New Year: Resolve, Review, Revise
The new year is a time for reflection. With that reflection often comes a resolve for change, from small modifications of some old habits to wholesale new beginnings and everything in between. From a business perspective, this is also an ideal time to review, update, and revise the company handbook, either in its entirety or individual policies and procedures. While there is a wide range of possibilities, we highlight two noteworthy items to guide your policy review as we usher in 2015.
Background Checks Beware: Fair Credit Reporting Act Requirements
Many businesses conduct background checks for new hires, as well as for position transfers or promotions. Often, companies use standardized disclosure forms that have been passed down from year to year and, perhaps, modified or streamlined during the process to include an acknowledgement that the background check is being conducted or a waiver of liability as a result of information provided during the check. However, changes to the disclosure and other forms or information required under the Fair Credit Reporting Act (FCRA) should not be undertaken lightly. The FCRA has some specific and technical requirements for conducting background checks, and failure to follow the provisions precisely can have serious consequences for employers.
In 2014 alone, almost 30 new FCRA class action lawsuits were filed against employers based on violations of the technical provisions of the Act. Many do not necessarily allege that the employer’s ultimate hiring decision violated the FCRA, but that the procedure involved in obtaining the background check did.
Notably, the FCRA requries that, prior to obtaining a background check report, employers provide applicants or employees with a disclosure form consisting solely of a disclosure that it may obtain a consumer report for employment purposes. Long-standing guidance from the Federal Trade Commission states that including the disclosure in a job application or including a release of liability in the disclosure are violations of the FCRA.
For example, in October of last year, a major supermarket chain agreed to pay $6.8 million to settle a putative class-action lawsuit alleging it failed to properly disclose that it would perform background checks on more than 90,000 applicants. Specifically, the plaintiffs alleged that including a liability waiver in the company’s disclosure form violated the FCRA because the disclosure form was not “solely” a disclosure that a consumer report may be obtained for employment purposes.
The recent legal actions and the potential financial consequences for FCRA violations serve as important reminders to review your company’s background check procedures and policies. In doing so, the following are some points to highlight: 1) make sure the disclosure is a separate, stand-alone document; 2) do not include any additional language in the FCRA-required disclosure, such as a waiver of liability; and 3) do not include the disclosure in the same document or online screen as the general employment application.
Emerging Email Policy Issues
Many companies also have policies that restrict use of company-provided email to work purposes only, prohibiting any personal or other use. However, in December, the National Labor Relations Board (NLRB) called into question the viability of such policies in a 3-2 decision. It held that the National Labor Relations Act (NLRA) presumptively entitles employees to use company-provided email systems during non-working time to engage in communications protected under Section 7 of the NLRA, such as communications regarding working conditions, union representation, and collective bargaining. Purple Communications, Inc. 361 NLRB No. 126 (2014).
Purple Communications, Inc., a sign language interpretation service, assigned its employees individual email accounts that were accessible on company computers and workstations, as well as on employees’ personal devices. The company’s policy explicitly required that email, in addition to other company-provided communication tools, “be used for business purposes only,” and prohibited employees from using the email system to “send uninvited email of a personal nature.”
The NLRB held that Purple Communication’s property rights in its email system were outweighed by its employees’ “core Section 7 right to communicate in the workplace about their terms and conditions of employment.” As a result, the Board struck down the policy’s ban on employee use of the Company’s email system for non-work-related communications.
The ruling only applies to email policies, and an employer may be able to demonstrate “special circumstances” that make a total ban on non-work use of email necessary to maintain production and discipline. However, the NLRB provided no guidance or examples of situations where special circumstances may exist that justify a complete ban on non-work-related emails.
The decision in the case of Purple Communications is particularly noteworthy because it overruled a prior decision in which the NLRB held that employees had no statutory right to use employer email systems for activities covered by Section 7 of the NLRA. Register Guard, 351 NLRB 1110 (2007). However, the new decision is consistent with other pro-union opinions issued by the NLRB in recent years.
The decision is likely to be appealed and tested in the courts, so it is not clear whether courts will enforce this new precedent. Nevertheless, for now, employers subject to the NLRA (generally most employers except governmental entities) should review their policies regarding non-business use of emails and determine whether they comply with the rules set forth in Purple Communications.
Happy New Year!