Privacy Act.   

This proposed act restricts employers from making hiring decisions based on a person's credit history. It would also prevent employers from inquiring about a job applicant’s credit history, unless good credit history is “an established bona fide occupational requirement of the particular position or employment classification.”

Further, employers cannot ask that individuals waive any right or protection under the proposed act.

A violation of the proposed act allows for the aggrieved individual to bring a civil suit for damages or injunctive relief. Additionally, the proposed act specifically requires a court to award costs and reasonable attorney fees to an individual who prevails as a plaintiff in a suit authorized by the act.

Intent Behind Proposed Job Applicant Privacy Act

Representative Switalski explained that the motivation behind the proposed bill as follows: 

Michigan residents shouldn't be punished and passed over for jobs because their credit rating has suffered during these tough economic times. A lot of good hard-working people have lost their jobs and are trying to get back on their feet. Many job seekers are behind on their bills because they lost their job, but they can’t get hired because they have a low credit rating – it’s a vicious cycle.

The Take Away for Employers 

We will continue to monitor this legislation and encourage you to subscribe to this blog for future updates on this and other employment law topics.

But in the meantime, it is important for employers to comply with existing statutory requirements that may come into play when a person's credit related information is used in employment decisions. Also, there are restrictions applicable to related information under the Bankruptcy Code that employers must also comply with when making employment decisions. 

Can an Employer Reject a Job Applicant Based on a Previous Bankruptcy?

Employee Screening.jpgEmployers commonly ask if it is legally permissible to use a job applicant's prior bankruptcy filing in making hiring decisions. A recent court opinion out of the Third Circuit (the federal circuit that covers Pennsylvania, Delaware, New Jersey) answers this question in favor of employers. But for employers in Michigan and outside of the jurisdiction of the Third Circuit, the answer is not so clear cut and there are also important limitations to using bankruptcy in hiring and firing decisions.

First for background purposes, under the Bankruptcy Code, 11 USC § 525(b), a private employer cannot "terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under ... the Bankruptcy Act ..."

The Third Circuit Court of Appeals, however, determined that despite the preceding statute, private employers may refuse to hire an applicant based upon a prior bankruptcy filing. Specifically, in Rea v. Federated Investors (3d Cir. Pa. 2010), the plaintiff, Dean Rea, appeared to have a job offer contingent upon a third-party background check. Rea, however, was later informed that the company refused to hire him because of his 2002 bankruptcy.

Takeaway for Employers

With respect to using an applicant's prior bankruptcy filing, there are a number of legal and business decisions employers should consider:

  • First, under 11 U.S.C. § 525(b), employers cannot discharge a current employee "solely" because that employee filed for bankruptcy.
  • Second, the Rea decision is not binding on courts outside of the Third Circuit. Michigan employers are within the jurisdiction of the Sixth Circuit Court of Appeals and a review of the case law did not reveal any decisions addressing the issue of whether private employers may refuse to hire a job applicant who has previously filed for bankruptcy.
  • Third, it is important to consider that filing bankruptcy or related credit problems may be completely unrelated to an applicant's decision making or integrity. For example, Katherine Shinn, a bankruptcy attorney explained that it is not uncommon for an individual to file for bankruptcy due to a catastrophic medical event, long term unemployment following a mass layoff, or other reasons unrelated to whether an individual is employable. In this regard, consider individual bankruptcy filings in the United States (both Chapter 7 and Chapter 13) increased from 797,783 in 2007 to 1,383,644 in 2009. This staggering increase certainly correlates to the equally significant job losses the U.S. experienced for that time-period.  
  • Fourth, and building upon the preceding, a default rule to exclude consideration of job applicants based solely upon a prior bankruptcy filing may not make business sense in the long run. Take for example that Abraham Lincoln, Walt Disney, and (the original Detroit import) Mr. Henry Ford all declared bankruptcy before achieving well-known success. No company would want to see in their rear-view mirror job applicants of this calibre passed up simply because of a rigidly applied bankruptcy exclusion rule.     

Certainly these are exceptional examples. But it can also be said that the increased bankruptcy filings have - in large part - occurred under exceptional circumstances. For these reasons, a more strategic course for employers is to continue to permissibly screen applicants to identify the best qualified candidates. As Steve Williams of Ecto HR explains "in conducting background checks for our clients we make it a point to give as a complete picture of a candidate as possible, including the circumstances of the bankruptcy filing." With this information, Mr. Williams notes that "employers are then able to make informed decisions as to a prospective hire." 

An important note about using third-party service providers to conduct background checks: Bankruptcy filings are often uncovered when an employer conducts a background check on a job applicant. For any employer using a third party service provider to obtain background reports on a job applicant, the Federal Fair Credit Reporting Act will come into play. This statute imposes a number of obligations on employers obtaining background reports (referred to as "consumer reports" under the statute). Such obligations include obtaining advance authorization from an applicant to conduct a background check and mailing an "adverse action" notice if a job applicant is rejected due, in whole or in part, to derogatory information contained in the background report. 

Failing to comply with this statute may expose the employer to civil and criminal liability in addition to punitive damages. It is, therefore, critical for employers to understand the requirements of this statute as well as their their third-party service providers actually conducting applicant background checks.