DRIVER SCREENING: A BREAKDOWN OF TWO NEW SOURCES OF LIABILITY

Speakers Scott Anderson – VP Safety, Anderson Trucking Service, Inc. Lana Batts – Co-President, Driver iQ David Robinson – Partner, Scopelitis, Garvin, Light, Hanson & Feary

Quality Background Check Process To hire quality drivers To follow regulatory requirements

Criminal Background Checks No direct supervision Cargo theft liability Violent crimes liability Negligent hiring claims Protect customers Customer requirements

Labor Pool Has Changed One of four US adults have been arrested or convicted 6.5% have a felony record One in 15 have gone to prison 700,000 individuals are released from prison and millions are cycled through local jails each year

Background Check Complication Hard to hire drivers Often not face-to-face Quick turnaround needed

Criminal Checks Complication Has Increased EEOC 2012 Enforcement Guidelines Consideration for arrests and conviction records for hiring Bottom Line – More difficult to eliminate criminals in hiring process

Agencies Making a Splash Class Action Cases Recent class action lawsuit against Consumer Reporting Agency for $28 million with 700,000 plaintiffs on regarding stale criminal records Most plaintiffs were truck drivers Recent class action against Kmart for $3 million with 65,000 plaintiffs failure to provide most recent FCRA forms Administration Fines EEOC collected $354 million in fines in administrative process

Why Review Current Practices? Recent EEOC Guidance Recent FTC Enforcement Recent Class Action Lawsuits Obama Administration Predilection Rules have not changed, but enforcement has Looking for systemic violations Looking for high profile violations EEOC collected $354 million in fines in administrative process

I. EEOC Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII Using criminal records to screen potential employees is seen as a civil rights issue Discrimination based on criminal record is not in the original 1964 Civil Rights Act…. But since 1969, the EEOC has investigated cases where criminal records were used in a discriminatory way, based on race or national origin

Can You Deny Employment to Convicted Felons? Some employers are unwilling to consider recently incarcerated individuals. Convicted felons tend to be employed at a much lower rate than non-criminals. Current incarceration rates: 1 in 17 white men 1 in 6 Hispanic men 1 in 3 African-American men

What is the Effect of the Enforcement Guidelines? Effective April 25, 2012 Represents the EEOC’s interpretation of the law Does not have the force or effect of regulations Intended to provide guidance as to how the EEOC will interpret the law in its investigations and administrative proceedings Office of Federal Contract Compliance applying EEOC guidelines to haulers of government traffic

Recent FTC Class Action Lawsuits Recent class action lawsuit for $28 million with 700,000 plaintiffs on same issues Stale records of criminal violations used to deny employment Lack of contemporaneous notice to the applicant Involved mostly truck drivers

The New RealityCombination of Obama Administration, EEOC, FTC, and Class Action Law Suits Require Review of Hiring Processes Job Description Applications Screening Post Screening

Review of Current Carrier Practices Criminals need not apply No criminal checks unless breaks in employment Reasonable Suspicion Criminal Checks Full criminal checks

“No Criminals Allowed” Can you state it on the application? EEOC forbids the automatic rejection ofthe person because he/she checked the box Only disqualifying the honest ex-offender Can you ask on application? EEOC recommends not asking if a person has a criminal record on the application Many states and cities have passed, or are considering “ban the box” legislation Last year’s Congress proposed a federal ban

How Do You Know Someone Has Been Convicted? Federal Study 12 months ending 9/30/2009 (US DOJ BJS Federal Justice Statistics 2009) 86,975 offenders (convictions) 67,499 (or 77.6 %) sentenced to incarceration Of those, 51,639 (or 59.4%) had prior convictions 19,482 (or 22.4% ) were not incarcerated 9,520 (or 48.9%) probation only (including 6,676 felons) 2,747 (or 14.1% ) fine only (including 289 felons) 7,215 (or 37.0%) suspended terms, jail time less than 4 days, deportation, unknown disposition

82.4% 16.1% 35.3% 35.3% 25.0% 4.4%

Reasonable Suspicion Remember current incarceration rates: 1 in 17 white men 1 in 6 Hispanic men 1 in 3 African-American men Since1969, the EEOC has investigated cases where criminal records were used in a discriminatory way, based on race or national origin Must be consistent in practice with strict guidelines for recruiters – not just a feeling

Internet Sites Product of the internet age Claim to have national scope Quick and cheap Neither accurate nor complete Usually contain disclaimer that they should not be used for hiring purposes Not compliant with FCRA Not recommended by EEOC Beware of Social Media in light of Title VII

Database Only Searches None is national No federal information on 94 district courts No information on 10 states Scattered information on the remaining 3,100 counties and 30,000 incorporated towns and cities Not considered current Updated at different times EEOC now questioning whether stand alone database searches are in compliance with these deficiencies

Database Plus Verification Databases of criminal records that are not official government repositories must only be used as “pointers”; Verify records found official government repositories to ensure accurate, complete and up to date information; Consider requiring a minimum of 2 unique identifiers (such as name and date-of-birth or name and social security number) match the candidate

STEPS TO TAKE NOW Audit your criminal background screening process Application Do not ask about arrests If you ask about convictions, consider adding the following language: “Apositive answer to this question does not necessarily eliminate you from further consideration” State laws

STEPS TO TAKE NOW, cont. 2. Make your screening process targeted Eliminate any reference to a blanket exclusion Avoid permanent exclusions Be able to show some nexus between the job and the conviction Consider: Job title Essential functions Circumstances under which job is performed Nature and gravity of crimes Relevance of crime to the position

STEPS TO TAKE NOW, cont. 3. Allow for an individual assessment Notice Opportunity to explain or clarify Consideration of additional information Facts surrounding offense or conduct; Number of offenses for which individual convicted; Age at time of conviction or release from prison; Evidence individual performed same type of work, post conviction, with no known incidents of criminal conduct; Length and consistency of employment history before and after offense or conduct; Rehabilitation efforts; and Employment references.

II. New Attacks Under the Fair Credit Reporting Act Two areas of concern for motor carriers: 1. The Disclosure and Authorization Form 2. The Adverse Action Protocol

1. Disclosure And Authorization Form Clear and conspicuous disclosure In writing In a document that consists solely of the disclosure Prior to the report be procured Applicant authorizes in writing * Motor Carrier Exception

Motor Carrier Exception IF: The applicant seeks a position as a driver, driver’s helper, loader, or mechanic; and The only communication with the applicant has been by mail, telephone, computer, or similar means – a “Remote Applicant”

Motor Carrier Exception, cont. THEN: The carrier can provide oral, written, or electronic notice to the Remote Applicant that a background check will be obtained and a summary of the applicant’s rights under the FCRA; and The Remote Applicant can provide oral, written, or electronic consent

2. Adverse Action Protocol Based in whole or in part on report Prior to taking adverse action Must provide (1) copy of report, and (2) description of applicant’s FCRA rights Wait a “reasonable” period of time Send final adverse action notice * Motor Carrier Exception

Motor Carrier Exception IF: The applicant seeks a position as a driver, loader, or mechanic; and The only communication with the applicant has been by mail, telephone, computer, or similar means – a “Remote Applicant”

Motor Carrier Exception, cont. THEN: Motor carrier can send one notice to the Remote Applicant (within 3 business days) stating the following: Adverse action taken Contact information for Consumer Reporting Agency Consumer reporting agency did not make the decision Remote Applicant can obtain a copy of the report

Cases Of Concern Hall v. Vitran Express, Inc., Case No. 1:09-cv-00800 (N.D. Ohio) class action settled for $2.6 million on August 21, 2011 Hunter, et al. v. First Transit, Inc., Case No. 09-cv-6178 (N.D. Ill.) class action settled for $5.9 million in March, 2011

Cases of Concern, Cont. Kelvin Daniel, et al. v. Swift Transportation Corp., Case No. 2:11-cv-01548- (D.C. Arizona 2011) Class action Pitt v. K-Mart Corp., Case No. 3:11-cv-00697 (E.D. Virginia) class action settled for $3 million on January 28, 2013 60,000 class members

Steps To Take Now Audit your practices in this area 1. Is your authorization form valid? Stand-alone document Full disclosure that report will be used for employment purposes Clear authorization Continuing authorization Signed by the applicant Does the Motor Carrier Exception apply?

Steps to Take Now, cont. Are you complying with the adverse action requirements? Train your personnel Use a pre-adverse action letter Implement a waiting period Use a final adverse action letter Does the Motor Carrier Exception apply? Use the updated Summary of Rights under the FCRA form (1/1/13)

Review of Discussion The game has changed -- Review all policies and procedures carefully Review all employment applications Identify essential job requirements Identify qualifying convictions Verify criminal convictions from databases Use a valid FCRA Disclosure and Authorization Form Allow for EEOC’s individual assessments Allow for FCRA’s post adverse action notices Maintain records

DRIVER SCREENING: A BREAKDOWN OF TWO NEW SOURCES OF LIABILITY