Visit Our Website

Need passwords to our website? Click Here

Currently, federal consumer laws allow employers to access a consumer’s credit report for employment purposes.  States could be changing this soon.  At least one state has done so already. Washington State’s governor Gregoire signed a measure into law that takes effect July 22, 2007, that limits the employer’s right to access an applicant’s or employee’s credit report to either when: credit information is “substantially job-related and the employer’s reasons for use of such information are disclosed to the consumer in writing; or, it is required by law."  Other states may begin to follow suit. Privacy and minority groups are actively lobbying legislatures to limit or deny employers the right to access credit reports on applicants and employees.

Employers have traditionally sought credit reports on applicants for a variety of reasons.  Some employers take the position that a credit report shows whether an applicant is responsible and reliable.  The logic is that if a person cannot pay their own bills on time and make responsible financial decisions, they may not be the best fit for a job that requires handling company funds or making meaningful decisions.  Other concerns are that an applicant’s monthly debt is beyond their salary; one of the common denominators in cases of embezzlement is that the perpetrator was in debt beyond their means.  Sales positions often require the use of company credit cards and an employer wants to know a candidate can use the card wisely.

These may be valid arguments for using credit reports, but employers should approach their use with more caution than ever.  Credit reports with negative information should never be an automatic disqualification to employment or be the sole determination since lower income and minority populations tend to have disproportionately higher percentage of poor credit.  Unless you have good documentation on your business necessity to have such a strict policy on the use of credit reports, the EEOC will likely deem this policy discriminatory. Employers should determine if they have a sound business reason to obtain credit, making sure it is directly job related.  Before utilizing negative information on a credit report, consider the following:

• Is the negative information a valid predictor of job performance?

• Is the information current and accurate?

• Is there documentation to show that you are consistent in the use of negative information? 

In today’s climate and sensitivity to privacy invasion and identity theft, an employer’s access to a credit report comes closest to invading a perceived zone of privacy since it directly reflects where and how money is spent in our personal lives.  It can indicate where we shop, how much we spend.  It may reflect medical debts and other negative information for which the applicant may not be directly responsible, or there may be extenuating circumstances. 

If obtaining a credit report is a business necessity for you, be sure your written authorization specifically authorizes the use of a “credit report” and be sure to afford the applicant or employee all their legal rights under state and federal laws.

Avoid Use of Bankruptcy Information in Employment Decisions

All bankruptcy cases are heard in federal court and are easily accessible through the federal court index, or a credit report.  However, employers should use extreme caution in attempting to utilize these records.  Federal law (11 USC 5.11§ 525) makes it very clear that using a bankruptcy against a job applicant can be a form of discrimination.  A person cannot be penalized for the lawful exercise of a legal right.  If for any reason an employer feels that bankruptcy information is relevant to the job, the employer should consult their attorney to determine if there is a bona fide reason to justify its use for employment purposes.
                                                                                                       Back To Top

We are pleased to announce that our President, Larry L. Lambeth, has been named as the incoming Chairman Elect of the National Association of Professional Background Screeners. 

NAPBS, which was founded in 2003, is the only organization representing the employment screening industry.  Larry has been active in the association since its inception and has served on the Board of Directors  for two years.  He has overseen several major association committees and projects during his tenure.  This is a very prestigious honor for Larry and one that is well deserved.  It’s nice to know that he and ESS are held in such high regard by the industry.  We are very proud of him and are excited about the direction of the association under his leadership.        
                                                                                                      Back To Top

Verification of past employment is a necessary part of the employment screening process. But how do you handle the reference of your applicant’s current employer?

ESS will not contact the current employer unless we are told we can do so. In many cases your applicants will (justifiably) not want to have their current employer contacted for confirmation. Obviously having their employer know they are looking at changing companies leaves them in a precarious position.  Even if they might be satisfied with their current situation and are just looking at options, the employer might question the loyalty or longevity of the employee and might take pre-emptive steps toward their replacement.

The best and most stable candidates have probably been at their current company for sometime and your hiring decision is based on what level and responsibilities they have demonstrated at their current position.  Often decisions on what salary to offer is based on what they are currently earning.

What if the applicant is leaving (or has left) their current job in less than favorable circumstances? Or what if this “job” never existed?

You are taking the applicant at their word as to their current employment situation and making your hiring decision in part on what the applicant claims.  So what can the prospective employer do?

First and foremost, on the application or release form make sure there is an obvious box or question somewhere that asks if it is OK to contact their current employer. If this is not answered be sure and receive clarification before any contact attempt is made or asked for.

So…What if they say no?

You can ask for the name of a past supervisor that no longer works for that company as a reference. If this approach is to be taken, the company should be contacted to verify that the reference themselves were indeed employed by that firm.

Copies of past W2 forms for each year of work (or at least the last one) should be easy for the applicant to supply. Be careful if asking for past pay stubs.  This could lead to you being supplied with information such as marital status or other personal information that can’t be used in the employment decision process.  

A written conditional pre or post job offer can be a valuable tool at this point in the employment process. This conditional offer should include wording to the effect that “employment (or continued employment) is conditional upon a background screening report that is satisfactory to the employer” and that verification of their current employment claims is required as part of the offer.

If needed, you should specify exactly what those claims are as to position, pay level, dates of employment and eligibility for re-hire in your offer if this is not listed on the subject’s resume and/or application. You have made the decision to hire based on unverified employment claims. At this point there is no legitimate reason for the applicant to not allow verification of their most recent (or now past) employer and for you to complete the pre-employment investigation.

Once a job offer is officially completed or the applicant has given notice to their current employer, just let us know and we will be happy to contact that “current” employer to verify the work history.  If the original background check included employment verification there is no additional cost to you..

This final step is easy and an important part of your pre-employment investigation. Better late than never.
                                                                                                       Back To Top

One of the major problems with an e-Signature is that you can not rely on the technology to establish true identity; but this is one of the criteria for the use of an e-Signature. You must have something else in the process to prove that you have the right person.

So what laws apply to e-Signatures?

• The Fair Credit Reporting Act (FCRA) has no specific provisions regarding electronic signatures but does require specific "consent" from consumers in the form of a written signed document. The FTC has opined that electronic signatures can be valid if you comply with the e-Sign Act.
• Electronic Signatures in Global and National Commerce Act (e-Sign Act) went into effect in October of 2000. It states that neither contract nor signatures should be denied legal effect solely because they are in electronic form. Congress included a reverse preemption clause allowing State Law to supersede the e-Sign act if the state either 1/ Adopts a piece of similar legislation - i.e., the Uniform Electronic Transactions Act (UETA) as approved by the National Conference of Commissioners on Uniform State Laws (NCCUSL); or 2/ Passes a law that is consistent with the e-Sign act.
• Uniform Electronic Transactions Act (UETA) 46 states, as well as the District of columbia and the Virgin Islands, have adopted UETA. UETA essentially states the following:
  • a record or signature will not be denied legal effect or enforceability solely because it is in electronic form;
  • the parties must agree to conduct the transaction electronically
  • the authenticity of an electronic record or signature may be shown in any manner, including a demonstration of the effectiveness of the security procedures in place;
  • companies may satisfy records retention laws by maintaining electronic documents, so long as there are assurances that the electronic documents have not been altered.
    • see "A Few Facts About the Uniform Electronic Transactions Act at www.nccusl.org/Update/uniformact_factsheets/uniformacts-fs-ueta.asp
• Federal Regulations (DOT) The Department of Transportation has elected to NOT allow any form of electronic signatures at this time.
• State Laws - the states of Illinois, Georgia, Washington and New York have not yet adopted UETA, The most significant departure from UETA is Illinois. Illinois law provides evidentiary "presumptions" of authenticity for electronic records and signatures must satisfy certain criteria. The Illinois "Criteria for Rebuttable Presumption of Authenticity says:
  • A party seeking a rebuttable presumption of authenticity for an electronic record must show that it has in place a "Qualified Security Procedure" to ensure that the document was not altered.
  • A "Qualified Security Procedure" is
    • a "methodology or procedure"
    • used for the purpose of verifying the authenticity of a record that
    • entails "algorithms or codes .. encryption .. or similar security devices.
  • To show that it used a "Qualified Security Procedure" a party must demonstrate that the procedure meets all four of the following conditions:
    • It was either "certified by the secretary of state or agreed to by the parties;"
    • It was "commercially reasonable;"
    • It was "applied in a trustworthy manner;" and
    • It was "reasonably and in good faith relied upon."

So what are some practical tips to follow to insure you are properly following these requirements?

• Require the applicant to consent to electronic submission and storage
  • Uner UETA and e-Sign, parties to an electronic transaction must consent to having the transaction in electronic form.
  • Whether the parties agree to conduct a transaction by electronic means is determined from the "context and surrounding circumstances."
  • E-Sign suggests that PRIOR to this consent, a consumer must be informed of certain rights. These are:
    • any right or option the consumer has to obtain the record on paper or in other non-electronic form;
    • his or her right to withdraw his or her consent, together with any conditions, consequences or fees that would result from such a withdrawal. The Act specifically notes that these consequences may include the termination of the business relationship;
    • the procedures the consumer must use to withdraw consent or to update his or her electronic address;
    • whether the consent is for information relating to a single transaction or for identified categories of records that may be provided over the course of a relationship; and
    • hot the consumer may request and obtain a paper copy of any electronic record that is sent may be obtained even while the consumer consent to receive electronic media is still in effect, and whether any fee will be charged for such a copy.
    • the hardware and software requirements for accessing and retaining the electronic records the consumer is consenting to receive, and the consumer must consent in a manner that reasonably demonstrates that he/she can access the information in electronic form that is the subject of the consent.
• Use "a well-recognized method of encryption" and other security measures to protect the record of consent
• Select a signature method that allows for objective identification of the applicant.
• Be ready to prove authenticity of e-Signatures:
  • Electronic records present special challenges for parties wishing to admit them in court
  • Litigants must be able to show that the electronic document is authentic and in the same condition as originally submitted
  • According to Section 9 of UETA, litigants can meet this burden by "demonstrating the efficacy of the security procedures in place to protect the electronic document."
  • an employer should, therefore, put in place a well-recognized method of encryption to protect documents after they are submitted.
• Protect the Applicant's Personal Data by
  • Encrypt data during data transport via the Internet
  • Limit access to authorized personnel with the proper electronic credentials
  • Store electronic records in a secure data center
• Ensure the Objective identification of the Applicant by:
  • Demonstrating the authenticity of electronic signatures in court can prove challenging
  • Whereas a hand written signature has objective characteristics that identify the signer, a typed name does not
• Ideas for Complying:
  • Use a digital or digitized signature method (not easy)
  • Require applicants to submit a number or code along with their name
  • Accept e-Signatures from pre-approved IP Addresses
  • Require applicants to provide "wet" signatures, prior to beginning the electronic process

                                                                                                      Back To Top  

Copyright © 2007 Employment Screening Services, Inc.
627 E. Sprague Avenue
Suite 100
Spokane, WA  99202
1-800-473-7778