Sunday, January 18, 2015

Small Business Beware ~ What The Rise in Employment Lawsuits Means to You

Created by Kimberly Kline, API

According to a recent article, the class action lawsuits alleging employment (Background Check) violations tripled in 2014!  
“Watch Your Back: the Growing Threat of FCRA Background Check Class Actions”, Foley & Lardner LLP, Gregory D. Snell.

The rise in these cases can partly be attributed to favorable settlements (from $2 million to $7 million) and to continued confusion over the technical aspects of EEOC compliance with regard to Background Checks.

It is important that you understand what triggers an EEOC lawsuit and what you can do to make sure you are not in violation.

A big red flag is the perception that your use of criminal and credit checks during hiring create a “disparate impact” on minority candidates.

The increase in “Ban the box” laws and applicant’s rights have been born through this belief.  (Learn more here about “What New Ban the Box Legislation means to You”)

However, there are those who are willing to push back on the EEOC regarding the validity of their guidelines.

In “State of Texas v. EEOC, Case No. 5:13-CV-255 (N.D. Tex. Aug. 20, 2014)”, Texas attempted to make a pre-emptive strike against the EEOC’s guidance on using criminal and credit history during hiring.  Texas argued that that it interfered with existing TX laws that prohibit the hiring of felons for specific jobs.

This case was dismissed on the grounds that, up to this time, there has been no action taken by the EEOC to enforce the guidance. The court ruled that the suit was “mere speculation” and, therefore, there is no standing to file the claim.

Texas has filed an appeal on the basis that the EEOC guidance on this issue illustrates a direct threat to state law.  

Either way, the outcome of this case could impact future claims from states with similar laws restricting the hiring of felons for certain positions

While the reach of the EEOC, and their implied agenda, is often surprising and frustrating, 
it is worth noting that 
they were not always successful in their quest.

One such case, “EEOC v. BMW Manufacturing Co., LLC, Case No. 13-CV-1583, 2014 US District. LEXIS 169849 (D.S.C. Dec. 2, 2014)”, is an example.  

The EEOC claimed that BMW’s criminal background check policy created a “disparate impact” on minorities.  They also stated that convictions that were not job-related or necessary to protect the business were used in making hiring decisions.

BMW countered with a request for the EEOC’s own policies concerning the use of background checks in their hiring practices. As discovered in a previously argued case (EEOC v. Kaplan Higher Education Corp.), the EEOC does in fact use both criminal and credit histories to determine employment within their own company.

This will most likely continue to haunt the EEOC in their quest to charge employers with this offense. 

However, despite outcomes both for and against those that challenge the EEOC, the trend of increased litigation is something to beware of on into 2015.

What is important to know is that there are ways to protect yourself and your company.

My belief is that “Forewarned is Forearmed”.  Understanding that the EEOC is driven to continue its pursuit of companies who they believe are negligent in their hiring practices is key.

Because of this, it is important that you make sure you are compliant with all applicable state and federal employment laws pertaining to your business.  

Violations that most commonly garner notice from the EEOC are those involving the background check release form.  The absence of a “stand alone” form and/or a misleading form are often cited. 

The #1 thing you need to do in 2015 is review your release form and take all steps necessary to make sure it is compliant.  

I cover this in my article, Tips to Help Your Business Fly Under the EEOC Radar.  

In addition, your best defense is to make sure that all employee documents you have on file put you in the best position to defend yourself against any possible lawsuits.

These documents are:

  • Job Descriptions ~ A thorough description of each position within your company, including education/skills required, job duties, etc.  

(Read more about the importance of a good job description here.)

  • Employment Documents ~ these include completed applications and resumes, signed release forms, Background check results, documentation of employee rights notices, notices of adverse action, and any notes pertaining to what decisions concerning an offer of employment were made and when. 

  • Performance Evaluations and Disciplinary Warnings ~ a written documentation of each employee’s performance evaluations, including any warnings and/or counseling given (extremely valuable if an employee is let go for “cause”).  Be sure to cite all dates and times of each evaluation.

Now is the time to take a look at your hiring practices and fix anything that is not up to par.

Contact Me Now for a consultation.  
I can help you get and keep your company compliant. 

Don’t be a part of this year's 
EEOC lawsuit list!

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