Application Researchers

Legal Update: Tennessee’s Lawful Employment Act
The Basics

Effective January 1, 2012, Tennessee employers with five (5) or more employees will be required to verify the employment eligibility of their employees and other “non-employees”. “Non-employees” are defined as “any individual, other than an employee, paid directly by the employer in exchange for the individual’s services.”

It’s important to note that, although the Act does not require the use of the federal E-Verify program, it is strongly encouraged. In fact, employers who choose to utilize E-Verify will be provided a safe harbor if a worker is later found to be in the country illegally. An employer will not be found to have violated the Act if they receive a confirmation from E-Verify, or if the employee is appealing the tentative non-confirmation and the appeal has not yet been resolved. If an employer chooses not to use E-Verify, then they are not protected by the Act’s safe harbor provision.

Warning:

Although the E-Verify system, which is operated by the Department of Homeland Security, verifies employment eligibility based on a Social Security number, it cannot verify that the person providing the Social Security number is the lawful owner of the number. To combat this issue, it’s important to continue to conduct Social Security number verifications through Application Researchers®. Our verification service is conducted through the Social Security Administration (SSA) and matches the name AND Social Security number to that on file with the SSA. We use this information as an identifier, and having incorrect information can result in inaccurate background screening information.

If an employer chooses not to use the E-Verify system, then they must verify employment eligibility status of employees and non-employees by obtaining one of the following documents from them:

• A valid driver’s license or other photo identification issued by the State;

• A valid certificate of birth;

• A valid, unexpired U.S. passport;

• A U.S. certificate of birth abroad;

• A certificate of citizenship;

• A certificate of naturalization;

• A U.S. citizen identification card;

• A lawful permanent resident card; or

• Other proof of immigration status and authorization to work in the United States.

Implementation Dates

The Lawful Employment Act is going to take effect in stages, as described below:

• January 1, 2012: effective for all governmental entities and private employers with at least 500 employees.

• July 1, 2012: effective for all private employers with 200 to 499 employees.

• July 1, 2013: effective for all private employers with 6 to 199 employees.

Records Retention

If E-Verify is used, then employers must keep those records for three years from the date of hire, or one year from the date of termination, whichever is later. If E-Verify is not used, then employers must retain the other required documentation for three years after receipt, or for one year after the worker ceases to provide services and/or labor, whichever is earlier.

Penalties

If an employer knowingly violates the Act, then penalties will be assessed by the Tennessee Department of Labor and Workforce Development. A first-time offender may only be issued a warning, if they comply with the remedial action required by the Department of Labor (DOL) and only if they did not knowingly violate the Act. If an employer willfully violates the Act, they will be assessed a civil penalty of $500 for the first violation, $1,000 for the second violation and $2,500 for a third or subsequent violation. In addition, they will also be assessed an additional $500 for each employee or non-employee who was not verified through the program or for whom an identity / employment authorization document was not requested. If there are second and/or third violations, then the employer would be fined an additional $1,000 or $2,500, respectively, for each employee or non-employee. In addition, if an employer doesn’t provide evidence of compliance, as required by the DOL within 60 days of the final order, that employer will have its business license suspended until they are in full compliance. The DOL will also keep a list of those employers who have been issued a final order and make it available on its website.

Application Researchers® provides a simple, cost-effective method for our clients to ensure their compliance with the Act. Contact us for additional information regarding our I-9 Compliance System.

Fair Credit Reporting Act Toolkit
Application Researchers® remains dedicated to being your trusted source for information related to the background screening industry. We have created a Fair Credit Reporting Act toolkit to assist you in understanding and complying with this ever-complicated law. The toolkit will provide you with invaluable resources and templates to ensure your compliance and educate you on your requirements. Please contact us for your complimentary toolkit today!

Legal Update: Use of Credit Reports in California
The State of California has been busy setting limitations on the use of employment-related credit reports. AB 22 will become effective on January 1, 2012 and significantly prohibits the use of credit reports in employment related decisions. Employers in the private sector may only request a credit report for the positions noted below, and only when the candidate has been informed that a report will be requested and that candidate has given their permission in writing. The employer must also provide a copy of the report, free of charge, to the individual on which it was requested. If employment is denied, then FCRA adverse action guidelines must be followed.

• Positions for which the information contained in the report is legally required to be disclosed or obtained;

• Managerial positions;

• Positions that require regular access to confidential information (i.e., credit card account information, Social Security Numbers, etc…);

• Positions in which the individual can enter into financial transactions on behalf of the company;

• Positions which involve access to confidential or proprietary information;

• Positions which involve regular access to cash totaling ten thousand dollars or more of the employer, a customer, or client, during the course of a workday.

Adverse Action – Your Guide to Compliance
The Fair Credit Reporting Act (FCRA) requires that the employer give the applicant a reasonable opportunity to ensure that the information reported in a Consumer Report or Investigative Consumer Report is correct before adverse action is taken. The FCRA requires that you utilize a two step process when adverse action is taken against an applicant or employee.

** The term Adverse Action is defined as declining or withdrawing an offer of employment. **

Step One

Before you decline an applicant or withdraw an offer of employment, you must provide the applicant with a Pre-Adverse Action Letter that puts them on notice that you have received information which could lead to adverse action; and this notification must be sent to the applicant within three days of making your initial decision. You must:

1. Provide them with a letter advising them that adverse action is being considered,

2. Provide them with a copy of the report provided to you by Application Researchers®, and

3. Provide them with a copy of their rights under FCRA.

This will provide the applicant with the opportunity to dispute the validity of the information contained in the report with Application Researchers® before adverse action is taken.

If the applicant does not dispute the accuracy of the information, then you may move to Step Two.

If the applicant does dispute the accuracy of the information contained in the report, the letter provides them with our toll-free phone number so that they may contact us to start the dispute process. Upon being contacted by the applicant, we will begin a formal dispute process and report the re-investigation results back to you and the applicant. We give priority attention to the dispute process to ensure a fast turnaround of the updated report.

Once you receive the re-investigation report, you are then able to make a final hiring decision. If that decision is to decline the applicant or withdraw the offer of employment, then you are required to take the second step of this process because you are taking adverse action against them.

Step Two

Now that you are ready to take adverse action against the applicant, you are required, under the FCRA, to do the following:

1. Provide them with a letter advising them that adverse action is being taken, and

2. Provide them with the updated report of the re-investigation (where applicable).

Application Researchers® is committed to helping our clients maintain compliance with this process while making your job easier. We offer current clients the ability to complete this process within Zip24AR®. Simply log in and locate the applicant in question. At the bottom of the screen, you will see “Adverse Action”. There, you will find both letters, as well as the summary of rights under FCRA. Simply open the letters and edit them to include your company name, contact information, and the applicant’s information. Print them on your letterhead and send them off! Make sure you keep copies of the letters in your records, as Zip24AR® does not maintain copies and does not document the adverse action process.