Bills Proposing Background Checks for Ride-Sharing Companies

On March 19th, the New Jersey Assembly Transportation and Independent Authorities Committee held a hearing on A. 3765, which would require background checks for ride-sharing companies. A similar bill is pending in California, AB 24. Under the New Jersey bill, ride-sharing companies would be required to conduct, “either directly or by a third party, a criminal history record background check on an applicant” and conduct subsequent background checks every three years. Companies would also be required to conduct a driver’s license record check. The bill would expressly prohibit the employment of drivers who have been convicted of certain crimes.

Uber logoOn March 18th, Uber Technologies, Inc. (Uber) responded, stating that “the bill…would drive Uber out of New Jersey.

 

The California bill is similar to the New Jersey bill; however, the California bill would “require a driver…to submit to the [state’s] Department of Justice fingerprint images and related information for the purpose of obtaining information as to the existence and content of state convictions and state arrests.” The bill would also subject drivers to mandatory drug and alcohol testing.

 

New Jersey Bill:

http://www.njleg.state.nj.us/2014/Bills/A4000/3765_U1.HTM

 

California Bill:

http://www.leginfo.ca.gov/pub/15-16/bill/asm/ab_0001-0050/ab_24_bill_20150316_amended_asm_v98.pdf

 

Uber Statement:

http://www.nj.com/politics/index.ssf/2015/03/fighting_nj_taxi_industry_over_regulation_uber_tak.html

 

PART 1 OF SERIES: Selecting a Background Screening Company: Prevent Costly Litigation

Infographic  Small for White Paper 2015

The pace of Class Action litigation is accelerating!  A quick survey of litigation activity since 2004 for just four of the largest companies in the background industry reveals 127 cases related to allegations of FCRA violations; 113 of those cases have been initiated since 2010!  Of those 127 cases, 86 named only the background screening company, 14 named only the employer, and 27 named both employer and CRA. Perhaps most concerning, 52 were certified Class Actions!  Of course, all 127 involved at least one applicant and were the result of perceived or actual poor applicant experiences serious enough to involve the courts.  To date, only 3 cases have been dismissed and 77 have been settled, some for several million dollars, most for undisclosed amounts, but at least two of them for over $20 million each.  (Take a moment to let that number sink in.) The litigation continues in 48 cases.  There have also been fines issued concomitantly by the FTC. (See table below)

Within the FCRA, there are two specific provisions dealing with accuracy of information.  Section §1681e(b) requires that CRAs follow procedures to assure maximum accuracy of information, and section 1681k(a)(2) requires that CRA assure information is complete and up to date at the time it is reported.  The “Accuracy” row of the table below tallies those suits that allege violations of one or both of those specific FCRA sections.  It should be clear that the vast majority of cases in which the CRA alone or the CRA and employer are named parties, include allegations regarding the lack of quality reporting.  That fact by itself is highly suggestive of the impact of the low cost segment of the industry.

In addition to FCRA sections relating to accuracy that may lead to law suits, there are various sections requiring consumer notifications.  Often, as is the case with the Disclosure form, notice of investigative consumer report, the pre-adverse and adverse letters, and the timing of the notices are specifically prescribed, as well as the general content and presentation, but the specific wording is left to the end user or CRA.  In the case of the Summary of Rights, the timing, actual wording, and even font size are specified and required.  The direction with respect to notices in the FCRA is clear.  Further, CRAs are required under the FCRA to educate end users of their responsibilities under the law and to obtain written certification that they will comply.  One would hope that with such clear direction and required education there would be full compliance with those FCRA sections requiring notices, but as the table illustrates, that is not the case.  Since 2004, 68 of the 127 suits have related to notices, 61 of those since 2010!  This apparent lack of compliance suggests one of the following conditions: 1) The CRAs failed in their duty to present notices or to educate employers; 2) The employers simply failed to heed the education advice; 3) The CRAs failed to provide sufficient tools to present or trigger requisite notices; or 4) The employers felt they could provide those notices better or at a lower cost and failed to do so consistently or at all.  All but the second condition suggest that in today’s litigious climate there is a very high cost to accepting the lowest cost solutions.

Recognizing that allegations are not always facts and that settlements are often expedient and not admissions of wrongdoing, there are common industry practices that can lead to litigation and an employer seeking a background screening company should specifically guard against such practices.

At CARCO, we know the law!  That is why CARCO has not been named in any Class Action lawsuits or regulatory complaints since its inception in 1977.  When choosing a background screening company, do your due diligence. ALWAYS choose the company that will keep you out of harm’s way.

 

Survey of Litigation Involving Four of the Larger Background Screening Companies

 

Company   1

Company   2

Company   3

Company   4

Totals

Since   2004

Since   2010

Since   2004

Since   2010

Since   2004

Since   2010

Since   2004

Since   2010

Since   2004

Since   2010

CRA

37

34

15

15

13

11

21

18

86

78

Employer

5

3

0

0

6

3

3

3

14

9

Both

8

7

3

3

7

7

9

9

27

26

Totals

50

44

18

18

26

20

33

30

127

113

Accuracy

35

33

15

15

16

15

27

25

93

88

Notices

18

14

10

10

17

14

23

23

68

61

 

 

 

 

 

Note that the sum of cases involving allegations of “Accuracy” and “Notices” are greater than the total of cases because the cases contained multiple allegations.

REMINDER : New Jersey Ban the Box Law Took Effect on March 1, 2015

bantheboxAs a reminder to New Jersey employers, the New Jersey Opportunity to Compete Act, which took effect March 1, forbids employers – both public and private –  with 15 or more employees from asking job applicants about criminal histories on job applications and during initial interviews.  Employers should objectively evaluate prospective employees before delving into – and potentially being negatively swayed by – their possible criminal histories.  Background checks can be conducted after the initial interview.

The law has some exemptions, such as emergency services and law enforcement occupations.