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Navigating Complex Issues of Employment Negligence (Part II)

By Dr. Gary L. Deel, Ph.D., J.D.
Faculty Director, School of Business, American Public University

Note: This article contains content adapted from lesson material written for APUS classes. This is the second article in a seven-part series on the particulars of employment negligence law and smart employer strategies for avoiding unnecessary workplace liability.

In the first part of this series, we reviewed the basic definition and components of employment negligence. Now, we will look at ways in which employers can and cannot screen job applicants based on historical information, including criminal and credit checks.

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One common way to establish employer negligence in a legal dispute is by proving that the employer either actually knew (legally called “actual notice”) or should have known (legally called “constructive notice”) that an employee had a propensity for negligent behavior. This concerns the very complicated and controversial area of employee screening.

Generally there are two types of employee screening tools: Those that look at an applicant’s historical information and those that look at current (at the time of the application) applicant circumstances.

We will focus on the two most common types of applicant history audits that are permissible for employment purposes, provided that they are narrowly focused and do not infringe on Civil Rights Act Title VII protections. The two types are criminal checks and credit checks.

Criminal Checks in Employment

In 2012, the Equal Employment Opportunity Commission (EEOC) published a comprehensive set of guidelines for the propriety of criminal checks used in employment decisions. Generally, the guidelines preclude any use of background checks that amount to either disparate treatment or disparate impact discrimination. However, this becomes a very difficult issue for many reasons.

First, criminal data may not be accurate or complete, depending on whether an employer relies on public or private data sources. Second, criminal statistics are known to have disproportionate correlations with traits like race.

Such a blanket exclusion of any applicants with criminal records would have the effect — the disparate impact — of discrimination based on a protected class. To overcome a charge of discrimination, an employer would have to establish a business necessity for such criminal checks and exclusions. So the EEOC suggested three factors that should inform any such employer policy:

  1. The nature and severity of the criminal record in question
  2. The amount of time that has passed since conviction and/or incarceration, if applicable
  3. The nature of the job for which the applicant is applying

Using these tools, employers are encouraged to design criminal background checks with the utmost scrutiny for what is appropriate under the circumstances. Say an applicant committed a crime 20 years earlier and has had an otherwise clean record since. Then, unless the crime was of a most severe nature, such as perhaps murder, the applicant’s criminal history should probably be given little weight in employment decisions.

Also, if an applicant’s past includes criminal vehicular behavior, such as a DUI, but the job in question does not involve driving, such an applicant should also not be excluded from consideration. The key is to use careful and purposeful reasoning in making such hiring decisions.

Credit Checks in Employment

With respect to credit checks, I wrote a separate article on the controversy over the use of these hiring tools. Credit checks are permitted under the Fair Credit Reporting Act. However, several states have outlawed or otherwise regulated these practices. The controversy surrounding the use of credit checks has two sides.

Proponents of credit checks argue that if an employee suffers from personal financial hardship, he or she might be more inclined to act unethically or illegally in desperation, such as stealing from their employer. Opponents of credit checks argue that this is an unfair assumption and that credit checks amount to discrimination against minorities that are statistically more likely to have low credit scores.

Despite this heated debate, credit checks remain legal at the federal level. But since the Great Recession of the last decade public policy concerns have emerged about whether these tools might be a dangerous kind of self-fulfilling prophecy. One can imagine a vicious cycle. A lack of income leads to financial hardship and poor credit history; that poor credit history in turn limits opportunities for future employment/income, and so on.

As with criminal background checks, if credit reporting is used for employment screening at all, it should be done with great care and precision so as to craft a substantial nexus between exclusionary criteria and job requirements. If a job entails no access to money or other valuables that could be easily misappropriated, then an applicant’s credit history alone is probably an insufficient reason to exclude that person from further consideration. If the position involves access to money, however, or requires the management of assets — such as an executive who must manage a budget — then such credit checks might be appropriate.

In the next article in this series, we’ll look at the legal implications of other tools that employers may use in hiring, including physical fitness, cognitive, integrity, personality and drug tests.

About the Author

Dr. Gary Deel is a Faculty Director with the School of Business at American Public University. He holds a J.D. in Law and a Ph.D. in Hospitality/Business Management. Gary teaches human resources and employment law classes for American Public University, the University of Central Florida, Colorado State University and others.

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