Friday, May 29, 2009

Are Your Background Checks Done Properly?

Many employers use background checks to investigate the background of their employees who have fiduciary obligations, such as money management, driving duties, or have high-profile positions with the company. The Fair Credit Reporting Act applies to any of these background checks performed by a consumer reporting agency for an employer. The act requires that, if an employer intends to do a background check, the employer must notify the person in writing—in a document consisting only of the notice and nothing else—that a report may be used. The person must also authorize the procurement of the report.

If an employer determines to refuse to hire a person on the basis of a background report, before it takes any action it must give the person a pre-adverse action disclosure which includes a copy of the report and a written description of the rights that person has under the Fair Credit Reporting Act. After the adverse action is taken, an employer must also (1) provide oral, written, or electronic notice of the adverse action, (2) provide the applicant the name, address, and telephone number of the consumer reporting agency that furnished the report and a statement that the consumer reporting agency did not make the decision and is unable to provide the specific reason for the adverse action, and (3) provide the applicant a notice of his or her right to obtain a free copy of the report for 60 days and the right to dispute with the consumer reporting agency the accuracy or completeness of the information furnished by it.

In Utah, an employer must also have a retention policy that provides for the destruction of any information gleened from a background check for its applicants who are not hired.

Wednesday, May 20, 2009

United States Supreme Court Agrees that Pension Plan that Pays Benefits based on Unequal Credits Given to Pregnant Women is Lawful.

On Monday, May 18, the United States Supreme Court ruled that a pension plan that paid out benefits to pension receipients based upon calculations that did not equally credit women who had taken pregnancy leave prior to the Pregnancy Discrimination Act (PDA) were not presently violating the Pregnancy Discrimination Act. The Court explained in its decision, AT&T Corporation v. Hulteen, that the pension plan at issue was paying out benefits based upon an employee's term of employment. In this case, the parties bringing the claims were receiving benefits for a term that included pre-PDA calculations. During that pre-PDA period, these pension recipients were not credited equally for leave that they took while they were pregnant. After the PDA, such unequal crediting would violate the Act; however, before the PDA was enacted, the Supreme Court had explicitly concluded that such unequal crediting was lawful. Under these circumstances, the pension recipients argued that by paying pensions based on these pre-PDA crediting rules, the pension plan was violating the law.

The Supreme Court held that the pension plan had not violated the PDA. The main reason for the Court's decision was that the existing law explicitly allows "bona fide seniority . . . system[s]" to "apply different standards of compensation . . . provided that such differences are not the result of an intention to discriminate." Because the Court concluded that the pre-PDA crediting were adopted at a time when such crediting was not illegal, the crediting was not a result of an intention to discriminate. Additionally, the Court ruled that the pension plan's payment system did not itself have discriminatory payment rules---it was merely paying out based upon a formula that did not itself discriminate.

Interestingly, the Court considered the effect that the passage of the Lilly Ledbetter Fair Pay Act had on its decision and determined that the recent passage of the Act did not change its conclusion.

Tuesday, May 19, 2009

New Whistleblower Protections!

The Stimulus Package that was enacted in February, otherwise called the American Recovery and Reinvestment Act of 2009, provides sweeping whistleblower protections to any employee of an employer who receives any stimulus money. The protections found in section 1553 of the Act prohibit any demotion, discharge, or other discrimination of an employee when he or she has disclosed "gross mismanagement" of a grant or public contract, "gross waste" of stimulus funds, "substantial and specific danger to public health or safety related to the implementation or use of" the funds, "an abuse of authority related to the implementation or use of covered funds," or "a violation of law, rule, or regulation" related to the use of the funds.

The law presumes that a prohibited act is related to the disclosure if the retaliating person knew of the disclosure or the reprisal occurred closely after the disclosure was made. This presumption can only be overcome by clear and convincing evidence that the employer would have taken the action even without the disclosure.

The protections give an offended employee the right to reinstatement, damages, and attorney fees, costs, and expert witnesses' fees. Further, a pre-dispute arbitration agreement is unenforceable to avoid court.

Wednesday, May 13, 2009

Have Employers Updated their COBRA Notices?

Section 3001 of the American Recovery and Reinvestment Act of 2009 that was enacted by Congress in February 2009 provides that for certain eligible employees who were involuntarily terminated between September 1, 2008, and December 31, 2009, an employer must cover 65% of COBRA continuation coverage premiums, which employers may then take as a tax credit. This is a substantial change from the regular provisions of COBRA, which allowed employers to require qualified employees to pay 100% of the premiums. The law requires employer's to notify employees of this change in the law if they lost their jobs prior to the law's effective date.

Failure to Update Employment Application Process Could Be Big Problem for Utah Employers.

The new Employment Selection Procedures Act became effective yesterday, May 12, 2009. As discussed in an earlier post, the Act requires an employer to "maintain a specific policy regarding the retention, disposition, access, and confidentiality of information" gathered in the "initial selection process," i.e, the application process. In fact, the new law requires that an employer have a copy of the policy readily accessible to any applicant who wishes to see the policy before filling out an application. The policy also requires that all records obtained during the application process be destroyed within two years unless another statute requires their retention. The law also restricts employers from asking for an applicants birthdate, social security number, or drivers license number until the applicant is offered a job or "the time in the employer's employment selection process when the employer obtains" certain background tests. It further restricts employers from using any information on an application for any other reason other than determining whether to hire the person, including sending them advertisements.

If employers have not taken measures to comply with the law, they are now subject to employer to fines and civil damage remedies for the applicants.