April 2011 Quick Clips

Failure To Follow Fcra Disclosure Requirements Can Be Costly Mistake,April 29, 2011

Many employers rely on third-party consumer reporting agencies to run background checks (such as credit and criminal checks) on applicants and employees. Use of a consumer reporting agency to conduct background checks triggers the protections of the Fair Credit Reporting Act (FCRA), which requires employers to obtain authorization for the background check and to make a series of disclosures to applicants/employees about the use of the background report. Among other things, employers must disclose in writing to applicants/employees that they intend to obtain a background report and disclose the results of any report, along with a summary of the individual’s rights under FCRA, before taking any adverse action.

A freight services company in Ohio, Vitran Express Inc., apparently did not take its FCRA disclosure obligations seriously and, as a result, just settled a class action lawsuit with about 3,000 job applicants (from April 2004 through March 2009) for $2.6 million. The named plaintiff sued Vitran after the company ordered a background check on him without providing any FCRA-required notices.

The class members include about 2,900 applicants who never received the disclosure from Vitran that it was obtaining a background report from a consumer reporting agency. Another group of class plaintiffs include applicants who did not receive copies of their background reports, which Vitran used in its hiring decisions, or summaries of their FCRA rights. Still others will receive settlement money because Vitran failed to provide them with notice that the decision to not hire them was not made by the consumer reporting agency or that they could obtain a free copy of their credit report from the agency. Hall v. Vitran Express Inc., No. 1:09-cv-00800 (N.D. Ohio).

Planning ahead. . . April 21, 2011

by Darrell R. VanDeusen

Lawyers get a bad rap. Sometimes it's not warranted. Sometimes it may be. Read this decision from the court in Jayhawk Capital Mgmt. v. LSB Industries, No. 08-2561-EFM, (D.Kan. April 12, 2011) and decide for yourself which category to put it in:

"He who is his own lawyer has a fool for a client" is one of every lawyer's favorite proverbs. Among the several reasons why this is undoubtedly true, is that lawyers are trained to handle disputes skillfully but without the emotional rancor that will mask the actual parties' reason and good sense. [footnote: ". . . do as adversaries do in law, strive mightily, but eat and drink as friends." Shakespeare, The Taming of the Shrew, Act 1, Scene 2.]

Regrettably, many attorneys lose sight of their role as professionals, and personalize the dispute; converting the parties; disagreement into a lawyers' spat. This is unfortunate, and unprofessional, but sadly not uncommon. Before the Court, however, is an uncommon example of this unhappy trend.

This matter is currently set for trial commencing June 14, 2011. Defendants seek a brief continuance, noting that one of their counsel, Bryan Erman, along with his wife, is expecting their first child due on July 3. Given the proposed length of trial and the famous disregard that newborns (especially first-borns) have for such schedules, and given that the trial is scheduled in Kansas City while the new Erman's arrival is scheduled in Dallas, Defendants move this Court for a continuance. This in itself would not be remarkable, but in reviewing the motion the Court was more than somewhat surprised to read that "Plaintiffs have refused to agree to continue the trial setting and have indicated that they intend to oppose this Motion."

Well, every party is entitled to file an opposition to a motion, and hoping that perhaps Defendants' had mis-characterized the vigor of Plaintiffs' opposition, we have eagerly awaited Plaintiffs defense of its opposition. The memorandum in Opposition arrived yesterday, and it was, sadly, as advertised.

First, Plaintiffs make a lengthy and spirited argument about when Defendants should have known this would happen, even citing a pretrial conference occurring in early November as a time when Mr. Erman "most certainly" would have known of the due date of his child, and even more astonishingly arguing that "utilizing simple math, the due date for Mr. Erman's child's birth would have been known on approximately Oct. 3, or shortly thereafter." For reasons of good taste which should be (though, apparently, are note) too obvious to explain, the Court declines to accept Plaintiffs' invitation to speculate on the time of conception of the Ermans' child.

Further, Plaintiffs assert that there are currently five attorneys from two different firms on Defendants' signature block. While the Court might be inclined to agree with Plaintiffs that this seems like a plethora of attorneys, it can't help but note that, entered and active on behalf of Plaintiffs in this case, are also five attorneys, from three different firms; so perhaps Plaintiffs are ill-equipped to argue that Defendants have too many attorneys.

Finally, Plaintiffs argue that surely Mr. Erman will have sufficient time to make it from the Kansas City trial to the Dallas birth, even helpfully pointing out the number of daily non-stop flights between the two cities; and in any event complain of the inconvenience of this late requested continuance. Certainly this judge is convinced of the importance of federal court, but he has always tried not to confuse what he does with who he is, nor to distort the priorities of his day job with his life's role. Counsel are encouraged to order their priorities similarly.

Defendants' Motion is GRANTED. The Ermans are CONGRATULATED. IT IS SO ORDERED.

Maryland's Job Applicant Fairness Act Limits Credit Checks, April 21, 2011

by Darrell R. VanDeusen

From an employer's perspective, one of the big bills passed by the General Assembly this term - and already signed into law by Governor O'Malley - is the Job Applicant Fairness Act (JAFA). This law (HB 87) prohibits an employer from using an applicant's or employee's credit report or credit history in determining whether to deny employment to the applicant, discharge the employee, or determine compensation or the terms, conditions, or privileges of employment. It authorizes an employer to request or consider an applicant's credit report or credit history under specified circumstance.

The law does provide some exemptions. Use of credit history is permitted when the employment sought involves: (1) a position that is managerial and that has access to personal information (as defined in the Commercial Law Article) of a customer, employee or employer, except for information customarily provided in a retail transaction; (2) a position with fiduciary responsibility to the employer, including the authority; to issue payment, collect debts, transfer money or enter into contracts; or (3) a position that is provided an expense account or a corporate debit or credit card or has access to confidential business information. Notably, the law does not exempt a position in which an employee will have access to cash or valuables.

The Commissioner of Labor may investigate a complaint of violation of the law and determine if the violation has occurred. If the Commissioner determines that a violation has occurred, the Commissioner may attempt to resolve the matter informally. If the Commissioner is unable to resolve the matter informally, the Commissioner may access a civil penalty of up to $500 for the initial violation and up to $2,500 for a repeat violation. An employer has 30 days to request an administrative hearing to contest the penalty. If the request is not made within 30 days the penalty becomes a final order.

The law takes effect October 1, 2011.

Arbitrator Rules in Favor of Rip Van Winkle, April 8, 2011

by Adam T. Simons

Proving, yet again, that arbitration is nothing more than a “sophisticated coin” toss, an arbitrator in Ohio recently held that an employer did not have just cause to terminate a union employee for sleeping on the job – even though the employee admitted that he fell asleep – because the employee did not construct a make-shift bed and did not attempt to conceal his slumber by moving to an inaccessible area. The union employee was terminated on March 30, 2010 after he was discovered sitting in a chair, asleep, with the lights off. The supervisor took photos of the individual and located a union representative, who assisted the supervisor in waking up the employee. The employee was suspended, and then terminated, at which point the union filed a grievance. The arbitrator reinstated the employee, explaining that, because the employee had not engaged in “nesting,” or the construction “of a makeshift bed and reclining in it in a position reasonably conducive to restful slumber.” To his credit, however, the arbitrator reinstated the employee without backpay or benefits. The take away? Maybe Marge Schott was onto something.

In the Event of the Federal Government Shutdown, April 8, 2011

by Adam T. Simons

With the deadline for the government shutdown imminent at the time of publication, it is important for employers, especially those currently dealing with pending charges at the EEOC, to understand what a shutdown will mean for those charges. According to the EEOC website, a contingency plan exists in the event of a government shutdown. Rest assured that the EEOC will still take new charges, pursue on-going litigation, and maintain the security of offices and files. During a shutdown, the following activities, however, will not occur:

Staff will not be available to answer questions from the public, or to respond to correspondence from the public.
While we will accept charges that must be filed in order to preserve the rights of a claimant during a shutdown, these charges will not be investigated.
Insofar as the courts granting EEOC’s requests for extensions of time, EEOC will not litigate in the federal courts.
Mediations will be cancelled.
Federal sector hearings will be cancelled, and federal employees’ appeals of discrimination complaints will not be decided.
Outreach and education events will be cancelled.
No FOIA requests will be processed.

Even with these measures, to most, the difference between the operation of the EEOC during the government shutdown and its normal operation will be imperceptible.

Employers: Keep Your Records! April 7, 2011

by Adam T. Simons

A recent decision from the D.C. Circuit highlights the importance of record retention policies. In Talavera v. Shah, a former employee of the Office of Security at USAID filed a suit against her former employer for gender discrimination and retaliation under Title VII. Among her allegations was that she was passed over for promotions in June 2004 and again in November 2004. USAID filed summary judgment which, the District Court granted. On appeal, the employee argued that the District Court improperly permitted USAID to rely on the results from the interviews, notwithstanding that the decision-maker had destroyed some of his interview notes shortly thereafter. The D.C. Circuit affirmed the grant of summary judgment, except with regard to the June 2004 non-promotion claim. The Court held that she had raise a triable issue of pretext and that a reasonable jury could find unlawful gender discrimination. The Court based this holding, in part, on the spoliation of evidence rule, which permits a court to assume that destroyed documents were harmful to the party responsible for their destruction. Here, the Court held that the destruction of the interview notes, even though it was not done in bad faith, created an inference in support of the employees because the employer was required to keep notes for one year under EEOC regulation and for two years under OPM regulation. The take-away of this case for employers is to make certain that your record retention policy is in accordance with any state or federal requirements, and, in any case, at least as long as the relevant statute of limitations for any employment law claims.

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