Category Archives: Hiring
The Minnesota Legislature passed “ban the box” legislation, and Governor Mark Dayton signed it into law. The law will take effect on January 1, 2014.
In essence, the law will ban private employers from inquiring into a job applicant’s “criminal record or criminal history” before an interview or, if there’s no interview, before a conditional offer of employment:
A public or private employer may not inquire into or consider or require disclosure of the criminal record or criminal history of an applicant for employment until the applicant has been selected for an interview by the employer or, if there is not an interview, before a conditional offer of employment is made to the applicant.
S.F. 523 (to be codified at Minn. Stat. §364.021). Violation does not give rise to a private cause of action, but rather the potential of fines for unremedied violations to be imposed by the Minnesota Department of Human Rights during a one year “introductory” phase. After the first year, higher fines may be imposed for violations, depending on employer size.
The legislation specifically prohibits causes of action by applicants, which was apparently an important part of the political compromises in the new law:
The remedies under this subdivision are exclusive. A private employer is not otherwise liable for complying with or failing to comply with section 364.021.
This legislation places Minnesota at the vanguard in this “ban the box” movement (only 3 other states have the ban). But the prohibition against private causes of action should help reduce employer concerns about its misuse by otherwise unsuccessful applicants.
Takeaways: Employers need to revise their application to take off the “box” (whether literally a “box” or in another form) or any questions about “criminal records or history” and move the inquiry to the interview or conditional offer stages of the hiring process. Since Minnesota is at the forefront, “off the shelf” application forms generated by national-offices for local Minnesota offices need particular attention. And remember, this is really a “fair crack at it” legislation, meaning that criminal history may still be relevant to a hiring decision, but only when the applicant has been able to demonstrate his or her qualifications despite the criminal history. In weighing the impact of such background information, it will be important to consult with legal counsel on the ultimate question of relevancy and the potential of discrimination. While this new legislation doesn’t allow for a private lawsuit, the EEOC is still very interested in the potential misuse of criminal background questions when investigating possible protected class discrimination.
The federal government has released new I-9 forms that are required to be used by all employers beginning tomorrow, on May 7, 2013. The new forms should be used only for newly hired employees. As most employers are aware, the I-9 form is used to verify that a new hire is legally authorized to work in the United States. A copy of the new I-9 form is available here.
While the new forms do not make significant changes in the verification process, there are a few differences. Both the old and new forms have three sections: Section 1 to be completed by the employee; Section 2 to be completed by the employer; and Section 3 to be completed if there is a need to re-verify an employee’s eligibility to work in the United States. The new form also asks for an employee’s email address and telephone number so that Immigration and Customs Enforcement (ICE) and the Justice Department’s Office of Special Counsel (OSC) can conduct follow-up interviews of employees more easily when I-9 audits of employers are performed. While the Bush administration appeared to target its enforcement activities against undocumented workers, the Obama administration seems more focused on targeting employers for work eligibility violations related to I-9 forms. ICE and OSC have stepped up their enforcement actions during the past few years in targeting employers for I-9 violations. ICE audits of employer I-9 forms have increased from over 250 in 2007 to over 3,000 in 2012, according to data provided by the Associated Press.
Additionally, the new form is now two pages instead of one page. While the new form more prominently requires the employee to attest to his or her citizenship or immigration status (and thus eligibility to work in the United States), the two-page format may increase retention costs for larger employers, and may increase the risk that one or both pages of the I-9 form may be misplaced or lost, which is tantamount to a failure to complete the I-9 form.
Takeaway: Be sure to start using the new version of the I-9 form no later than May 7, 2013. The failure to use the correct form may subject an employer to liability if ICE conducts an I-9 audit. With an increasing emphasis on employer I-9 audits by the current administration, it is more important than ever that employers ensure that I-9 forms are properly completed when an employee is hired.
Private employers in Minnesota should be aware of a “Ban the Box” bill introduced in the Minnesota House and Senate that provides as follows (new language underlined):
364.021 PUBLIC AND PRIVATE EMPLOYMENT; CONSIDERATION OF CRIMINAL RECORDS.
(a) A public or private employer may not inquire into or consider the criminal record or criminal history of an applicant for employment until the applicant has been selected for an interview by the employer or, if there is not an interview, before a conditional offer of employment is made to the applicant.
See HF 690; see also SF 523. In essence, the bill would prohibit a private employer from running a criminal background check or asking applicants questions about their criminal history in an application until the interview process or, if there is no interview, before a conditional offer of employment is made. Currently, the prohibition applies only to public employers.
The bills include enforcement provisions that differ in some ways, but both would allow for attorneys’ fees and fines. The bills are currently in committee. While they have not yet captured significant media attention, they are being discussed by employers’ groups and Chambers of Commerce. If passed, this will be an important change for many private employers’ standard hiring procedures; although certainly many already follow this or a similar contingent offer processes to safeguard against possible discrimination claims, as currently recommended by the Minnesota Department of Human Rights.
Takeaway: Private employers who inquire about applicant’s criminal backgrounds should monitor this proposed “ban the box” legislation.
In a previous blog we noted that the current Form I-9 technically expired on August 31, 2012, but that the United States Citizenship and Immigration Services (USCIS) had issued notice to employers to continue to use that form until a new form was released. Well, that time has come.
On March 8, 2013, the USCIS announced a new Form I-9 that employers should start to use immediately. The form is available here. Prior Form I-9s dated 2/2/2009 and 8/7/2009 may continue to be used until May 7, 2013. As of May 8, however, employers must use the new Form I-9 only.
While the format of the new Form I-9 is essentially the same as previous versions of the form, the Form I-9 now consists of two pages rather than one. The accompanying instructions also have been expanded and provide more detailed guidance regarding completion of the form.
Takeaway: Employers should begin using the new Form I-9 effective immediately, but in no event later than May 7, 2013. If you should have any questions regarding the new Form I-9 or the completion process, please do not hesitate to contact us.
Employers must begin using new Fair Credit Reporting Act (FCRA) forms no later than January 1, 2013. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 transferred FCRA rulemaking authority from the Federal Trade Commission (FTC) to the newly created Consumer Financial Protection Bureau (CFPB).
The FCRA regulates employers who use background checks provided by third parties, known as Consumer Reporting Agencies (CRA), as part of the employment process. Before an employer may obtain a background check on an applicant or employee from a CRA, the applicant or employee must be given certain information about the scope of the background check and must consent to the background check. This is where the new forms are relevant. The main change in the forms is that consumers must now contact the CFPB, rather than the FTC, about their rights under the FCRA.
What is confusing for employers is that the FTC’s website still has the old forms on it, and still has information about the FCRA, even though the CFPB is now the agency responsible for the FCRA and background checks. The new forms are not easy to locate, but can be found on the government’s website at the end of a very long document. You need to know that you are looking for Title 12, Banks and Banking Regulations, of the Code of Federal Regulations. Go to http://www.ecfr.gov/ in order to find the forms. Once you are at that website, find Title 12 “Banks and Banking,” and then scroll down to Part 1022, called “Fair Credit Reporting.” The actual forms for employers and CRAs are found at Appendix K (for employers) and Appendices M and N (for CRAs). Or you can access the new forms by using the links below.
The first of the new forms is called “A Summary of Your Rights Under the Fair Credit Reporting Act.” Employers must provide this form to applicants and employees when issuing a pre-adverse action letter, and in some other situations. PDFs for this form can be found here.
The second new form is called “Notice to Users of Consumer Reports: Obligations of Users Under the FCRA.” This form must be provided by a CRA to users of their services, like employers. PDFs for this form can be found here.
The last new form is called “Notice to Furnishers of Information: Obligations of Furnishers Under the FCRA.” The FCRA requires CRAs to give this notice to entities that provide information under certain circumstances, such as when a consumer disputes some information in the background report. PDFs for this form can be found here.
Takeaways: Employers need to make certain they are using the correct “Summary of Rights” form no later than the beginning of 2013. Employers who fail to comply with the FCRA or to use the new forms may be subject to lawsuits for actual damages, attorney’s fees, statutory damages, and possibly punitive damages, depending upon whether the failure to comply with the FCRA was negligent or willful.
Many employers in Minnesota extend a job offer by presenting the candidate with a written offer letter. The merits of this best practice include avoiding any ambiguity as to compensation or other employment terms and confirming, as appropriate, the individual’s at-will employment status – for example, by including an at-will employment disclaimer.
The offer letter can also be used to articulate any conditions to the job offer. For example, if the individual must satisfactorily complete a background check or drug screen prior to the offer being finalized, those requirements should be set forth in the letter. Further, if the offer is intended to be void if the candidate fails to show up for work on the specified start date, that term should also be expressly stated in the letter. As appropriate, the letter may also state that its terms are subject to change or withdrawal at any time prior to acceptance.
It is also important that the offer letter communicate any expectations the company may have that the candidate agree to the terms of a noncompete or other restrictive covenant agreement. Typically such an agreement would be included as an enclosure to the offer letter so that the individual can review the specific terms of any such restrictions before accepting the job. For the job itself to act as sufficient consideration for the restrictive covenants, the job must be accepted with prior knowledge of the noncompete, nonsolicit, or other restriction. See, e.g., Sanborn Manufacturing Co. v. Currie, 500 N.W.2d 161, 164–65 (Minn. Ct. App. 1993).
The job offeree’s understanding and acceptance of each of these employment terms is best confirmed by having the individual sign a copy of the offer letter and return it to the employer.
If the offer is accepted and finalized and the candidate becomes employed, this countersigned offer letter can also satisfy the requirements of a little-known Minnesota law regarding contracts of employment. Minnesota Statue § 181.55 was enacted in 1933 and technically requires that employers give employees a written and signed agreement of hire that clearly and plainly states certain terms.
While there is no claim or cause of action that arises if a signed written statement regarding the terms of employment is not provided, the failure to do so results in the employer bearing the burden of proof in establishing such terms in the event of a dispute. See Minn. Stat. § 181.56. The written statement is not required to be given to farm labor or casual employees who are temporarily employed, and does not apply to companies with less than 10 employees. See Minn. Stat. § 181.57.
Takeaway: Rather than leaving basic employment terms ambiguous and subject to dispute, the best practice for employers is to provide a candidate with a written job offer. Legal counsel can be of useful assistance in making sure such letters comply with applicable laws and contain essential terms.
When employers make written offers of employment or provide written employment policies to employees, such as Employee Handbooks, it is generally advisable for the employer to include a disclaimer stating that the employment is at-will. The purpose of an at-will disclaimer is to prevent an employee from mistakenly believing that he or she is entitled to employment for a specified period of time or is entitled to other protections with respect to the employment.
In most cases, the following language will be sufficient to disclaim any intent to alter the at-will employment relationship:
Employment with the Company is at will unless otherwise stated in a written agreement signed by the President of the Company. This means that either the Company or the employee can terminate the employment at any time and for any reason, with or without notice.
Employers should be careful, however, with respect to language that suggests “that the at-will employment relationship cannot be amended, modified, or altered in any way.” An administrative law judge recently held that language interfered with employees’ rights under Section 7 of the National Labor Relations Act.
Takeaway: The presumption that employment is at-will is an important protection for most employers. By including at-will employment disclaimers on key documents, employers can increase the odds that they will be able to benefit from the protections of the employment-at-will doctrine.
Recruiters can play a vital role in important hires by searching out the better candidates, doing initial selection and recommendations, and saving the employer a lot of time and frustration. To make sure there is a smooth and successful relationship, most employers enter a Search Retainer Agreement with a professional recruiter to define goals and expectations as well as to set compensation.
Many recruiters will present the employer with a standard search retainer agreement. These are often subject to some negotiation and should be closely reviewed by the employer. Key factors to focus upon include:
- Scope of the Search: There should be a defined search with job description-based criteria and timelines for producing qualified candidates who meet the criteria.
- Background Check Obligations: Many recruiter relationships go sour when the recruiter presents a candidate with undisclosed issues (like a non-compete or other background problem). The Search Retainer Agreement needs to spell out in its body, or in an attachment, the recruiter’s role in doing a background review.
- Clear Compensation Structure: Some recruiters are paid on a contingent basis; others are paid flat fees. Often the fee is formula-based set by the candidate’s salary – the formula and its triggers should be clear in the Search Retainer Agreement.
- Representations/Authority: The Recruiter is an agent of the employer so the Agreement needs to articulate clearly what the Recruiter can and cannot hold out to candidates regarding the terms and conditions of the job and the Recruiter’s ability to bind the employer.
- Warranties: What if a hire doesn’t work out or quits soon after he or she starts? The Search Retainer Agreement needs to spell out whether hires are covered by a warranty – usually meaning the Recruiter commits to find a replacement candidate at no cost.
- Confidentiality: Is there a provision by which the Recruiter safeguards the employer’s confidential information?
Takeaways: The Search Retainer Agreement creates a legal relationship that can either lead to excellent new hires or degenerate into disputes and lost opportunities. These are just a few examples of the provisions necessary for an employee to review when retaining a search professional. Consult legal counsel at the beginning so that you won’t need counsel at the end!
An employer has a “hot prospect” hire, perhaps coming through a placement agency, and all seems perfect until the prospect mentions something about a non-compete. “It’s no problem, they never enforce it, and if they do it’s my issue to deal with.” Employer beware! The former employer may move to enforce and it may very well be your legal problem.
The prospective employer generally cannot rely upon an applicant’s assurances alone and can potentially be drawn into legal liability for hiring an employee under a non-compete pursuant to the tort of “tortious interference with contractual relations.”
Essentially, this tort provides that when a post-employment constraint exists, and the new employer has knowledge of its existence and procures a breach without justification, the new employer can be liable to the former employer for damages. Such damages even may include the former employer’s attorneys’ fees in enforcing the non-compete. The liability may extend to the procured breach of a non-solicitation, non-compete, or confidentiality agreement.
It is a somewhat complicated tort in its elements and often many defenses are possible, but tortious interference is very real and very important. It requires careful independent legal analysis and consideration of the enforceability of a non-compete, non-solicitation, or confidentiality agreement as a critical component of a hiring decision. Sometimes, independent legal analysis will result in a round of negotiations with the former employer or perhaps even the abandonment of a hire. Legal counsel can provide protection to the employer in this difficult complication.
Takeaways: When you know of a non-compete, stop the process and refrain from the natural inclination to rely upon the prospective hire’s representations and perspective – it could be wishful thinking and downplaying. By knowing of the post-employment restraint, you have the “hot potato” and need a legal analysis of the next steps to take in analyzing and mitigating risk or avoiding the prospective liability of a tortious interference with contractual relations claim.
In conjunction with a more competitive job market, employers have increasingly relied on pre-employment background checks to distinguish candidates. Occasionally companies obtain background information, such as criminal history records and financial reports, on their own without outside assistance. More often, however, employers use an external vendors to conduct the background check and provide the information to the company.
Employers should be aware that when using an outside vendor to obtain background information they must comply with the provisions of the federal Fair Credit Reporting Act (“FCRA”). This law provides job applicants, and also employees, with certain rights regarding background checks. It also places certain obligations on an employer when seeking this information.
For example, prior to conducting the background check, the employer must provide the applicant with written notice disclosing the intent to seek this background information. The employer must also obtain the individual’s written authorization to conduct the background check. This form must be provided to the job candidate as a document separate from the job application form. See 15 U.S.C. § 1681b. The vendor conducting the background search, also known as a consumer reporting agency, may supply such forms to the employer for its use. In turn, employers should be careful not to assume that these forms comply with the requirements of the FCRA, but should instead have the forms reviewed by legal counsel to ensure their compliance.
If upon obtaining the background check information the employer decides to not offer the applicant a position, the FCRA mandates a certain two-step procedure. First, the employer must provide the individual written notice of its intent to withdraw the job offer based at least in part on information obtained in the background check and provide the individual an opportunity to obtain a copy of the background check report. Second, after a period of time which may allow the individual an opportunity to correct any errors in the report or otherwise explain the information, the employer can then actually withdraw the offer.
In addition to the federal FCRA, many states have similar laws. Minnesota has such a law, which contains requirements in addition to those found in the federal FCRA. See Minn. Stat. § 13C.02. Employers using external vendors to conduct background checks should make sure that their actions are compliant with these state laws as well.
Takeaway: Employers using outside vendors to conduct background checks on applicants or employees should take care to make sure their actions are compliant with both the federal FCRA and any similarly applicable state law.
To properly document that new employees are authorized to work in the United States, employers are required to make sure a federally-issued Form I-9 is completed on each employee hired after November 6, 1986. The form must be fully completed within three business days of the employee’s first day of work. As part of this process, the employer must review certain identifying documentation presented by the employee. The Form I-9 is not filed with any governmental agency, but is subject to audit and inspection by the Department of Homeland Security and the Department of Labor.
The Form I-9 is approved and authorized by the federal Office of Management and Budget (OMB). The form has evolved over time and occasionally a new Form I-9 is approved by OMB. Employers should take care to make sure that they are using the currently effective Form I-9.
The current Form I-9 has an OMB expiration date of August 31, 2012. The United States Citizenship and Immigration Services (USCIS) agency recently issued a notice that despite this expiration date, employers should continue to use the currently available form until further notice. Accordingly, employers should continue to use this form after August 31, 2012.
Takeaway: Despite the August 31, 2012, expiration date on the current Form I-9, employers should continue to use that version until further notice from USCIS.
On August 8, 2012, the Minnesota Supreme Court published an opinion reversing a $1 million verdict in the Jimmy Williams v. Tubby Smith negligent misrepresentation case. The Minnesota Court of Appeals previously upheld the verdict on the theory Williams harmed Smith when he falsely represented that he had authority to hire Williams as an assistant basketball coach for the University of Minnesota in the spring of 2007.
To prove negligent misrepresentation, a plaintiff must be able to prove that:
- The defendant owed a duty of care in conveying information;
- The defendant breached that duty by negligently providing false information;
- The plaintiff reasonably relied on the misrepresentation; and
- The plaintiff’s reliance proximately caused damages.
The Minnesota Supreme Court reversed the verdict in the Williams case on the grounds that the University of Minnesota did not owe a duty of care to Williams.
To support its conclusion that the University of Minnesota did not owe a duty of care to Williams, the Minnesota Supreme Court emphasized two principles. First, the Court cited authority for the principle that “sophisticated parties negotiating a commercial transaction are entitled to legal protection only for intentional, fraudulent misconduct.” Second, the Court cited a previous case in which it held that parties who challenge erroneous government action as “wrongful” must show something more than “simple inadvertence, mistake, or imperfect conduct” by the defendant government agency. In either of these situations, something more than mere negligence is required to permit recovery.
The Court concluded that “the legal relationship between Williams and Smith is not the type of relationship entitled to legal protection, and therefore no duty of care against negligent misrepresentation is owed.” The Court explained that there was no professional, fiduciary, or special legal relationship between the parties in which one party had superior knowledge or expertise. Instead, Williams and Smith were two sophisticated business people who negotiated at arm’s-length for a government position. The Court held that no public policy warranted imposing a duty of care in that context.
Takeaways: The Minnesota Supreme Court’s decision in the Williams case is a victory for the University of Minnesota, but the decision is based on the relatively unique facts of the case. Employers should still be cautious to avoid making misrepresentations during the hiring process. For additional tips on the hiring process, click here and here.