BulletProofBlog the blog on crisis communications

In this regular feature, Bulletproof interviews top plaintiffs' attorneys for their perspective on the crises likely to affect businesses in the near future. Today we talk to Adam Klein, a partner at New York’s Outten & Golden LLP, one of the nation’s premier labor/employment plaintiffs’ firms. Mr. Klein focuses his practice on the prosecution of class action statutory-discrimination and wage/hour cases. 

Are there specific new labor/employment areas where you are now focusing significantly more attention?

Adam Klein: I would flag the increasing use of background checks to screen applicants as a target of higher-volume litigation and government action. In particular, we have seen a dramatic increase in the use of criminal conviction records and credit history to deny applicants employment in a wide range of jobs and industries. It’s not a new area, but it’s one that deserves increased public awareness. Right now our firm is working with around 20 public interest groups to raise that awareness, and to pressure the EEOC to issue updated guidance in this area.

Let’s talk first about criminal records. Since 9/11, there’s been a heightened sensitivity to security concerns resulting in more comprehensive background investigations of applicants during the hiring process. The use of this information disproportionately impacts racial minorities in violation of our nation’s civil rights laws. In addition, discrimination based on criminal records violates the New York State Human Rights Law and several other analogous state laws. At both the federal and state level, employers may not lawfully ban applicants from employment based on criminal conviction records. 

Now, we all need to be reasonable. You can’t expect daycare centers to hire recently convicted pedophiles. But are we to deny carting jobs to former felons? Those are the two extremes, and we expect that the EEOC’s updated guidance will both educate the public and provide a measured approach to this issue.

Once there is a tangible increase in public awareness, will there be a concomitant spike in filings?

Adam Klein: The short answer is yes. I expect job candidates who were denied employment because of their credit histories to take legal action. Obviously, there’s a lot more people whose job prospects are affected as a result of their credit scores, versus criminal records, especially in this economy.

It is also glaringly ironic that there is no statutory or regulatory guidance that addresses the civil-rights impact of the use of credit history as a screen for employment, which means that employers cannot expressly reject murderers for a job – but they can exclude people who owe Master Card a few bucks.

For employers who exclude applicants based on poor credit, the legal exposure is nonetheless substantial. However, we are not seeing employers changing their employment practices at the moment because there have not been an appreciable number of suits filed. That will presumably change once the government effectively informs the public, which should also include reminding job candidates that the Fair Credit Reporting Act gives all citizens the right to learn about how their credit scores have been used.            

Assuming maximum dissemination of such information, are we really looking at a significant impact on business?

Adam Klein: It’s a ticking time bomb. At the very least, there’s a burgeoning industry of companies that provide credit reports directly to employers. Their entire business will be threatened. But the overall impact will be felt by all businesses and none more so than retailers, 40 percent of whom use credit-history as a screen for hiring decisions.

I believe that these employers are operating under the extremely dubious supposition that people who owe money are likelier to steal. That is not just bad business policy; it also creates a serious social and economic problem. It results in good people not being hired and it costs jobs at a point in time when we can least afford it.

Employers need to be educated as well. In fact, there’s considerable sense in arguing, simply from a practical standpoint, that people who have credit problems make better employees, and that they will be more invested in their jobs because of their situations. 

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Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.