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Minimizing Liability Risks in the Hiring Process – Part 2

This post is part of a new series that specifically discusses employment law issues for startups and small businesses operating in New York State and New York City.

The hiring process is fraught with liability risks for the unassuming employer.  Certain inquiries and requirements are flat out no-no’s.  With protections increasing for job applicants, it’s more critical than ever for employers to approach the hiring process with caution.

This is part two of a two-part post.  In this part, we’ll discuss how to minimize liability risks in interview questions and background checks.

Interview Questions

Employers must take care to ensure that interview questions do not seek information about an applicant’s membership in any protected class under applicable federal, state, or local law.   This includes seemingly innocent conversation starters like “Where did you grow up?” as the answer to that question could reveal a protected characteristic.

There are a number of questions that employers simply should not ask during interviews.  Some of them will vary by jurisdiction, but for the most part, they are the same.  While not a comprehensive list, below are some examples of questions employers should steer clear of:

  • Is this your maiden name?
  • What’s your spouse’s name?
  • Do you wish to be addressed as Miss? ?  Ms.?
  • Do you have, or plan to have, kids?
  • Are you a U.S. citizen?
  • What is your native language?
  • How long have you lived here?
  • How did you acquire your ability to read, write or speak a foreign language?
  • What clubs do you belong to?
  • What religion do you practice?
  • Which religious holidays do you observe?
  • How old are you? What is your birth date?
  • What are the ages of your children?
  • What year did you graduate?
  • Do you have any injuries or disabilities?
  • Have you had any recent illnesses?
  • Have you ever been arrested?

Background Checks

Background checks are a particularly problematic area for employers because so many different laws apply.

In general, whenever employers use a third party to conduct background checks on applicants, the federal Fair Credit Reporting Act (FCRA) will apply.  The FCRA governs how employers obtain and handle consumer reports, which include standard background checks.  The FCRA does not apply when an employer conducts its own background checks, only when it uses a third party to do so.  Examples of third parties include credit bureaus (e.g., Equifax, Experian, and TransUnion), private investigators, collection agencies, detective agencies, and background screening services (e.g., GoodHire).

The FCRA imposes a rigorous set of requirements on employers when obtaining background checks and when taking adverse employment actions (such as not hiring an applicant) because of information in the background check.

For example, before obtaining a background check, an employer must notify the applicant that the employer will be obtaining a consumer report.  The disclosure must contain the FCRA notice only.  The employer must also obtain written consent from the applicant before obtaining the consumer report.  The employer must certify to the consumer reporting agency that the employer will comply with the disclosure and “adverse action” requirements of the FCRA and will not use the information provided to violate equal employment opportunity requirements.

Once an employer has received and reviewed a background check report, the employer must meet additional requirements if the employer intends to take an adverse employment action based on information in the report.

Before taking an adverse action, the employer must provide the applicant with a copy of the consumer report and a written summary of consumer rights.  The advance notice allows the applicant to review the report’s contents and inform the employer if the information is correct.

After taking an adverse action, the employer must notify the applicant of that fact and make the following additional disclosures to the applicant: the name, address, and phone number of the reporting agency that supplied the report; a statement that the company that supplied the report did not make the decision to take the unfavorable action and can’t give specific reasons for it; and a notice of the applicant’s right to dispute the accuracy or completeness of any information the reporting agency furnished, and to get an additional free report from the company if the person asks for it within 60 days.

New York State and New York City have their own very strict requirements about the use of certain information that may be revealed to an employer through a background check.  For example, NYC employers may not even inquire about or consider the criminal history of an applicant until after extending an offer of employment.  If an employer wishes to withdraw its offer, it must give the applicant a copy of its inquiry into and analysis of the applicant’s conviction history, along with at least three business days to respond.

Employers operating outside of New York City should take care to comply with any local ban-the-box laws that may apply to them.  If there are none, only New York State law will apply.  Under New York State law, New York employers must provide a copy of the pertinent sections of the New York Corrections Law (called Article 23-A) to applicants when requesting consent to conduct the background check and again if the background check discloses a criminal conviction.

If the background check reveals a criminal conviction, New York State law prohibits an employer from taking adverse action against an applicant based on previous criminal conviction unless either:  (1) a direct relationship exists between the offense and the position sought by the applicant, or (2) the applicant presents an unreasonable risk to property, or to the safety or welfare of specific individuals or the general public.  In making this determination, the employer must consider: the state public policy encouraging the employment of persons with criminal convictions; the job duties and responsibilities; what bearing the criminal offense may have on the applicant’s fitness or ability to perform the duties or responsibilities; the amount of time since the criminal offense; the applicant’s age at the time of the criminal offense; the seriousness of the criminal offense; any information produced by or for the applicant concerning the applicant’s rehabilitation and good conduct; and the employer’s legitimate interest in protecting property, and the safety and welfare of specific individuals or the general public.  If requested by the applicant, New York employers must also provide a written statement of the reasons for denial of employment because of a criminal conviction.

New York State law also protects applicant’s lawful off-duty conduct and NYC law, with limited exceptions, largely prohibits employers from requesting or using the credit history of an applicant when making employment decisions.

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