HR That Works Blog

On April 25, 2012, the EEOC issued updated Enforcement Guidance regarding an employer’s use of arrest and conviction records in making employment decisions. The agency also issued a Question and Answer (Q&A) document that helps explain the Guidance.

According to the EEOC, a policy or practice that excludes everyone with a criminal record from employment will not be job related and consistent with business necessity and therefore will violate Title VII, unless it is required by federal law. The Enforcement Guidance explains how the EEOC analyzes the “job related and consistent with business necessity” standard for adverse employment hiring decisions based on criminal records, and provides hypothetical examples interpreting the standard.

Arrests and convictions are treated differently for purposes of Title VII, since the fact of an arrest does not establish that criminal conduct has occurred. The EEOC acknowledges that an arrest may in some circumstances trigger an inquiry into whether the conduct underlying the arrest justifies an adverse employment action. The Guidance notes, “[a]lthough an arrest standing alone may not be used to deny an employment opportunity, an employer may make an employment decision based on the conduct underlying the arrest if the conduct makes the individual unfit for the position in question. The conduct, not the arrest, is relevant for employment purposes.”

In examining whether an employer’s policy of screening individuals based on criminal convictions violates Title VII, the EEOC will look to see whether the employer’s policy provides an opportunity for an individualized assessment for those people identified by the screen in order to determine if the policy as applied is job related and consistent with business necessity. Under the new enforcement rules, the following should be considered by an employer when screening based on criminal convictions:

• The Nature and Gravity of the Offense or Conduct. The Guidance notes: “Careful consideration of the nature and gravity of the offense or conduct is the first step in determining whether a specific crime may be relevant to concerns about risks in a particular position. The nature of the offense or conduct may be assessed with reference to the harm caused by the crime (e.g., theft causes property loss). … With respect to the gravity of the crime, offenses identified as misdemeanors may be less severe than those identified as felonies.”

• The Time that Has Passed Since the Offense, Conduct and/or Completion of the Sentence. The Guidance points out that the amount of time that had passed since the applicant’s criminal conduct occurred is probative of the risk he poses in the position in question. For example, the Guidance notes that the risk of recidivism may decline over a certain period of time.

• The Nature of the Job Held or Sought. Linking the criminal conduct to the essential functions of the position in question may assist an employer in demonstrating that its policy or practice is job related and consistent with business necessity because it “bear[s] a demonstrable relationship to successful performance of the jobs for which it was used.”

The Guidance also lists examples of employer best practices for considering criminal records in connection with employment decisions. Among other examples, the Guidance advises employers to (1) develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct, (2) identify essential job requirements and the actual circumstances under which the jobs are performed, (3) determine the specific offenses that may demonstrate unfitness for performing such jobs, (4) determine the duration of exclusions for criminal conduct based on all available evidence, and (5) record the justification for the policy and procedures.

Article courtesy of Worklaw® Network firm Shawe Rosenthal (www.shawe.com).

In 2009 the US Supreme Court pretty much cut out “mixed-motive” cases in the age arena. Meaning you now have to show that “but for” age discrimination you would have suffered that loss of job, etc. If there is any legit reason for your termination then you lose. In response to this ruling the legislatures are busy trying to work their way around it and the EEOC has updated its regulations as follows (underlining mine):

§ 1625.7   Differentiations based on reasonable factors other than age (RFOA).

(b) When an employment practice uses age as a limiting criterion, the defense that the practice is justified by a reasonable factor other than age is unavailable.

(c) Any employment practice that adversely affects individuals within the protected age group on the basis of older age is discriminatory unless the practice is justified by a “reasonable factor other than age.” An individual challenging the allegedly unlawful practice is responsible for isolating and identifying the specific employment practice that allegedly causes any observed statistical disparities.

(d) Whenever the “reasonable factors other than age” defense is raised, the employer bears the burdens of production and persuasion to demonstrate the defense. The “reasonable factors other than age” provision is not available as a defense to a claim of disparate treatment. (Meaning individual harassment, discrimination, etc.)

(e)     (1) A reasonable factor other than age is a non-age factor that is objectively reasonable when viewed from the position of a prudent employer mindful of its responsibilities under the ADEA under like circumstances. Whether a differentiation is based on reasonable factors other than age must be decided on the basis of all the particular facts and circumstances surrounding each individual situation. To establish the RFOA defense, an employer must show that the employment practice was both reasonably designed to further or achieve a legitimate business purpose and administered in a way that reasonably achieves that purpose in light of the particular facts and circumstances that were known, or should have been known, to the employer.

(2) Considerations that are relevant to whether a practice is based on a reasonable factor other than age include, but are not limited to:

(i) The extent to which the factor is related to the employer’s stated business purpose;

(ii) The extent to which the employer defined the factor accurately and applied the factor fairly and accurately, including the extent to which managers and supervisors were given guidance or training about how to apply the factor and avoid discrimination;

(iii) The extent to which the employer limited supervisors’ discretion to assess employees subjectively, particularly where the criteria that the supervisors were asked to evaluate are known to be subject to negative age-based stereotypes;

(iv) The extent to which the employer assessed the adverse impact of its employment practice on older workers; and

(v) The degree of the harm to individuals within the protected age group, in terms of both the extent of injury and the numbers of persons adversely affected, and the extent to which the employer took steps to reduce the harm, in light of the burden of undertaking such steps.

(3) No specific consideration or combination of considerations need be present for a differentiation to be based on reasonable factors other than age. Nor does the presence of one of these considerations automatically establish the defense.

Word to the wise: Make sure you can fit any promotion, termination, or layoff type decision into the guidelines set forth above.

Forecasters predict that the amount of information companies have to manage will quadruple in the next ten years. Data management and security protocols are a growing risk management concern. Companies need to protect proprietary and confidential information including everything from their latest designs, internal communications, client data, marketing strategies, financial information, and the list goes on. Fact is, every aspect of your operations has information and data attached to it that competitors or worse would love to have access to. What can and should a company do to help manage this ever growing risk?

1. Make sure you have cyber-liability and other insurance coverages to cover against these losses.
2. Do a complete assessment of the most important risks. Not all are weighed equally. Make sure there is someone fully responsible for managing each one of those risks.
3. Make sure you know where the information flows and who has access to it. Chances are, your employees have access to more information than they need to.
4. Have protocols surrounding all information devices including servers, desktops, laptops, and mobile devices, video conferencing, online chats, and social media platforms.
5. Train your employees on the risk associated with not properly managing this information or data.
6. Hire a third party service to check your vulnerabilities.
7. Employ today’s technologies to help better manage data. For example, Symantec and Web Sense are the leaders in data loss prevention. Their software is often used to prevent social security and credit card numbers from leaving a company.
8. Have protocols around the use of social media. HR That Works members should take a look at the Social Media Training Module and related tools.
9. Have clear protocols about people who are telecommuting to work or are third-party vendors.
10. Make sure how you manage the departure of terminated or defected employees. Of course, you can have non-compete and confidentiality agreements as well as taking a checklist approach to making sure all equipment, passwords, etc. have been collected. If necessary you can employ counsel to file an injunction against use of any confidential information.
11. Don’t forget about low-tech espionage including dumpster divers and the Xerox machine.

These suggestions are just a start. You should conduct an extensive risk management and technology assessment and there are plenty of vendors willing to help you with that effort.

In this 5-minute video HR That Works president, Don Phin, discusses the reason why HR is high risk. To download the 149 Things to Worry About in HR PDF, please click here.

On January 25th the NLRB issued its second lengthy memo on Social Media use by employees. Like the first report, it is disjointed, poorly organized, and leaves employers with more questions than answers. In this 25-minute video Don Phin goes over the learning that can be gleaned from the report. This is a video that applies to every employer!

Here’s what figures to be ten of the top audit questions facing employers in the New Year. You will note no new surprises. Fact is, 20% of employment practice risk categories cause the majority of claims.

1.  Are you properly using credit and background checks in the hiring process? 

The EEOC as well as state legislatures have severely constricted your ability to acquire and use criminal and credit records. We think it’s very important to get as much information as possible during the hiring process—just make sure you do it right. Whether you work with our strategic partner, Global HR Research or another company, make sure they stay on top of the laws in your state.

2.  Have you properly managed your I-9 compliance process?

HR That Works Members were treated to an excellent webinar on the I-9 form. It generated a lengthy question and answer session afterward which was converted into a FAQ. That FAQ is available on HR That Works. You can see a detailed I-9 audit checklist by clicking here.

3.  My employees are properly classified as exempt.

Wage and hour claims continue to cause employer headaches. We see no reason for this tide to be stemmed in 2012. The bottom line is this: If you’re not 100% certain an employee is classified as exempt, you’d be better off labeling them as non-exempt. If you’re an HR That Works Member and realize you may have a problem, see the Special Report in the Wage and Hour Training Module entitled Now That I’ve Got a Problem, What Should I Do About It?  See www.dol.gov/whd/flsa. California employers should check out www.dir.ca.gov/dlse/dlse.html.

4.  Are your independent contractors really independent contractors?

 The NLRB, IRS, and state taxation authorities are coming down hard on the 1099 misclassification problem. Make sure your 1099 contractors really are not employees. Also make sure any leased or temp employees are properly treated by their employers too. HR That Works Members should consider the Independent Contractor Training Module which also includes an audit, checklist, and sample agreement. See the IRS’s guide to differentiating between an employee and an independent contractor.

5.  We are staying on top of National Labor Relation Board requirements.

The private workplace thought they had nothing to worry about when it came to the NLRB. Now they know that’s not the case. Not only has the Board made it much easier to organize your business, but they’ve also stepped in to the social media landscape. I suggest you subscribe to the NLRB’s notification service by clicking here. HR That Works Members should watch the various webinars produced on managing NLRA concerns. Remember, all employers are now required to put the new NLRA poster up in their workplace by April 30th. Click here to double check as that date has already been postponed twice due to some serious employer complaints about it! 

6.  We have our compliance policies and procedures up to date.

Despite the vast amount of new legislation, the most common claims in the workplace continue to consist of sexual harassment, race discrimination, and wrongful termination. Do you have your employee handbook, training, and other compliance measures up to snuff? Take advantage of the Compliance Quiz, Sexual Harassment and Discrimination Training Modules.  

7.  Do you have a robust employment practices liability policy? 

Less than half of companies with less than 1,000 employees have what is known as employment practices liability insurance. This is a big mistake! Given the fact that the average employment practices verdict hovers around $250,000, a company would be remiss not to purchase inexpensive employment practices liability insurance and thereby cap their risk exposure anywhere from $5,000-$25,000. Click here to see a checklist that will help you when you purchase employment practices liability insurance.

8.  Have you done what you need to do to protect yourself from cyber liability?

 This is a rapidly growing risk exposure. What many companies don’t realize is that more than half of the exposure comes from within its four walls. Employees rip off more confidential and valuable information than any third parties do. In fact, internal employee data theft is alleged to cost employers in the billions! (As Austin Powers would say, “With a B.”) The best advice is to work with third party experts to make sure you have both risk management protocols in place as well as sufficient cyber liability insurance. Is HR working with IT and riskmanagement to get a handle on this exposure?

9.  I have properly managed personnel files.

Remember, privacy has become an overwhelming concern, as has the need to defend yourself should you get hit with an employee claim. Well-maintained personnel files keep you out of trouble. You should make sure to separate out medical information, financial information, immigration and claims information from day-to-day personnel management files. Make sure that your personnel files are kept under lock and key with need-to-know-only access, that they contain all the documents that they should, and that they are stored for a sufficient period of time (anywhere from one to seven years depending on the document). If you have or are moving to electronic storage, make sure to identify your scanning protocols, storage, permissions, signature rights, etc.

10. Do you have you leave management act together?

There are additional concerns including social media risks, leave management, disability accommodation, whistleblowing claims, ERISA claims, and much more. Pretty much guarantees an eventful New Year!

I recently joined a very lively conversation in the Work Comp Analysis Group on LinkedIn http://www.linkedin.com/groups?home=&gid=1328307&trk=anet_ug_hm&goback=%2Egmp_1328307

A few salient points were made:

1. Most claims are legit.
2. While it’s easy for folks to point fingers depending on their agenda, all sides impact the analysis. As an example, Paul Jahn contributed this insight:

“An interesting discussion on the perceived stigma of filing a workers’ compensation claim but all in all one that is focusing on outlier claims.

The system (in the US) typically does a pretty fair job of handling and resolving the vast majority of claims. At PERMA (where I am very familiar with the data), 75% of our claims resolve without loss of time and 80 to 90% of the lost time claims resolve with a return to work. Typically we have 10 to 15 long term litigious claims per accident year out of a universe of 3500 or so.

These claims all have to be looked at on an individual basis (and they all tend to be very high cost). I have been doing so for over 20 years and can draw some general conclusions.

1. Most claims that do not resolve in some sort of a return to work start out with a poor relationship between employer and employee.
2. Distrust between providers of coverage and injured workers can make placement in alternative employment a futile effort. An assumption of good faith on both sides could help everyone involved in the system.
3. A poor economy exacerbates systemic problem. Some employers place less value on injured workers when they can be easily replaced and in a tough job market placement in alternative employment is difficult.

As a system designed to temporarily tide injured workers over until they can return to their original employment, the system works pretty well. As a means of dealing with management issues and economic problems that complicate long term serious disability, the system is at best a band aid.”

I couldn’t agree more! Take a look at the Injury Prevention That Works Report.

A review of the EEOC’s press release from the 30-day period between December 13 and January 13 reveals the following:

Pepsi to Pay $3.13 Million and Made Major Policy Changes to Resolve EEOC Finding of Nationwide Hiring Discrimination Against African Americans 1/11/12

Family Dollar Stores of Virginia to Pay $45,000 to Settle EEOC Sexual Harassment Lawsuit 1/11/12

Matrix L.L.C. Will Pay $450,000 to Settle EEOC Race Discrimination and Retaliation Lawsuit 1/6/12

DynCorp to Pay $155,000 for Sex-Based Harassment and Retaliation In Iraq 1/6/12

Bank of Albuquerque Discriminated on the Basis of Age and Sex, EEOC Alleges in Lawsuit 1/4/12

Grand Central Partnership Fired Rastafarian for Complaining of Threatened Violence, EEOC Says 1/3/12

RCC Consultants, Inc. Sued for Disability Discrimination 12/29/11

EEOC Sues Midwest ISO for Disability Discrimination 12/23/11

Mesa Systems Sued by EEOC for National Origin Discrimination 12/23/11

American Apparel Agrees to Settle EEOC Disability Bias Suit for $60,000 12/19/11

Jim Robinson Ford-Lincoln-Mercury to Pay $56,000 to Settle EEOC Disability Lawsuit 12/16/11

EEOC Retaliation Case Against Cognis to Proceed, Federal Judge Orders 12/16/11

Wal-Mart to Pay $275,000 to Former Employee Fired after Cancer Surgery 12/16/11

EEOC Launches Small Business Task Force 12/15/11

EEOC Sues Wal-Mart for Disability Discrimination and Retaliation 12/15/11

B&B Pharmacy in Bellflower to Pay $70,000 for Disability Discrimination In EEOC Suit 12/15/11

M. Slavin & Sons to Pay $900,000 to Settle EEOC Discrimination Suit 12/15/11

Vitas Healthcare Sued By EEOC in Disability Discrimination Lawsuit 12/14/11

Dairy Queen Restaurant Sued By EEOC for Sexual Harassment and Retaliation 12/14/11

Federal Court Signs Order for Blockbuster Inc. To Pay Over $2m to Settle EEOC Suit for Sex, Race and National Origin Discrimination, Retaliation 12/14/11

UPS Unit to Pay $95,000 to Settle EEOC Disability Discrimination Suit 12/14/11

King Soopers to Pay $80,000 to Settle EEOC Disability Discrimination Lawsuit 12/13/11

Bottom line: The EEOC is cranking it up. Make sure you have your disability, discrimination, and sexual harassment training and tools up to date…or you could be the next press release!

President Obama recently signed into law the “VOW to Hire Heroes Act” (H.R.674), a law that provides tax credits for employers who hire unemployed veterans and veterans with service-related disabilities. The new law allows a company to claim a tax credit of up to $2,400 if it hires veterans who have been looking for work for at least one month. The maximum credit is increased to $5,600 for hiring veterans who have been searching for work for at least six months. Additionally, employers may be granted a $9,600 tax credit for hiring out-of-work veterans with service-related disabilities.

The new legislation also amends the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”)—which was enacted to prohibit civilian employers from discriminating against employees engaged in military service—to recognize claims of “hostile work environment” on account of an individual’s military status. The law states that employees who perform military service “shall not be denied initial employment, reemployment, retention in employment, promotion, or any benefit of employment” on the basis of that service. However, courts had previously rejected the notion that the statute creates a cause of action for “hostile work environment” harassment against military service members. By clarifying that “benefit of employment” includes the “terms, conditions, or privileges of employment,” the new legislation brings the USERRA in line with Title VII and the Americans with Disabilities Act, both of which include the phrase “conditions…of employment.”

EEOC Approves Draft of Rule Amending Age Discrimination Regulations The Equal Employment Opportunity Commission (“EEOC”) has approved a draft final rule amending its Age Discrimination in Employment Act (“ADEA”) regulations in light of U.S. Supreme Court decisions addressing disparate impact claims and the “reasonable factor other than age” (“RFOA”) defense.

The proposed rule is based on the EEOC’s analysis of Smith v. City of Jackson (2005) 544 U.S. 228 (2005) (holding that an employment practice that has a disparate impact on older workers is discriminatory unless the practice is justified by a reasonable factor other than age) and Meacham v. Knolls Atomic Power Lab. (2008) 128 S. Ct. 2395 (holding that the employer bears the burden of proving the RFOA defense).

Under the proposed rule, a “reasonable” factor is one that is objectively reasonable when viewed from the position of a reasonable employer under like circumstances. The rule explains that whether a particular employment practice is based on RFOA turns on the facts and circumstances of each particular situation and whether the employer acted prudently in light of those facts. According to the EEOC, this standard is lower than Title VII’s business-necessity test but higher than the Equal Pay Act’s “any other factor” test. The standard is intended to represent a balanced approach that preserves an employer’s right to make reasonable business decisions while protecting older workers from facially neutral employment criteria that arbitrarily limit their employment opportunities.

To assess whether an employment practice is based on RFOA, the proposed rule provides a non-exhaustive list of factors to be considered:

• whether the employment practice and the manner of its implementation are common business practices;
• the extent to which the factor is related to the employer’s stated business goals;
• the extent to which the employer took steps to define the factor accurately and to apply the factor fairly and accurately (e.g., training, guidance, instruction of managers);
• the extent to which the employer took steps to assess the adverse impact of its employment practice on older workers;
• the extent to which the employer took preventive or corrective steps to minimize the severity of the harm, in light of the burden of undertaking such steps; and
• the existence of a lesser discriminatory alternative and the reasons why the employer selected the option it did.

The proposed rule also emphasizes that in order for the RFOA defense to apply, the challenged practice must be based on an objective, non age-related factor (e.g., salary, seniority, etc.).

The EEOC’s final draft regulations now go to the White House Office of Management and Budget for a review period that takes approximately 90 days. If the draft regulations are approved, they will return to the EEOC for a final vote before taking effect.

To learn more go to http://www.whitehouse.gov/blog/2011/11/21/president-obama-hire-veteran.

Article courtesy of Pettit Kohn (www.pettitkohn.com).

Watch Don’s 35-minute video on what you must know about a recent NLRB Memo on Social Media today! HR That Works members can see the updated Social Media Policy and Special Report in the Social Media Training Module.