An increasing number of employers are conducting background checks on applicants and employees and many are outsourcing this function. Employers that outsource their background check function will find themselves subject to the Fair Credit Reporting Act (FCRA), which contains a set of “technical” compliance requirements.

The lack of guidance by courts in the area of background checks has left employers wondering whether their “best practices” will pass muster if challenged. A recent decision from the Southern District of Ohio, Mandy Burghy v. Dayton Racquet Club, Inc. et al., 2010 U.S. Dist. LEXIS 17373 (S.D. Ohio Feb. 26, 2010), may provide some needed assistance.

By way of background, the FCRA imposes specific procedural requirements on employers that wish to obtain consumer or investigative consumer reports (“Reports”) from third-party consumer-reporting agencies regarding applicants or employees. These employers must:

  1. Obtain written consent from and provide written disclosure to applicants or employees, in a “clear and conspicuous” stand-alone document, that a Report has been requested. (Informally, the Federal Trade Commission (“FTC”) has stated these requirements can be satisfied through the use of a combined consent/disclosure form focused solely on the Report being obtained);
  2. Before taking any adverse action based on information contained in a Report, provide the individual with a copy of the Report and a copy of the FTC’s Summary of Rights and allow the individual reasonable period of time to dispute the accuracy of the disqualifying information (the “Pre-Adverse Action” requirement); and
  3. Issue an adverse-action letter when implementing any adverse action, such as a denial of employment or denial of promotion.

In Burghy, the Court first considered whether the employer provided a “clear and conspicuous” disclosure. It found this was satisfied because the employer put the disclosure “on the front side of a one page document,” “employed reasonably sized type,” used “bullet points to call attention to the disclosures,” and the plaintiff was aware that the employer was obtaining a Report.

Practice point Infuse clarity and brevity into disclosures and exclude ancillary information.

The Court also considered the plaintiff’s assertion that the employer violated the “Pre-Adverse Action” requirement by implementing an adverse action prior to providing a copy of the Report and the FTC Summary of Rights. Specifically, the plaintiff claimed that the employer advised her of her termination at the same time as it provided her with the Report and Summary of Rights. The Court allowed this claim to proceed, denying the employer summary judgment.

Practice pointEliminate factual disputes by carefully structuring conversations or correspondence pertaining to a Report so that the individual understands that no final decision (adverse or otherwise) has been made and the individual retains the right to contest the accuracy of the Report for a reasonable time. To the extent there is a conversation, having a checklist handy to delineate the process may be helpful.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.

Photo of Richard I. Greenberg Richard I. Greenberg

Richard Greenberg, a Principal in New York City office of Jackson Lewis P.C., is admitted to the bar of the State of New York and the Federal District Court for the Southern District of New York. Mr. Greenberg graduated from Cornell University’s…

Richard Greenberg, a Principal in New York City office of Jackson Lewis P.C., is admitted to the bar of the State of New York and the Federal District Court for the Southern District of New York. Mr. Greenberg graduated from Cornell University’s School of Industrial and Labor Relations in 1992 and earned a Juris Doctor degree from Brooklyn Law School in 1995.

He advises both unionized and union-free clients on a full-range of labor and employee relations matters. With respect to traditional labor matters, Mr. Greenberg represents clients in collective bargaining negotiations, labor disputes, grievances and arbitrations, proceedings before the National Labor Relations Board, and in state and federal court. Mr. Greenberg also advises clients on the legal aspects of remaining union-free. With respect to employee relations matters, Mr. Greenberg has extensive experience assisting clients in numerous industries with the development and maintenance of personnel policies and personnel infrastructures. In this regard, Mr. Greenberg often works on these issues with clients as business needs and culture change as a result of business transactions, such as mergers and acquisitions.

Mr. Greenberg regularly advises clients on compliance with the myriad of federal and state employment laws, including the FMLA, FLSA, ADA, ADEA and WARN, as well as new legal developments impacting labor and employment policies and practices.

Photo of Susan M. Corcoran Susan M. Corcoran

Susan M. Corcoran is a principal in the White Plains, New York, office of Jackson Lewis, P.C. Susan is a seasoned employment counselor and litigator and is often thought of as the “go to” person on national workplace law issues for her clients.