You’ve made an offer-what next? The transition from most qualified candidate to successful employee can be rocky without the right procedures in place. Issues surrounding federal and state laws and the proper use of background checks have been a major source of litigation for employers. Drug testing and the proper procedures and documents also rank as a high risk area for employers. I-9 verifications and the procedures and documents that are allowed and disallowed provide further traps for employers in the hiring and on-boarding process. We have the answers to some of the trickiest legal questions facing employers who are ready to add fresh faces to their teams.
o I-9 Verifications: One simple form can generate a surprising number of questions. We can help you make sure you have the right verification documents, store and retain your forms properly, and gain expertise in everything from work visas to E-Verify.
The Immigration Reform and Control Act of 1986 (IRCA) was enacted to eliminate the economic incentive for unlawful immigration. Under IRCA, employers are:
employing foreign workers that they know or should know are not authorized to work in the US; and
discriminating based on citizenship or national origin.
complete the Form I-9 identity and employment eligibility verification process for each employee hired after November 6, 1986;
retain and update the Forms I-9 of all current employees; and
retain the Forms I-9 of terminated employees for the longer of three years from the date of hire or one year from the date of termination.
Different agencies are responsible for enforcing IRCA's anti-discrimination and employment eligibility verification provisions.
IRCA's anti-discrimination provisions are enforced by the Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC), an office within the Department of Justice (DOJ) Civil Rights Division. For an explanation of IRCA's anti-discrimination provisions and enforcement mechanisms.
IRCA's employment eligibility verification obligations are enforced by ICE, a bureau of the Department of Homeland Security (DHS)
employee handbooks (premium content)
Perhaps one of the most critical pieces to the hiring and onboarding process, as well as the life cycle of an employee's career with your company, is your company's employee handbook Our premium services include a legally prepared, state-specific employee handbook. Simply click on "Employee Handbook" below and we will walk you through this critical process.
How do you run a proper background check, and what can you do with the results? The answers to these questions require skillful navigation of local, state, and federal laws. We’re here to guide you through the background check process and help you avoid costly mistakes. If you are in need of a background checking company, click on the following button to use our Partner, Universal Background Screening, one of the best in the business!
Employers often want access to information on job applicants and current employees to improve the chances that employers hire, retain, and promote the best candidate for the job. However, employers must use background checks and references appropriately. Otherwise, they can be exposed to substantial legal and financial risks. (If you need a background check provider, click the button above for our Partner Universal Background Screening - one of the best in the business!)
There is no obligation to carry out background checks for most positions in the private sector. However, there are industry-specific laws requiring background checks for dangerous or sensitive jobs, such as professional drivers, security guards, and caregivers. Even without a legal requirement, there are good reasons to conduct background checks on applicants for employment, as set out below:
Reduce Exposure to Litigation
If an employee causes harm that could have been avoided by appropriate pre-hire due diligence, an employer exposes itself to legal liability based on several grounds. For example:
Respondeat superior. Latin for "let the master answer," this is the legal principle that employers may be subject to liability for acts of their employees (also known as vicarious liability.0 Respondeat superior liability requires a showing by a plaintiff that the wrongdoer (also known as tortfeasor) employee acted within the scope of his job duties and for the employer's business purposes. If the employee acted exclusively for personal interests, the employer will not be held liable.
Independent employer negligence claims. If an employee acts outside the scope of his employment, so that respondeat superior does not apply, a plaintiff may attempt to hold the employer accountable on grounds of independent negligence. Examples of independent negligence theories include negligent hiring, negligent supervision, and negligent retention.
Health and safety violations. OSHA requires employers to provide employees with a workplace free from recognized hazards that do, or are likely to, cause death or other serious harm. Workplace violence presents this kind of hazard
Reduce the Risk of Employee Theft and Other Honesty Crimes
Appropriate due diligence, including the use of background checks, can help minimize the risk of:
Intellectual Property theft.
Theft from fellow employees.
Fraud in the workplace.
Reduce the Risk of Workplace Violence
Background checks improve an employer's chances of avoiding workplace violence. Workplace violence adversely impacts employee morale, turnover, attendance, and productivity.
Confirm the Accuracy of Applicant's Credentials
Background checks allow employers to determine the accuracy of candidates' representations about their academic and professional credentials. Resume fraud and inadvertent error are common.
Reduce the Risk of Noncompliance with Immigration Law
Employers hiring individuals who are not authorized to work in the US could face stiff penalties, including fines in the thousands of dollars and possible imprisonment. Background checks help keep those risks to a minimum
The Fair Credit Reporting Act and the Use of Third-Party Providers
Employers conducting background checks can run the check themselves or use a third party. However, it is nearly impossible for employers to gather some kinds of information independently, such as credit history and criminal records. As a result, most employers use third-party providers.
Employers using a third-party service provider, also known as a consumer reporting agency, must follow the rules established by the FCRA (amended in 2003 by The Fair and Accurate Credit Transactions Act and in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank)).
The FCRA applies to the use of third-party service providers to obtain background information on applicants and existing employees. Its purpose is to encourage fairness, truthfulness, and confidentiality in obtaining and using background check reports.
In-house background checks may be regulated by state law, as they are in California.
Employer Obligations Under the FCRA
The FCRA imposes specific obligations on both CRAs and employers using their services. Employers' obligations include a rigorous set of notice, disclosure, and consent requirements, both in conjunction with obtaining reports and taking adverse employment actions because of information in reports. The FCRA defines "employment purposes," in the context of a consumer report, as "employment, promotion, reassignment or retention as an employee".
This Note does not cover the special rules applicable to commercial driving companies requesting reports on drivers who have no physical contact with the company.
Consumer Report Obligations
When using consumer reports for employment purposes, employers must comply with relevant portions of the FCRA:
Before obtaining a consumer report, the employer must notify the individual (using an easy-to-read document) that the employer may be obtaining the report. This disclosure must contain the FCRA notice only and must not address any other topics. For example, including the disclosure in a job advertisement or job application does not meet the requirements of the FCRA.
The employer must obtain written consent from the individual before obtaining the consumer report. Employers that use applications that are completed online and submitted electronically should also be aware that this practice may be challenged in the courts. Some employers have faced class action lawsuits because of their use of an "I agree" box to obtain an applicant's consent to the terms and conditions of an online job application, including an authorization to obtain a consumer report on the applicant (this consent practice is often referred to as a click wrap agreement).
The employer must certify to the CRA that it will comply with disclosure and "adverse action" requirements of the FCRA and will not use the information provided to violate equal employment opportunity requirements (see Adverse Employer Actions.) The CRA may supply a form for this purpose to the employer. The employer should review the form supplied to ensure that it does not impose more obligations than the statute.
It is the CRA's obligation, not the employer's obligation, to notify the individual of his rights
Adverse Employment Action Obligations
If a CRA supplies an employer with a consumer report or an investigative consumer report and the employer intends to take an adverse employment action based either entirely or in part on information in the consumer report, the employer must meet additional requirements. Adverse employment actions include decisions not to hire and other employment decisions that negatively impact applicants or employees.
The employer has obligations both before and after taking the adverse employment action:
Before the action. The employer must provide the investigated individual with a copy of the consumer report and a written summary of consumer rights. This summary may be obtained from the CRA but should be reviewed by the employer for accuracy. As of January 1, 2013, the employer must use the new summary of consumer rights under the FCRA that includes contact information for the CFPB.
Dodd-Frank created the CFPB and transferred primary authority to publish rules and guidelines under the FCRA from the FTC to the CFPB. The employer does not need to provide any additional information about the adverse action at that time. Although the FCRA does not specify how long an employer must wait between obtaining a report and taking an adverse employment action, employers should give the investigated individual a reasonable amount of time to respond to the report's contents before proceeding with the adverse action. The FTC found that waiting five business days after supplying the required notice to the employee before taking an adverse employment action is reasonable.
After the action. The employer must comply with another set of disclosure rules under the FCRA, as amended by Dodd-Frank. The employer may provide post-adverse action disclosures in writing, orally, or electronically. Oral communications are not recommended; therefore, employers should maintain a written record. The employer does not need to offer additional information about the employment decision, but must provide the following information:
notice concerning the adverse action;
notice of the individual's credit score, if used in taking the adverse action, along with the range of credit scores under the credit reporting system used, the key factors that adversely affected the credit score of the individual (the disclosure should not include more than four factors), the date the credit score was created, and the name of the CRA that provided the credit score (as required by the Dodd-Frank amendment to FCRA);
contact information for the CRA that provided the report, including name, address, and phone number;
a declaration that the CRA cannot provide specific information about the reasons underlying the adverse action and that it did not make the adverse action decision itself;
notice of the individual's right (within 60 days) to request and acquire another copy of the consumer report at no charge from the CRA; and
notice of the individual's right to contest the contents of the consumer report with the CRA.
For a model notice, see Fair Credit Reporting Act (FCRA) Adverse Action Notification Letter.
If an employer obtains a report with negative information but decides to make an employment decision for reasons completely unrelated to the report's contents, it is good risk avoidance practice to provide the investigated individual with:
a copy of the report;
notice of his rights; and
an explanation that the report's contents were not relevant to the employment decision.
The employer does not need to offer any additional information about the employment decision.
Laws governing drug testing procedures vary from state to state. We can provide notice and consent forms that ensure your pre-employment drug tests are performed according to the statutory requirements in all 50 states.
Employees impaired by drugs or alcohol impact workplace safety, as well as productivity. The federal Occupational Safety and Health Administration (OSHA) considers substance abuse in the workplace an avoidable workplace hazard and strongly supports drug-free workplace programs. While certain federal contractors and all federal grantees must comply with employee drug testing requirements under the Drug-Free Workplace Act of 1988, private employers without these types of contracts have no similar obligation.
However, private employers may choose to implement a drug and alcohol testing program as part of an effort to maintain a safe and healthy workplace.
A drug testing policy need not be elaborate, but it must be detailed enough to give job applicants and employees sufficient notice of an employer's drug testing policy, including some details regarding:
When drug testing is required.
How testing will be conducted.
The confidentiality of test results.
Employers must also be mindful of employees' privacy rights and use a testing method with the least amount of intrusiveness.
Employers should ensure that the provisions of a drug testing policy accurately reflect the employer's actual practice. For example, if an employer does not engage in random drug testing at all, that provision should not be included in the employer's drug testing policy. If an employer allows other provisions, such as a re-test or an appeals process in the event of a positive drug test, that provision should be included in the policy.
Compliance with the Americans with Disabilities Act and Genetic Information Nondiscrimination Act
To comply with the Americans with Disabilities Act (ADA), this policy should not prohibit appropriate use of over-the-counter and legal prescription medication when used to treat a disability. The use and possession of marijuana, which some states have legalized for recreational or medicinal purposes, remains an illegal drug under federal law (for more information, contact our lawyers (click Ask a Lawyer) for the very difficult legal issues related to recreational drug use and the employers workplace.)
When enforcing this policy, employers should understand and comply with their obligations under the ADA and the Genetic Information Nondiscrimination Act (GINA), including:
Not discriminating against employees on the basis of a disability or genetic information.
Engaging in the interactive process and, when appropriate, providing a reasonable accommodation to qualified employees with a disability.
Only asking for medical and genetic information to the extent permitted by the ADA and GINA, and ensuring that the information is kept confidential.
Alcoholics and drug addicts can be protected by the ADA as individuals with disabilities. However, an employer may discipline or terminate employees (even if they are alcoholics, drug addicts, or both) for current use of alcohol, illegal drugs, or both that impairs the employee's work or violates workplace policies.
Compliance with the National Labor Relations Act
Both unionized and nonunionized employers must ensure that they comply with the National Labor Relations Act (NLRA) when developing and implementing policies.
Q. I’ve made an offer to our top candidate contingent on a background check. Do I need her permission to run the check?
A. To conduct background checks in compliance with the law, the employer must provide two documents: disclosure and authorization. These should be two separate, independent documents that you present to the employee before running a background check with a third party credit reporting agency (CRA).
Disclosure lets the candidate know that you will be performing the background check, what his or her rights are with respect to the background check, and what types of information will be sought by the background check. Federal law requires employers to provide a summary of rights with the disclosure, which can be obtained from the CRA. Some state laws require you to provide additional specific information with the disclosure.
Authorization is a form signed by the candidate giving you her consent to perform the background check. The candidate should be given a copy of the signed authorization, and a copy should be retained for your records in a background check file. The authorization should be an individual form that notes that it is specifically authorizing the employer to obtain a background check. Having a candidate check “I Agree” on a document containing other information does not comply with the law.
You do not need to provide disclosure and obtain authorization to perform an “in-house” background check. An in-house background check involves performing Google searches for the candidate’s name, or looking up the candidate in publicly accessible jail records or state criminal records databases. In-house background checks are strongly discouraged, as they are likely to turn up inaccurate, incomplete, misleading, or out-of-date information.
Q. The background check came back showing a bankruptcy/poor credit rating/criminal conviction/arrest. Can I withdraw the offer?
A. It depends. State laws vary widely on how the results of a background check may be used, and what an employer is required to do before withdrawing an offer.
Some state laws prohibit employers from considering a bankruptcy, or making employment decisions based on a candidate’s credit rating. Although some states do not specifically prohibit the consideration of arrest records, federal guidelines discourage the use of arrests that do not lead to a conviction in making employment decisions.
Before taking adverse action (withdrawing the offer) an employer must provide the candidate with a copy of the background check report and a summary of rights, which can be obtained from the CRA. An employer should then wait five days before taking the adverse action, to allow the candidate to respond to the results of the background check.
Some states and municipalities have laws that are sometimes referred to as “fair chance” laws. These laws require employers to take additional steps in response to a background check that reveals criminal convictions. Employers in these jurisdictions must perform written assessments to consider the details surrounding the conviction, and how the nature of the conviction relates to the position sought. Employers then must give the candidate an opportunity to respond to the results of the background check, and perform a second written assessment after receiving additional information from the candidate.
Q. Can I offer a position to a candidate contingent on passing a drug test?
A. Generally, yes. Just like with background checks, you should always have disclosure and authorization before conducting drug testing. The requirements as to what needs to be included in the disclosure vary according to state law. Some states require you to describe the testing procedure, or list the substances for which you are testing. Some states require you to inform the candidate that he or she may have the sample retested at his or her own expense. Many states require you to disclose the consequences for a positive drug test, or refusing to take the drug test.
It is always a good idea to provide the candidate with written notice that a positive drug test, or a refusal to test, will result in the conditional job offer being withdrawn. The remainder of the written notice should be tailored to comply with state law. Authorization requires a candidate’s specific consent to undergo a drug test. As with background checks, disclosure and authorization should be two separate documents, and should not be part of an unrelated document, such as an application.
Q. My candidate tested positive for marijuana, but claims to use it for medical purposes. Can I withdraw the offer?
A. Forty-one states have legalized some form of marijuana. No state requires an employer to tolerate the use or possession of or impairment by marijuana in the workplace. Some states in which medical marijuana has been legalized provide employment protection to individuals who have been granted medical marijuana cards or certificates. In these states, employers may not discriminate against individuals on the basis of the individual’s status as a medical marijuana patient. In some of these states, employers are prohibited from refusing to hire an applicant who tests positive for marijuana, if that applicant has a valid medical marijuana card or certification. Whether or not you are allowed to refuse to hire a legally certified medical marijuana user who tests positive for marijuana depends on the law of your state.
Q. Do I have to keep photocopies of the documents that my new hire presents for I-9 verification?
A. You are not required to keep photocopies. Whether or not to keep photocopies of the documents is a business decision for you to make. However, you must adhere to your standard practice without deviation. If you keep photocopies for one employee, keep photocopies for all employees. Keeping photocopies of only some employees’ verification documents could lead to a claim of discrimination based on national origin.
Q. We rehired an employee who was originally hired two years ago. Do we need to do a new I-9?
A. If an employee is rehired within three years of the original I-9 date you should not complete a new I-9, and may complete Section 3 of the existing I-9 to reverify eligibility. If your rehired employee’s authorization documents have expired since the original I-9 date, you must obtain current, valid authorization documents and complete Section 3.
Q. How do I store completed I-9s?
A. I-9s may be stored on paper or electronically. Using either method, you must be able to produce forms I-9 for all employees within three days in the event of an audit.
If you store I-9s on paper, they should be stored in a separate I-9 file, not in employees' personnel files. This file should be kept in a secure location, where access is restricted only to those who have a valid business reason to view the documents.
If you store I-9s electronically, they should be legible and readable. Your electronic system should be able to maintain an audit trail, so that any changes to the form are recorded and tracked. There should be controls in place to prevent unauthorized or accidental creation or alteration of forms I-9.
Q. Can I use E-Verify instead of the I-9?
A. The I-9 is a mandatory form that all employers must use to verify employees’ eligibility to work in the United States. E-Verify is voluntary for most business, and uses an online service to compare the information given on an employee’s I-9 with Department of Homeland Security and Social Security Administration databases. E-Verify does not replace the I-9.
Standalone Handbook Policies