NEW White Paper: A Question of Credit: Proper Use of CREDIT REPORTS in Hiring

White Paper on Using Credit Reps for Hiring  Our clients often ask us how best to handle credit reports in employment decisions. Our response is “always handle with care!”  

Credit reporting is an established and respected feature of our daily commerce and has been used successfully when conducting background checks on prospective employees for job-related purposes. However, the political and social tolerance for the use of credit reports has changed dramatically since the recession of 2008.  And the question of job-relatedness is the most difficult question to address.

We know you have many questions on this subject.  With that in mind, we have created this new White Paper which explores the use of credit in employment decisions, what information is returned in a credit report, recommendations on the proper use of credit reports going forward, and guidance to avoid litigation traps.

Click here to read the White Paper

Philadelphia, PA Fair Practices Ordinance: Restricts use of credit history for employment

Law book  The Mayor of Philadelphia signed a bill restricting the use of an applicant or employee’s credit history for employment purposes. Philadelphia joins the growing list of jurisdictions that have enacted similar laws: California, Chicago, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, New York City, Oregon, Vermont, and Washington.  This legislation goes into effect on July 7, 2016.

According to the Ordinance:

Key Provisions

It shall be an unlawful discriminatory practice for an employer – both public and private – to procure, to seek a person’s cooperation or consent to procure, or to use credit information regarding an employee or applicant in connection with hiring, discharge, tenure, promotion, discipline, or consideration of any other term, condition or privilege of employment with respect to such employee or applicant. 

Exemptions:

  1.  any law enforcement agency or financial institution;
  2. the City of Philadelphia with respect to efforts to obtain information regarding taxes or other debts owed to the City;
  3. if such information must be obtained pursuant to state or federal law;
  4. if the job requires an employee to be bonded under City, state, or federal law;
  5. if the job is supervisory or managerial in nature and involves setting the direction or policies of a business or a division, unit or similar part of a business;
  6. if the job involves significant financial responsibility to the employer, including the authority to make payments, transfer money, collect debts, or enter into contracts, but not including handling transactions in a retail setting;
  7. if the job requires access to financial information pertaining to customers, other employees, or the employer, other than information customarily provided in a retail transaction; and
  8. if the job requires access to confidential or proprietary information that derives substantial value from secrecy.  

If an employer relies, in whole or in part, on credit information to consider adverse employment action with respect to any person, and exemption (4), (5), (6), (7) or (8) applies, the employer:

  1.  shall disclose the fact of such reliance to the person in writing and identify and provide the particular information upon which the employer relied; and
  2. give the employee or applicant an opportunity to explain the circumstances surrounding the information at issue before taking any such adverse action.

 Remedies

The ordinance provides aggrieved persons with the right to file a complaint with the Philadelphia Commission on Human Relations or, after timely exhausting administrative remedies, to pursue a private right of action to recover the full panoply of damages available under the Fair Practices Ordinance, which includes compensatory damages, attorney’s fees and punitive damages.

Next Steps

Employers in Philadelphia that use credit reports or other credit information for employment purposes should consult with their employment attorney to ensure compliance. Multi-state employers should review their practices to ensure that they comply with both this ordinance and the laws of the other jurisdictions that now regulate employers’ use of credit information.    

 

Worried About Employee Retention? Gallup Reports U.S. Employee Engagement Slips Below 33%!

employee engagement 2

A new Gallup poll for the month of May shows that 32.7% of U.S. workers are engaged in their jobs. The research shows that out of the remaining 67.3%, 50.9% are “not engaged” and 16.4% are “actively disengaged.” The May 2016 employee engagement average is based on Gallup Daily tracking interviews conducted with 7,327 U.S. adults working for an employer.

Despite dropping below 33.0%, the May employee engagement average remains higher than it was in 2015 and is in line with the generally stronger monthly averages Gallup has recorded over the past six months.

According to Gallup, organizations appear to be making incremental — but important — progress in employee engagement, pushing engagement closer to the rare 33.0% mark. Certain economic factors may also be influencing improvement in engagement levels.

Employee engagement and retention continue to be important issues for HR managers. In a recent SHRM poll, employees cited the following three top reasons they would look for a new job now that the job market has improved:

  • 53% seek better compensation and benefits.
  • 35% cited dissatisfaction with potential career development.
  • 32% said they were ready for a new experience.

Engagement and retention go hand-in-hand. In essence, if you treat your employees right, you will not lose them. It is important to engage them early on in the onboarding process, communicate goals, roles and responsibilities so they know what is expected, and recognize and celebrate success.

Connecticut Bans the Box for Private and Public Employers, Effective January 1, 2017

banthebox   On June 1, 2016, Connecticut Governor Dannel Malloy signed a Ban the Box Bill into law that will prohibit most employers in the state with one or more employees from requiring job seekers to disclose any criminal history such as prior arrests, criminal charges, or convictions on initial job applications. Employers still may make criminal background inquiries later in the hiring process, either during the interview process or contingent upon an offer.

The Connecticut Ban the Box law takes effect on January 1, 2017.

 The key provisions are as follows:

  • No employer shall inquire about a prospective employee’s prior arrests, criminal charges or convictions on an initial employment application, unless (1) the employer is required to do so by an applicable state or federal law, or (2) a security or fidelity bond or an equivalent bond is required for the position for which the prospective employee is seeking employment.
  • Any violation of this rule is subject to a complaint filed with the Labor Commissioner, but not a lawsuit.

Recommended Actions in Preparation for January 1, 2017:

  • Review job applications for impermissible inquiries regarding criminal records.
  • Review your hiring and interview policies and processes. Revise them to delay inquiry into criminal history until AFTER initial employment application.
  • Train all individuals involved in recruitment, hiring, and interviewing, to comply with the requirements of this law.

     

15 Best Practices for the Proper Use of Criminal Records in Hiring

best-practice  Hiring new employees is a critically important function in any business. Every hiring decision represents a major investment that employers must make with limited information. Checking criminal history is just a small part of the background check process, which may also include verifying education, prior employment and other reference information.

At CARCO, we know that it is more important than ever to comply with the recommendations of the Equal Employment Opportunity Commission (EEOC) and the Federal Fair Credit Reporting Act (FCRA) when using criminal records in the hiring process.  We’ve put together a helpful “cheat sheet” on 15 Best Practice Standards for our HR partners to use to properly weigh adverse personal history to find those applicants who will contribute most to the productivity of their organizations.

 1. CONSIDER ONLY CONVICTIONS AND PENDING PROSECUTIONS

The fact that someone has been charged with a crime should not disqualify them for a job if they were not convicted. If a person is being prosecuted for an offense that is relevant to a job for which they have applied, an employer may consider it.

2. CONSIDER ONLY CONVICTIONS THAT ARE RELEVANT TO THE JOB IN QUESTION

A person who has committed an illegal act in the past may be more likely than the average person to commit a similar act in the future, but they are no more likely to commit other offenses. A person who has been convicted of DUI may put the public at risk in a job that involves driving, but not in other jobs.

3. CONSIDER ONLY CONVICTIONS RECENT ENOUGH TO INDICATE SIGNIFICANT RISK

The risk that someone who has been convicted of a crime will commit another offense  decreases over time. Employers should consider the available evidence on recidivism rates before rejecting an applicant.

4. DO NOT ASK ABOUT CRIMINAL RECORDS ON EMPLOYMENT APPLICATIONS

Delaying learning about an applicant’s criminal record until the interview or later enables the employer to make more informed hiring decisions.

5. USE A QUALIFIED CRA TO CONDUCT CRIMINAL RECORD CHECKS

All consumer reporting agencies are not equal. Employers should consider the quality of CRAs’ procedures and results and not decide which one to use based solely upon cost.

6. CRAs SHOULD REPORT ONLY CONVICTIONS THAT ARE RELEVANT AND RECENT

Employers should determine in advance the convictions that it considers relevant for specific jobs and the time period during which they are relevant. These determinations should be provided to the CRA with instruction to report only convictions that meet these criteria.

7. REPORT CONVICTIONS ONLY WHEN FULL NAME AND ONE OTHER IDENTIFIER MATCH

In a country of over 300 million people, many people have the same first and last name. A conviction should only be reported to an employer when the full name (including middle name where available) and at least one other identified match.

8. CONFIRM ALL INFORMATION FROM ONLINE DATABASES WITH ORIGINAL SOURCE

Online databases are not always accurate or up to date. All information from such databases should be confirmed with the original source.

9. GET CURRENT DISPOSITION OF ALL RELEVANT INFORMATION

All information obtained from any source should be updated to ensure that it is current.

10. PROVIDE THE APPLICANT THE OPPORTUNITY TO CHALLENGE THE CRA’S REPORT

Whether or not required to do so by FCRA, employers should provide applicants with a prompt and convenient method of challenging information in the CRA’s report.

11. ALL CHARGES RELATED TO A SINGLE INCIDENT SHOULD BE REPORTED AS A SINGLE ENTRY

Reporting information relating to a single incident in different sections of a report can create the impression that multiple incidents took place. All information related to a single incident should be reported in a single entry.

12. CONSIDER EVIDENCE OF REHABILITATION

People change over time. Some people with criminal convictions change their lives and become good citizens who can be good employees. Applicants with relevant convictions recent enough to be of concern should not automatically be rejected. Instead, he or she should be given the opportunity to present evidence of rehabilitation which the employer should carefully consider before making a decision.

13. MINIMIZE CONFLICT OF INTEREST BY DECISION MAKERS

Employees making hiring decisions regarding applicants with criminal records are in a difficult position. If the company hires an applicant with a record who later commits another offense, the employee who hired them may be blamed. Hiring decisions should be made by an employee (or employees) who are in the best position to make an objective decision.

14. TRAIN HUMAN RESOURCES STAFF

Hiring decisions regarding applicants with criminal records require an understanding of the practical and legal steps an employer should take to comply with federal and state law on background checks and to comply with federal, state and local anti-discrimination laws, without exposing the employer to unreasonable risks. Human resources employees should be thoroughly trained on these subjects.

15. HAVE A DIVERSITY PROGRAM

One of the benefits of making sound decisions regarding applicants with criminal records is a more diverse workforce. Having a diversity program helps an employer determine how well it is making such decisions.

 

To view CARCO’s complete White Paper on Best Practice Standards: The Proper Use of Criminal Records in Hiring, click here.

CARCO Group, Inc. Joins the City Of Los Angeles’ Blue Ribbon Commission on Employment Equity

CARCO Group, Inc. is proud to announce that Fred Giles, Senior Vice President of Strategic Initiatives, has been invited by Los Angeles’ Mayor Garcetti to join his Blue Ribbon Commission on Employment Equity to help “ensure that all Angelenos have a fair chance to secure sustainable, living wage jobs that put them on the path to upward mobility.” 

Mr. Giles’ role on the Committee will include working to support and amplify fair hiring practices throughout the City of Los Angeles, the state of California, and beyond.

According to Mayor Garcetti’s invitation, Mr. Giles has been invited to join this prestigious committee as CARCO has been “a leader in the field of employment equity.”

Per Mr. Giles, CARCO is honored to take part in this initiative.  We all have a role to play in reintegrating individuals as productive members of society after they have paid their debt for past mistakes.”

 

About CARCO Group, Inc.

CARCO is an HR technology and paperless workflow solutions company. Started in 1977 as a background screening company, CARCO has evolved to become a full-service HR partner, helping clients manage their new hire process in standalone solutions or integrated with their ATS. CARCO’s Onboarding Solution eliminates paper processes and ensures efficient and compliant hiring. Full-service offerings include background screeningglobally, electronic I-9/E-Verify, vendor screening, drug testing, and fingerprinting services. Through its technology, CARCO is able to customize unique programs and quickly respond to changing customer needs.