Have background checks for job candidates gone too far?

McClatchy NewspapersMarch 20, 2012 

WASHINGTON — Justin D'Heilly never saw it coming.

He was working as a Domino's Pizza delivery driver in St. Paul, Minn., in 2009 when he pulled over to take a call from his manager, who told D'Heilly he could no longer drive for the company.

A background check had found some problems with his motor vehicle history, but D'Heilly wasn't told exactly what the trouble was, nor was he given a copy of the damning report.

When he checked with police to see if his license had been revoked, D'Heilly learned that it was valid and that he had only a couple of speeding tickets. He was fired the following month.

"They never officially told me why," D'Heilly said. "I just kind of faded away from them, I guess. ... I've always been a good employee there. I've never had any kind of disciplinary problems whatsoever, so to get that call out of the blue like that, you know, it just threw me off."

D'Heilly is now a named plaintiff in a budding class-action lawsuit that claims Domino's willfully violated the Fair Credit Reporting Act by running employee background reports without proper authorization and by not sharing the reports with applicants and employees before taking adverse job actions against them, like termination or denial of employment.

Domino's has denied the allegations in court filings. Company spokesman Tim McIntyre wouldn't comment on the case, but in an e-mail response, he was clear: "We do not apologize for conducting criminal background checks."

With more than four unemployed workers per opening, the job search has become a contact sport following the Great Recession. The buyer's market for labor has employers relying on criminal and credit background reports to help thin the applicant pool and avoid potential lawsuits for negligent hiring.

A recent survey found that more than 90 percent of employers run criminal checks on job applicants, while 60 percent sometimes screen for credit, depending on the position. Black marks on either report can prove fatal for the estimated 65 million U.S. adults with criminal records and the 25 percent of whites, 33 percent of Hispanics and 50 percent of African Americans thought to have bad credit.

Identifying potential hires who could pose a threat to a company's assets or the safety of its workers and customers is a huge responsibility with serious legal ramifications, so consumer background reports are invaluable in helping employers gauge the trustworthiness, judgment, reliability and competence of new employees.

But at a time when jobs are scarce and 5.4 million have been unemployed for more than six months, a robust discussion is brewing among lawmakers, employers and regulators who are re-examining the way that negative background information is used.

Millions who lost jobs through no fault of their own in the Great Recession were left unable to pay their bills, which has hurt their credit standing and made it even harder for them to find work.

And adults with minor or even "stale" criminal convictions, that date back 20 or more years, can still have trouble finding work even if they've kept their records clean since their conviction. Researchers in 2009 found that a criminal record cut chances for a job callback or job offer by nearly 50 percent.

Sharon Dietrich, a legal aid attorney in Philadelphia who represents mainly poor blacks in employment discrimination cases, said, "It's the single biggest reason (her clients) can't get jobs."

These kinds of issues have prompted more states to restrict employer use of credit background checks, while a national "ban the box" movement has led growing numbers of states, cities and counties to eliminate the question about a person's criminal history from initial applications for government jobs.

The U.S. Equal Employment Opportunity Commission, which enforces federal civil rights law in the area of fair employment practices, is also addressing the issue. For the first time in 25 years, the commission is revising its guidance to employers on how to properly evaluate criminal records in pre-employment screening.

That prospect, and the commission's stepped-up investigation of job-screening policies that disproportionately hurt minorities, has employers wondering whether new EEOC guidelines will make criminal background checks even more complicated to use and harder to defend in court.

Employers have a tough enough time trying to protect company interests and give former offenders a second chance without new commission guidelines making it even tougher, said Richard Mellor, vice president for loss prevention at the National Retail Federation.

"We do want to give second chances," Mellor said. "We've all made mistakes in our lives and people deserve an opportunity to improve and to become employed." New EEOC guidelines "could be a real good thing," he added, but new federal "restrictions that prohibit or impede us from (doing) the responsible thing are not."

The new EEOC guidelines will not affect the use of credit checks. But last year researchers at three universities found no connection between a person's poor credit history and their likelihood of behaving badly in the workplace. That gave credence to what many consumer advocates had long believed — that individual credit ratings have little, if any, predictive value about future job performance.

That belief has prompted seven states to limit credit background checks only to positions for which the information is pertinent. In January, California became the latest state to do so, joining Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington. Similar legislation passed the Colorado state senate last month.

At least 31 cities and counties and a handful of states — including California, Connecticut, New Mexico, Massachusetts and Minnesota — have deferred criminal-background checks until later stages of the interview process for most government jobs. Doing so removes the "box" on employment applications that ask about a candidate's criminal past and allows employers to evaluate the candidate's skills and experience first.

Dietrich said these developments are heartening.

"More and more people are coming to understand that large segments of our population are being rendered unemployable unnecessarily because of employers that simply say, 'You have something on your record. I don't want you working for me,'" Dietrich said.

But attorney Don Livingston, who represents companies in civil rights and employment discrimination cases, said it's very difficult for employers "to make a judgment about whether someone is a former offender or is in the middle of their criminal career."

The EEOC enforces Title VII of the Civil Rights Act of 1964, which bars employers from using job-screening standards that have a disparate racial impact. So denying jobs solely on the basis of criminal convictions is illegal because it would disproportionately affect African Americans and Hispanics, who have higher rates of criminal convictions. The same is true for rejecting applicants solely for poor credit histories, which would disproportionately affect African Americans, Hispanics and women.

For these job denials to pass EEOC muster, the rationale must be "job related and consistent with business necessity," according to EEOC guidelines. This means the employer must show that it considered three factors: the nature and gravity of the offense, the amount of time since the conviction and the relevance of the offense to the type of job being sought.

That standard has stood for 25 years. But a 2007 U.S. appeals court ruling found legal shortcomings in the EEOC guidelines, including their failure to address "whether an employer justifiably can decide that certain offenses are serious enough to warrant a lifetime (employment) ban."

EEOC Commissioner Victoria Lipnic said the appeals court case "is figuring fairly prominently in our discussions at the commission about what to do in revising our guidance."

So is the easier access that employers have to all sorts of personal information. That explosion of data has prompted "the idea, or the notion, that employers are perhaps using (job-screening criteria that has a disparate impact) maybe more than they have in the past. Whether or not that is true," Lipnic said.

Last year, the National Employment Law Project reviewed online job postings on Craigslist and found many that appear to ban all applicants with a criminal history. Several ads read "No Exceptions! ... No misdemeanors and/or Felonies of any type ever in background" and "Do not apply with any misdemeanors/felonies."

Mellor, of the National Retail Federation, disputed the findings, saying a past conviction is not a deal breaker in the job hunt.

"I've not worked for a company that has had such a stern posture nor do I know of one, off the top of my head, that simply denies employment based on the fact that you've had criminal activity in your past," Mellor said.

Based on his experience, Mellor said most companies focus on a five- to seven-year window for convictions, so that offenses more than 10 years old are "almost under the radar screen" for prospective employers. What's most important, Mellor said, is "whether or not the criminal offense affects a person's ability to perform a job up to the employer's standards."

The stakes for getting it right are high. Employers are vulnerable to lawsuits for negligent hiring when workers with criminal histories commit acts of violence on the job. By one estimate, companies lose 72 percent of lawsuits alleging negligence or a lack of due diligence in hiring decisions.

And if an employee with a troubled financial history ends up stealing from the company, committing fraud or some other financial misdeed, the company's reputation could suffer as well.

In New York City, a 67-year-old bookkeeper for the Roman Catholic Archdiocese of New York was recently charged with stealing more than $1 million over seven years after she was hired in 2003 without a background check that would have shown a prior conviction for grand larceny.

In Charlotte, N.C., convicted felon Mark Anthony Cox was recently charged with robbery and two counts of murder for killing the pregnant manager of the restaurant where he worked and the woman's unborn child. Cox had recently been released from prison for robbing the last restaurant he worked at, but his new employer did no criminal background check before Cox was hired.

Consumer law attorney Len Bennett of Newport News, Va., said criminal background checks are no panacea.

"I would suggest that at least one-third of criminal background checks will have materially inaccurate information in them, and I've reviewed thousands," Bennett said.

Common mistakes include multiple reports of a single offense, the inclusion of convictions and arrests that were legally expunged, and even the inclusion of another person's criminal offenses.

Third-party background screeners hired by employers give job applicants the opportunity to contest and correct any misinformation in their reports, said Theresa Preg, chair of the National Association of Professional Background Screeners.

But as Justin D'Heilly's case against Domino's alleges, companies may not always follow the law and share the reports with job seekers or employees before they take adverse action based on a negative report.

After agreeing to take an administrative position with a utility company in 2007, Deborah Adams of West Hartford, Conn., gave her former employer two weeks notice of her intent to resign. But before she could start her new job, an employee background check claimed she had been convicted of crimes in Virginia.

But the Virginia crimes were committed by a different woman who had a similar name and the same birthdate as Adams, albeit a different Social Security number.

It was the second time the Virginia woman's criminal record had been mistakenly linked to Adams during a job search. In 2006, Adams was able to fix the mistake before it cost her. This time she wasn't so fortunate.

Before the mix-up could be corrected, Adams' new position was offered to someone else. Unable to get her old job back, Adams ended up losing out on two jobs because of the mistake. Unable to pay her bills, she later lost her apartment and her car was repossessed. Depression, anxiety and anger followed.

"It was a dark period," Adams recalled. "I kept thinking, 'Where am I going to find another job?' I'm still emotionally distraught, so I'm really not fit to go on interviews. I'm not positive. I'm negative. I'm very angry, depressed, crying all night and day, like, 'How did this happen? What am I going to do?' ... It seems like everybody wants you when you're employed, but if you're not employed, forget about it."

In her lawsuit against the screening company and the staffing company that hired them, Adams sought damages for alleged willful violations of the Fair Credit Reporting Act. She said the companies failed to ensure that the information was accurate and that they didn't notify her that a negative report was being produced and forwarded to the employer.

In the end, Adams lost at trial and received no punitive damages. After receiving a complex 14-page set of instructions for deliberations, the jury determined that the background report included inaccurate information.

But the violation did not result from "willful" or "negligent" non-compliance with the law, which is required in order to receive damages. Adams would later appeal the decision before ultimately reaching an undisclosed financial settlement with both companies.

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