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Fraud Avoidance Strategies Hiring & Vetting: How Well Are You Checking? Washington, DC – March 16, 2017. Presented by. OVERVIEW OF THE HIRING PROCESS. Update/create the job description Post the job Applications Interview Reference Check Tests Conditional Job Offer Reference Check

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  1. Fraud Avoidance StrategiesHiring & Vetting: How Well Are You Checking?Washington, DC – March 16, 2017 Presented by

  2. OVERVIEW OF THE HIRING PROCESS • Update/create the job description • Post the job • Applications • Interview • Reference Check • Tests • Conditional Job Offer • Reference Check • Background Check • Offer letter

  3. LAWS THAT IMPACT VETTING & HIRING • Federal Anti-Discrimination Laws • race, religion, sex, color, national origin, age, disability, military status, genetic information • Anti-Retaliation Laws • The FCRA • The NLRA • General Torts • Invasion of privacy, negligent hiring, defamation • State/City/Local Laws • e.g., criminal history, unemployment discrimination, credit history, etc.

  4. TWO TYPES OF DISCRIMINATION IN HIRING • Disparate Treatment • Disparate Impact

  5. APPLICATIONS • Why do you need it? Will CV suffice? • Avoid illegal inquiries • DOB, maiden name, etc. • Have reviewed by employment lawyer • Ban-The-Box • Do not ask for arrest/conviction information • ~½ of all states • Include: • “Equal Opportunity Employer” • at-will language • Falsification warning

  6. APPLICATIONS Certification I certify that the facts contained in this application are true, and I understand that any false or misleading statements or omissions on this application may result in rejection of this application or, if hired, in discharge. I understand that [Company] is an Employer-at-Will, which means that if employed, my employment is for no definite period and may be terminated at the will of myself or my employer at any time, without notice, for any reason, or for no reason. No employee of the company is authorized to promise me anything contrary to what is stated in this paragraph, and I may not rely on any such representations. ______________________________ ______________________________ Signature Date

  7. Develop a list of permissible questions for interviewers Ask applicants similar questions to have a basis for comparison of answers Train interviewers on appropriate interview conduct/questions Ask applicants for examples/seek proof of claims Document the basis for hiring decisions Prohibit interviewers from investigating candidates INTERVIEWING BEST PRACTICES

  8. KEEP IT JOB RELATED • Job Descriptions/ Advertisements/ Postings/ Applications/ Interview Questions • Avoid indirect questions that may have a disparate impact • Avoid soliciting personal information • Every piece of information gathered should relate to job qualifications and have some demonstrable relevance to the employment decision • If the information is not likely to help in assessing the applicant’s qualifications, DON’T ASK FOR IT!

  9. INVESTIGATING THE CANDIDATE

  10. INVESTIGATING THE CANDIDATE • Investigations: • Criminal background • Credit history • References • Biographical data • Social media • Medical exams • Drug screening • Other tests

  11. INVESTIGATING THE CANDIDATE • Who conducts the investigation? • Conducted internally OR by 3rd party • Who internally? • What do they do with the information? • Disseminate Information on a Need-to-Know Basis • Only to those who need to know and only what they need to know • Information only goes UP never OUT or DOWN

  12. INVESTIGATING THE CANDIDATEThe Fair Credit Reporting Act & Similar Laws • Covers ALL “background” checks on applicants where 3rd party does the investigation. Very detailed requirements, summarized: • Obtain written authorization from applicant; • Provide applicant with required legal disclosure, mandatory notices and statement of rights; • Provide the applicant with a copy of the report and an opportunity to correct/explain prior to being denied employment opportunity; • Send the applicant a notice of adverse action containing the legally required information • ManysimilarState & Citylaws, somelocallaws

  13. INVESTIGATING THE CANDIDATE • BEWARE OF YOUR BACKGROUND CHECKING VENDOR • IT IS THE EMPLOYER’S LIABILITY • Check procedures • Indemnification

  14. INVESTIGATING THE CANDIDATECriminal Background Checking • U.S. Federal, State and City Laws, and some foreign jurisdictions, protect applicants with criminal records • One in five American adults have arrest or conviction records • Many states require checks after conditional offer • Employers cannot utilize policies that automatically bar applicants with criminal records - violates Title VII and various other laws • EEOC issued extensive guidance re use of criminal background checks • http://www.eeoc.gov/laws/guidance/arrest_conviction.

  15. INVESTIGATING THE CANDIDATECriminal Background Checking • Can only exclude on the basis of criminal records if there is a business necessity for the employment decision • To establish business necessity, the employer must show that it has considered: • the nature and gravity of the offense(s); • It must be job related • the time that has passed since the conviction/ sentence completion; & • the nature of the job sought • One or more of these factors must be sufficiently negative to warrant the decision not to hire

  16. CRIMINAL RECORDSCOMMON STATE & CITY & LAWS • An applicant may not be denied a job because of an arrest that did not result in a conviction • An applicant may not be denied a job because of an old conviction • Employment can be denied if: (1) there is a direct relationship between the criminal offense(s) committed and the employment sought; or (2) the applicant would pose an unreasonable risk to property or the safety or welfare of others

  17. INVESTIGATING THE CANDIDATECriminal Background Checking • Some employers are required to ask: • Schools; • Child care; • Health facilities; • financial institutions; • Security personnel employers • Volunteers count • Beware of confusing information • There is no consolidated, coherent national or international system • For local hires, get a clearance letter from the local police station

  18. INVESTIGATING THE CANDIDATECredit History • Bankruptcy: Federal law prohibits a private sector employer from discriminating against a person “who is or has been…a debtor or bankrupt under the Bankruptcy Act.” • Many States/Cities restrict consideration of credit history • NYC recently implemented a credit history ban • Most States/Cities permit it for certain positions/reasons: • “Substantially related” to the position • Access to confidential and/or proprietary information • Access to cash/accounts • Permitted/required by law • State/national security information

  19. INVESTIGATING THE CANDIDATEReference Checking • Formal/informal- you are not limited to those listed by the applicant • You should check all references you can • Have a form permitting you to check references • Prior to or after official offer? • Condition offer on check with current employer

  20. INVESTIGATING THE CANDIDATEReference Checking Reference Authorization I understand that references will be contacted, and that appropriate work-related references are not limited to those listed in my application. I authorize _____ to contact and secure information about my educational background, work experience, and to secure records of licensing, administrative, regulatory or any other governmental agency, and to contact any other information source relevant to employability. I hereby release _____, its subsidiaries, officers and agents from liability for seeking such information, and all other persons, schools, corporations or organizations for furnishing such information. ___________________ ___________________ Signature Date

  21. INVESTIGATING THE CANDIDATEReference Checking • Qualified Privilege • The information is reasonably necessary for the protection of the interests of one of the parties • The scope of the inquiry is limited to what is reasonably necessary to protect the interest • The information is communicated on a proper occasion • The information is given to and confined to proper parties only • The process is conducted in a proper manner • The entire process is characterized by good faith

  22. INVESTIGATING THE CANDIDATEBiographical Data • Confirm job related data • In US, hire a vendor • For local hires, what documents are you going to require? • Have a sound process to review • Understand how pay is comprised in-country

  23. INVESTIGATING THE CANDIDATESocial Media • Protections are afforded by the Nation Labor Relations Act • You cannot discriminate against individuals because of protected, concerted activity • You cannot engage in conduct that might chill an employee’s engagement in protected concerted activity • You may learn things you’d rather not know • You cannot demand an applicant or employee’s passwords • Do not have decision maker check- HR should check

  24. INVESTIGATING THE CANDIDATEMedical Inquiries • Pre-Employment • No inquires or examination until after an offer of employment • A medical examination is any examination seeking examination of a persons physical or mental health • Not drug tests or physical fitness tests that are job related • Post-Offer • May require medical exam and make medical inquiries after offer of employment if all entering employees in the same job category are treated similarly

  25. INVESTIGATING THE CANDIDATEDrug Screens • Drug tests are generally permitted post-conditional offer • Testing must be administered in a nondiscriminatory manner • Testing must be administered in accordance with a policy • Prescription drugs? • Legal marijuana? • Be careful what you wish for…

  26. INVESTIGATING THE CANDIDATETests • You may screen applicants using other tests, for example: • Writing, typing, accounting, math, honesty, personality, data analytics • Cannot directly discriminate • Cannot have an adverse impact • If test has selection rate for a particular EEO group which is less tan 80%, there is a presumption of adverse impact • EEOC has issued guidance on Employment Testing Procedures & adopted the Uniform Guidelines on Employee Selection Procedures (UGESP)

  27. INVESTIGATING THE CANDIDATETests • UGESP outlines the process by which an employer can determine whether a test or policy is in fact job-related • Validity or validation is the term used to state that a test is job related

  28. INVESTIGATING THE CANDIDATETests • Validity • Criterion-related validity: Relationship between test scores and later job performance • Content validity: • Job analysis as a foundation for the test; • Reasonable competence in test construction; • Test content related to job content; • Test content representative of actual job; • Generally selects applicants that are better job performers • Construct validity: Test measured a “construct” (something believed to be an underlying human trait or characteristic such as honesty) and that the construct is important for successful job performance

  29. INVESTIGATING THE CANDIDATETests • Right Fit/Personality/Honesty Tests • Data Analytics • Narrow band of “right” answers or “normal” answers will have an adverse impact • Will eliminate creative thinkers with a different frame of reference • Will create a “right fit for right now” – not for a future in a changing world and economy • Make sure they do not reveal psychological information (mood, depression, anxiety, hypochondria, paranoia, drug or alcohol dependency, etc.)

  30. INVESTIGATING THE CANDIDATETests • Beware of your test vendor • Employer has all the liability • Review/research your tests • Are they producing an adverse impact? • Is your test actually selecting applicating based on significant job-related issues? • Performance • Absence • Turnover

  31. INVESTIGATING THE CANDIDATEPolygraph • The Polygraph Protection Act prohibits lie detector testing (except federal employment, national defense contracts and security positions)

  32. Amanda M. Fugazy, Esq.Ellenoff Grossman & Schole LLP Founded in 1992, Ellenoff Grossman & Schole LLP is a New York City-based law firm comprised of almost 80 professionals, offering its clients legal services in a broad range of business related matters. Amanda M. Fugazy is a Partner in Ellenoff Grossman & Schole and is head of the firm’s Labor & Employment Practice Group. Ms. Fugazy represents clients exclusively in the fields of labor and employment law, including litigation, counseling and preventative education with regard to employment discrimination, harassment, labor relations, internal investigations, employment contracts, collective bargaining agreements, severance agreements, arbitration, mediation, wage-hour compliance and labor and employment aspects of corporate and real estate transactions. Ms. Fugazy works extensively with many not-for-profit organizations. Ms. Fugazy received her B.A. from The George Washington University and her J.D. from St. John’s University School of Law. afugazy@egsllp.com∙ (212) 370-1300 ∙ 1345 6th Ave., NY NY www.egsllp.com

  33. QUESTIONS? Presented by

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