Hunton Employment & Labor Perspectives

Uber Technologies, Inc. has been sued in a class action lawsuit alleging the company’s use of criminal background checks discriminates against Black and Latinx drivers. The complaint, filed in the U.S. District Court for the Southern District of New York on April 8, challenges Uber’s “unlawful use of criminal history to discriminate against its drivers in New York City as well as its brazen noncompliance with human rights and fair credit laws.”

Named plaintiff Job Golightly, a Black resident of Bronx County, New York, drove for Uber from 2014 through August 2020. Golightly claims that his criminal history consists of a single 2013 misdemeanor speeding violation from Virginia. According to the lawsuit, until 2017 Uber had relied solely on background checks conducted by the New York City Taxi and Limousine Commission (TLC). Plaintiffs allege that in mid-2017, in response to negative news coverage on assaults committed by drivers, Uber began using the credit reporting agency Checkr to conduct additional background checks on current and prospective drivers. As a result, in August 2020 Uber allegedly conducted a background check on Golightly that revealed his 2013 speeding violation. One day later, Golightly claims that Uber deactivated him from its platform, preventing him from driving for the company.

Ten U.S. senators are asking the U.S. Equal Employment Opportunity Commission to hone in on employers’ use of artificial intelligence (“AI”), machine-learning, and other hiring technologies that may result in discrimination.

The group of senators—Michael Bennet (D-CO), Cory Booker (D-NJ), Sherrod Brown (D-OH), Elizabeth Warren (D-MA), Catherine Cortez Masto (D-NV), Chris Coons (D-DE), Ron Wyden (D-OR), Tina Smith (D-MN), Chris Van Hollen (D-MD), and Jeff Merkley (D-OR)—jointly penned a December 8, 2020 letter to Chair Janet Dhillon. The letter urges that EEOC is responsible for combatting discrimination resulting from the use of hiring and other employment technologies. The senators voice concern about a number of hiring technologies, including:

• “[T]ools used in the employee selection process to manage and screen candidates after they apply for a job”;
• “[N]ew modes of assessment, such as gamified assessments or video interviews that use machine-learning models to evaluate candidates”;
• “[G]eneral intelligence or personality tests”; and
• “[M]odern applicant tracking systems.”

The Federal Reserve anticipates an approximate two percent reduction in unemployment by June 2021, envisioning rapid mass-hiring by employers once governments lift the more stifling COVID-19 restrictions.  Businesses requiring pre-employment background checks may be uniquely exposed to liability under the Fair Credit Reporting Act (“FCRA”) if minor mistakes are amplified by mass-hiring events.

On November 22, 2019, the federal Consumer Financial Protection Bureau (CFPB) filed a complaint in the U.S. District Court for the Southern District of New York against Sterling Infosystems, Inc. (“Sterling”) regarding allegations that it violated the Fair Credit Reporting Act (FCRA) in providing criminal background checks to employers.  Sterling is a “consumer reporting agency” as defined by the FCRA, which provides background check results to employers when requested.  The CFPB is an independent federal agency tasked with regulating and enforcing a host of consumer protection and financial protection statutes, including the FCRA.

On July 11, 2019, the House Financial Services Committee, led by Chairwoman Maxine Waters (D-CA), considered The Restricting Use of Credit Checks For Employment Decisions Act (the “Act”) as one of four bills designed to reform the Fair Credit Reporting Act (FCRA) and the credit reporting system.

On June 5, 2019, Nevada Governor Steve Sisolak signed into law Assembly Bill No. 132 (“A.B. 132” or the “new law”), which is the first state law to curb pre-employment marijuana drug tests.  The new law has two primary effects: 1) it makes it unlawful for Nevada employers to fail or refuse to hire a prospective employee because the applicant submitted to a screening test and the results of the test indicate the presence of marijuana; and 2) it provides employees who test positive for marijuana with the right to, at their own expense, rebut the original test results by submitting an additional screening test within the first 30 days of employment. 

In a positive development for employers, the California Court of Appeals affirmed summary judgment for an employer in a class action alleging willful violations of the Federal Fair Credit Reporting Act (“FCRA” or “Act”).  In Culberson v. Walt Disney Parks and Resorts, the plaintiffs alleged Disney willfully violated two provisions of the FCRA: (1) plaintiffs alleged Disney’s disclosures letting job applicants know they may be subject to a consumer report were not contained in a standalone document; and (2) plaintiffs alleged Disney rejected some applicants based on information in their consumer reports without first providing the notice required by the FCRA.  In affirming summary judgment, the court concluded that it need not decide whether Disney violated the FCRA, because the court found that any such violation was not willful. 

If your background check forms include too much information about rights under state law, or even grammatical errors, you might be in trouble according to the Ninth Circuit.  In Gilberg v. California Check Cashing Stores, the appeals court recently ruled against an employer for using background check disclosure forms that violate both the federal Fair Credit Reporting Act (FCRA), and California’s Investigative Consumer Reporting Agencies Act (ICRAA).

The Consumer Financial Protection Bureau (“CFPB”) issued a new “A Summary of Your Rights Under the Fair Credit Reporting Act” (“FCRA”)  (“Summary of Rights”) form on September 12, 2018.  This form replaces the previous version issued on November 12, 2012, and is expected to be implemented by employers on September 21, 2018.

A magistrate judge in the U.S. District Court for the District of Oregon recently made findings and recommendations to dismiss a purported class action against Kroger subsidiary Fred Meyer.  The suit alleges that the retailer’s background check process for prospective employees violates the Fair Credit Reporting Act by both failing to properly disclose that a report will be run, and failing to comply with the statute’s procedural requirements before taking adverse action against an applicant.

The New York City Commission on Human Rights recently amended its rules to establish certain definitions and procedures applying the Fair Chance Act.  The Act makes it unlawful to discriminate against job applicants and employees on the basis of criminal history, and is particularly important for employers for two reasons: (1) it applies not only to criminal background checks performed by third-party vendors but also to checks performed entirely by the company, and (2) out-of-state non-employers may be held liable for aiding and abetting violations of the Act.  For more on this latter point, read our prior post on the New York Court of Appeals opinion in Griffin v. Sirva, Inc.

On February 20, 2015, a unanimous panel of the Fourth Circuit affirmed the exclusion of expert testimony by EEOC expert Kevin Murphy and the grant of summary judgment against the EEOC in its suit challenging Freeman’s use of credit and criminal background checks in the hiring process.  Although the Fourth Circuit’s decision expressed no opinion on the merits of the EEOC’s claim, the court found summary judgment was justified because the “sheer number of mistakes and omissions” in Murphy’s analysis rendered it unreliable.  While the court’s published opinion cited the ...

The U.S. Supreme Court is considering a case that could have important implications to disparate impact analysis, including on criminal background checks.  The case also foreshadows further challenges from the Texas Attorney General to aggressive positions taken by federal enforcement agencies in regard to disparate impact.  The case is Texas Department of Housing & Community Affairs, et al., v. The Inclusive Communities Project, Inc., Case No. 13-1371, and is being argued by the Texas Attorney General.

Discover how the use of criminal background checks in the hiring process is creating an increasing exposure to liability. The Equal Employment Opportunity Commission (EEOC) is aggressively pursuing this issue to ensure the practice does not have a disparate impact on minority applicants. Additionally, plaintiffs' class action attorneys are pursuing employers nationwide for failing to conform their background check process with the dictates and protections of the federal Fair Credit Reporting Act. This webinar will highlight lessons learned in the trenches, and give insights on how to properly handle the sensitive use of criminal background check information.

On August 11, 2014, New Jersey’s Governor Chris Christie signed into law the “Opportunity to Compete Act.”  Beginning on March 1, 2015, employers will be prohibited from publishing advertisements providing that the employer will not consider any applicant with an arrest or conviction record, and more importantly, employers will be prohibited from inquiring about applicants’ criminal records “during the initial employment application process,” orally or on job applications.  “Initial employment application process” is defined as the period beginning with the initial inquiry about prospective employment until the employer has conducted a first interview, determined the applicant is qualified, and selected the applicant as the employer’s first choice to fill the position.  If an applicant voluntarily discloses information regarding a criminal record, the employer may inquire about it.

Illinois recently joined a growing number of states and municipalities that have passed “ban the box” laws regulating when employers can inquire into an applicant’s criminal history. 

On April 9, 2014, the Sixth Circuit of Appeals not only affirmed summary judgment in EEOC v. Kaplan Higher Education Corp., et al. but also chastised the EEOC for applying a flawed methodology in its attempts to prove that using credit checks as a pre-employment screen had an unlawful disparate impact against African-American applicants.

On February 14, 2014, San Francisco passed the San Francisco Fair Chance Ordinance and became the latest national municipality to “ban the box” and limit the use of criminal background checks in employment hiring decisions.  The deadline for San Francisco employers to comply with the San Francisco Fair Chance Ordinance is August 13, 2014.  The “ban the box” campaign continues to gain momentum – San Francisco joins other cities (Buffalo, Newark, Philadelphia, and Seattle) and states (Hawaii, Massachusetts, Minnesota, and Rhode Island) who do not allow employers to ask ...

On March 10, 2014, the Federal Trade Commission (“FTC”) and the Equal Employment Opportunity Commission (“EEOC”) issued joint guidance regarding the use of background checks.  The FTC, which enforces the Fair Credit Reporting Act, monitors compliance with how background checks are conducted.  The EEOC, which enforces federal laws against discrimination, seeks to ensure that the use of background checks does not disparately impact protected groups.

The “ban the box” movement continues to sweep through state legislatures.  These laws, which vary in terms of scope and detail, generally prohibit employers from requesting on applications information about applicants’ criminal histories.  Recent legislation in two states applies “ban the box” prohibitions to private employers in the state.

In an article to be published this month in the Seton Hall University Law Review, Hunton & Williams partners, Terry Connor and Kevin White have challenged the authority of the EEOC to publish its April 2012 Guidance.  That Guidance interprets Title VII to impose disparate impact liability on employers who consider the criminal background of applicants for employment as a criterion for selection.

As reported on Hunton & Williams’ Privacy and Information Security Law Blog, on January 25, 2013, Kmart Corporation (“Kmart”) agreed to a $3 million settlement stemming from allegations that it violated the Fair Credit Reporting Act (“FCRA”) when using background checks to make employment decisions. The FCRA addresses adverse actions taken against consumers based on information in consumer reports and includes numerous requirements relating to the use of such reports in the employment context.

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Beginning January 1, 2013, employers must issue an updated notice form to applicants and employees when using criminal background information under the federal Fair Credit Reporting Act.

In September, the Newark Municipal Council passed Ordinance 12-1630, which prohibits any employer with five or more employees from asking job candidates before or during the application process about their criminal history (i.e., the ordinance “bans the box” from an employment application). 

On April 25, the Equal Employment Opportunity Commission  adopted its Enforcement Guidance: Consideration of Arrest - Conviction Records in Employment Decisions under Title VII of the Civil Rights Act of 1964 (“2012 Guidance”), expanding on its 1987 and later policy statements to its field offices.

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The U.S. Department of Justice has moved to intervene to defend the constitutionality of the Fair Credit Reporting Act (“Act”) against a consumer reporting agency accused of violating § 605 of the Act.

On November 23, 2010, Shamara T. King filed suit against General Information Services, Inc. (“GIS”) in Pennsylvania federal court claiming violations of the Act.  (See, King v. General Information Services., No. 2:10-CV-06850 (E.D. Pa. Nov. 23, 2010).  Specifically, King claims that when she applied for a job with the United States Postal Service, GIS performed a background check that included details about a car theft arrest that occurred more than seven years prior to the requested background check.  According to § 605(a)(5) of the Act, consumer reporting agencies cannot provide adverse information, except for criminal convictions, “which antedates the report by more than seven years.”