Compliance isn’t the sexiest of topics, but it’s one of upmost importance, especially considering there were 76,418 discrimination charges filed with the U.S. Equal Employment Opportunity Commission alone in 2018. And it’s why we recently teamed up with GoodHire to shed light on new ban-the-box laws (some of which can conflict with FCRA and EEOC laws), as well as important compliance laws not to miss when maintaining a fair hiring practice for your company.
As businesses ramp up their hiring, especially across multiple locations in the U.S., they’re probably going to consider at some point in time using pre-employment background checks for a couple of reasons. One, because it’s a risk mitigation measure against any sort of negligent hiring claim, which is very important to any business trying to limit risk. It also builds trust between organizations and their employees, and between organizations and their purchasing publics.
Compliance can be a meaty and complex topic, so we found it critical to arm our audience with the facts and areas of focus after the webinar. Here are five requirements not to miss as you hire the next wave of great talent fairly for your organization.
1. The Fair Credit Reporting Act
At the federal level, you’ve got the Fair Credit Reporting Act, which is referred to as the FCRA. The FCRA regulates the procurement process, the use of pre-employment background checks, and other types of background checks that are known as consumer reports. The federal law sets out specific procedures for getting candidate consent for background checks and specific procedures for what process you have to follow if you’re going to use information in a background check against the candidate in a hiring decision.
If hiring for any position, ensure you are compliant with the up-to-date FCRA laws by jurisdiction before asking for credit history or a background check.
2. Consent form compliance and adverse action compliance
“These are the two main areas where we see employers get into trouble,” says Elizabeth McLean, General Counsel of GoodHire. “We see a lot of litigation against companies who aren’t digging into the federal law and making sure that their forms, specifically their consent forms, meet federal requirements.” According to McLean, employers are failing to make sure that their adverse action process is being performed at all, and if so, if it is being performed in the way that the FCRA requires.
Two key items to cover to ensure fair hiring practices:
- Consent form compliance
Make sure your consent forms contain only a disclosure, that’s the legal term for the paragraph that describes the background check, and an authorization, the paragraph that actually gets the authorization from the candidate to run the check.
- Adverse actions
“Make sure you’re following the three-step process that’s set out under the FCRA,” says McLean. It’s very clearly laid out. If you have questions about it, GoodHire also has a ton of resources. But the federal process, the three-step process, that requires sending a pre-adverse action notice when you think information found in a background check might be used to form an adverse hiring decision. Then you have to wait five business days. After five business days, you have to send a final adverse action notice if you decide to formally withdraw an offer or fail to hire. So if you cover your bases with consent form compliance and adverse action compliance, you’re going to significantly mitigate your risks when using background checks.
3. Ban-the-box requirements
The ban-the-box movement becomes critical at the state and local level, and has become a key area of compliance for recruiters. Ban-the-box regulates the timing of background checks, or when you can ask about criminal history. It can also regulate what information can be used from a background check, how it can be used, as well as what kinds of notices or information about the checks you have to provide your candidates.
4. Drug screening laws
“We’re seeing the trends in marijuana legalization, especially medical marijuana legalization,” says McLean. With the legalization of marijuana in some states, the zero tolerance in workplaces went from normal to becoming very risky. Courts are now laying down the hammer if employers fail to fire or hire somebody due to a positive marijiuana screening.
The employers are saying, “We’re not going to test for it, due to the employee and candidate protections under our state’s medical marijuana law,” says McLean. So that’s where the change is happening in the medical marijuana landscape. Medical marijuana users are being protected by the law now, even when they fail drug screens at work.
“Interesting to note, on the West Coast the landscape is very different than the East Coast when it comes to medical marijuana protections and the law there,” adds McLean. Businesses out west can feel generally more comfortable taking adverse action based on drug screens, if maybe having zero-tolerance policies in place. So when you’re crafting your drug screening policies, ensure you do so with a broad, nationwide lens going forward.
5. Credit and salary history
Credit history bans prohibit employers from accessing a candidate’s credit history or credit report. And there are a number of states and cities that have those bans in place. This is the thinking that credit history rarely has a direct relationship to the duties and responsibilities of a position, right? More often than not, it’s going to disadvantage some groups more than others. And you see that with younger candidates who are impacted by student loan debt, with folks who were affected by the mortgage crisis in the late 2000s, and with women who sometimes lack as much credit history as their male counterparts. So the credit history ban is meant to level the playing field by removing employer access to information that rarely bares on a candidate’s ability to perform a role.
In the same vein, state and local jurisdictions are also casting salary history bans. In certain jurisdictions, you cannot ask about salary history unless it is voluntarily offered by the candidate.
So, how can businesses today keep track of all the various requirements and operationalize them when operating in multiple states and jurisdictions?
It’s very difficult to keep all of the stuff straight and know what all the laws are to operationalize it in your organization, especially if you’re in growth mode. So there’s a simple, four-step framework that GoodHire recommends to folks who are looking for a starting point:
- Create a source of authority in your organization.
Whether that’s a background screening team or an HR person who is your go-to person for compliance, go ahead and appoint that person or that team so that you can make sure that you’re going to get consistent answers to screening inquiries and uniform compliance operations organization-wide.
- Host biannual reviews of your hiring practices in conjunction with the latest compliance laws.
“I’ve started recommending biannual reviews for folks because of how frequently laws are changing in the background space,” says McLean.
- Partner with a screener that knows their stuff and is responsive.
Ensuring you partner with a background screener that is willing to help you navigate compliance issues is critical for businesses today. Work with a knowledgeable screener, that advocates for compliance.
- Document your legal obligations.
Record each of your responsibilities in the law, maybe in a checklist format, to show that your organization is making a good-faith effort to comply with these obligations.
Leveling the playing field with fair hiring practices
All of these laws have a common fair hiring theme. They’re candidate-friendly laws that are intended to provide candidates with a fair and transparent process, that limits the information employers can access and use when making hiring decisions and making salary decisions.
If needing support on hiring in conjunction with scaling your recruiting best practices, don’t hesitate to reference the GoodHire + Lever integration for more information on how these two platforms can work together to power your fair hiring.