5 Reasons Why HR Compliance is More Complicated Than Ever

September 24, 2019 | Shannon Shoemaker

Because compliance is changing so quickly on the state and federal level, HR departments are finding it more and more challenging to keep up with current regulations and changes to employment law. A vendor partner can be the HR practitioner’s best support to help navigate the fast-moving legal compliance landscape that includes background screening, reference checks, and employment verification.


Non-Compliance in HR is Complicated and Expensive

A recent compilation of court records from the Corporate Research Project of Good Jobs First, found that over the past decade, employers paid out over $174 million to resolve class-action lawsuits alleging that they violated federal rules governing the use of background check reports on job applicants. Companies providing those reports have paid out another $152 million when they have been sued directly. Non-compliance is expensive, and “I didn’t know that law changed” isn’t a valid excuse according to our court system.

Here are five specific areas of compliance that are the most risky for companies and HR departments. Your vendor partner should have comprehensive and up-to-date information on each.


1. Changes to Ban the Box.

Ban the Box regulations restrict when an employer may ask a candidate about criminal history. The number of states and communities that support Ban the Box continues to grow. Coverage usually applies where the applicant lives, although some cities defer to the applicant’s place of work.

An article on ensuring fair hiring practices in HRO Today explains the employer’s role in Ban the Box regulations. “Ban the Box ensures that previously incarcerated individuals have a fair chance of getting to an interview stage to demonstrate whether he or she is the best candidate for the job,” says Cisive’s Chief Compliance and Data Protection Officer, Vice President, and Corporate Secretary Bruce Berger. “Employers must still take responsibility to ensure that they will only consider convictions that might be relevant to the position to be filled and that evidence of rehabilitation is considered at the time since conviction or release from incarceration.”

The Cisive platform ensures state-specific Ban the Box documents are presented to the correct person when necessary to comply with legislation, improving your time to fill and streamlining your workflow.


2. Increased EEOC oversight.

Because legal compliance has become more challenging, companies must consider both Equal Employment Opportunity Commission (EEOC) and Federal Trade Commission (FTC) guidelines for collecting, using, and disposing of background check information. Add the laws that vary by state, and most companies require a dedicated team just to maintain the most basic standards for compliance.

For example, the EEOC requires any personnel or employment records you make or keep (including all application forms, regardless of whether the applicant was hired, and other records related to hiring) must be preserved for one year after the records were made, or after a personnel action was taken, whichever comes later. (The EEOC extends this requirement to two years for educational institutions and for state and local governments. The Department of Labor also extends this requirement to two years for federal contractors that have at least 150 employees and a government contract of at least $150,000.) If the applicant or employee files a charge of discrimination, you must maintain the records until the case is concluded.


3. Complex state and city laws.

For example, California and New York, along with eight other states, municipalities, and multiple city governments, now have bans that prohibit companies from asking about the salary history of job candidates. The new laws are aimed at ending the cycle of pay discrimination and some go further than simply banning pay history questions. A few also prohibit an employer from relying on an applicant’s pay history to set compensation if it is discovered or volunteered; others prohibit an employer from taking disciplinary action against employees who discuss pay with coworkers.

Even with the specificity of these state laws, we have to consider questions like: How do you determine whether any salary history bans apply to your situation? Is applicability based on the prospective worksite? Where the interview takes place? A recruiter’s location when they’re asking? Can you require a copy of a w-2 to verify salary? The answers depend on the specific laws of the state, interpretation of those laws, and legal precedents in states where the laws have been challenged. A vendor partner’s job is to know the answer to all of the above.


4. Recent case law and changes surrounding FCRA.

Increased complexity of the recent amendments is what makes compliance difficult for employers. Over the past decade, civil litigation under the FCRA has surged, and class actions brought under the FCRA are increasing in frequency. The FCRA is a complex, highly technical statute that allows recovery of statutory damages, actual damages, punitive damages, and attorney’s fees and has resulted in significant jury verdicts. For these reasons, the FCRA has become a favorite vehicle for class actions and often threatens outsized liability even when a plaintiff’s chance of success on the merits is slim. The class certification battle is therefore the decisive point of the litigation in many cases. Two of the largest are class actions filed against McDonald’s and PepsiCo.

In the class action suit against McDonalds in Florida, a job seeker said that McDonald’s violated federal law when it conducts background checks on applicants.

According to plaintiff Danny O’Neill, he and other job seekers were subject to a background check when they applied with McDonald’s. However, the McDonald’s background check class action lawsuit claims that the fast food company failed to obtain proper authorization in violation of the federal FCRA.

Further, alleges the plaintiff in the McDonald’s background check class action lawsuit, he and other job applicants were not properly notified of the consumer report that the company pulled as part of the application process. O’Neill says that when he applied with McDonald’s in March 2018, the company pulled a background check on him that contained personal, private, and sensitive information about him. According to the lawsuit, O’Neill was unaware that the report would be pulled because the disclosure in the hiring paperwork contained other distracting information.

[O’Neill v. McDonald’s Corporation, Case No. 8:18-cv-02038-SDM-AEP, in the U.S. District Court for the Middle District of Florida.]


5. Increased adoption, risk and use of artificial intelligence (AI) in candidate vetting, screening and hiring.

While there are many companies offering background screening using AI, proceed with caution. Some of these companies that conduct background checks using AI technology without additional oversight. It can actually cost a lot more in the long run.

For example, Uber and Lyft use background screening services that are less expensive than one used by parts of the taxicab industry, a practice that may have contributed to the companies failing to identify some drivers with criminal backgrounds, according to CNET’s Download.com, A 2016 lawsuit revealed that Uber used two background checks of its drivers. Those background checks failed to catch 25 drivers with criminal backgrounds because the screening process didn’t include access databases with complete criminal histories or go back as far as the law allows, according to the lawsuit.

Uber settled the lawsuit, which was brought by San Francisco and Los Angeles, for $25 million. Lyft also settled a lawsuit stemming from lax background checks in 2014.


Vendor Partners in HR Help Lessen Compliance Complications

Maintaining compliance in human resources is complicated but not impossible.

Because the responsibility of communication and disclosure related to these regulations lies on you, the employer, vendor partner selection is critical for companies of all sizes. The provider you select to support your HR compliance and team efforts should be experienced and well-versed in the latest legislation for HR compliance, as well as act as an advisor for you and your company with regards to what your responsibilities are. Partners like Cisivewill even conduct training for key staff members to ensure your hiring and HR standards and processes are compliant.

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