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November 2014 Privacy Summary

By Nicolas Dufour | Mar 20, 2015 | Privacy Summary

Federal Developments

Background Checks
On November 17th, the U.S. Senate passed S. 1086, “The Child Care and Development Block Grant Act of 2014, ” to implement new educational, health and safety standards on child care providers that receive grant funds. Specifically, section 7 of the bill has a requirement for child care providers receiving funding from the Child Care and Development Block Grant (CCDGB) to conduct criminal history checks for prospective and current employees working with children. Additionally, section 7 calls for “licensing, regulation, and registration requirements” that prohibit the employment of child care staff members who:

  • Refuse to consent to a criminal background check;
  • Knowingly make materially false statements in connection with the background check;
  • Are registered, or required to register, on a State sex offender registry; and
  • Have been convicted of one or more specified felonies, as listed in the bill.

Section 7 of the legislation also details requirements for conducting the background checks, including fees a state may charge. The legislation is pending the President’s signature.
https://www.congress.gov/bill/113th-congress/senate-bill/1086

On October 29th, U.S. Customs and Border Protection (CBP) published five updated single-source purchase orders to notify contractors that new background check standards, established after the recent data breach of contractor USIS, require the contractors to update their IT systems before resuming their access to the personal information of CBP’s prospective and current employees. The five single-source, no-bid contracts amount to a total value of approximately $500, 000.
http://www.weeklystandard.com/blogs/customs-and-border-protection-halts-background-checks over-securityconcerns_817719.html

EEOC and NLRB / Social Media
On November 12th, officials at the U.S. Equal Employment Opportunity Commission (EEOC) and the National Labor Relations Board (NLRB) spoke at an employment law event and discussed companies’ use of social media in hiring employees. EEOC Commissioner Chai Feldblum recognized the availability of information online, but emphasized the possible inability to act on such information. NLRB officials specifically mentioned employers should consider the protections afforded in the National Labor Relations Act prior to any social media monitoring of prospective employees.

State Legislation

Ban the Box
Private employers in Montgomery County, Md., with 15 or more employers have a new ban the box law with more provisions than a straight ban the box.

For the press release from Montgomery County, MD where Several companies’ headquarter are located in the Defense Contracting and Hospitality Industry:
http://www6.montgomerycountymd.gov/Apps/Council/PressRelease/PR_detailsNew.asp?PrID=14203

Important highlights of the new law:

  • Provide the applicant or employee with a copy of any criminal record report.
  • Notify the applicant of the intention to rescind the offer and state the items that are the basis for the intention to rescind the offer.

Give an applicant who finds false information or mistaken identity in the report provided an opportunity to respond with evidence proving the mistake within seven days.

Court Cases

Background Checks
On November 24th, an Uber driver filed a class action lawsuit against Uber Technologies, Inc. (Uber) alleging violations of the Fair Credit Reporting Act (FCRA), the Massachusetts Consumer Credit Reporting Act, and the California Consumer Credit Reporting Act by using background checks without applicants’ knowledge or authorization to make hiring decisions. The Plaintiff argues he had been working for Uber for approximately one month when he received an email from Uber’s employment screening agency stating that his employment contract had been terminated because of information obtained through a consumer reporting agency. The complaint emphasized that the information concerned a “minor criminal record…stem[ming] from [Plaintiff’s] seven children receiving much-needed Medicaid benefits.” The complaint alleged, “[i]n direct violation of the FCRA [and state laws], whenever adverse action is taken against an applicant on the basis of information disclosed on a consumer report, the defendants fail to afford the applicants the procedural safeguards mandated by law… including by failing to provide pre-adverse action notices and a reasonable opportunity to dispute information in such reports before taking adverse action.”
Mohamed v. Uber Technologies, Inc. et al., No. 3:14-cv-05200 (N.D. Cal., Nov. 24, 2014).

On November 4th, a federal district judge in Pennsylvania approved a $3.2 million settlement between a background screening company and two proposed classes of plaintiffs on whom they provided a pre-employment background screening report. Plaintiffs alleged that the background screening company violated the Fair Credit Reporting Act (FCRA) by providing information in background check reports which was outdated and beyond the 7 years permitted under the FCRA for adverse information; as well as reporting public record information without providing notice and without following strict procedures to assure accuracy.
King v. General Information Services, Inc. No. 2:10-cv-06850 (E.D. Pa., Nov. 4, 2014).

Disparate Impact Liability
On November 3rd, the federal district court in Washington, D.C., ruled that the Fair Housing Act (FHA) allows for direct discrimination claims “only, ” contradicting a Department of Housing and Urban Development (HUD) rule allowing for the establishment of liability based on disparate impact. The court ruled that HUD violated the Administrative Procedures Act by issuing its Disparate-Impact Rule, which the ruling vacated. The court wrote in part, “The expansion of the FHA to include disparate-impact liability would not only have a wideranging disruptive effect on the pricing and provision of homeowner’s insurance, but would also require insurers to collect and analyze certain types of race-based data on their clients and prospective clients.” The Supreme Court is expected to rule by June 2015 whether the Fair Housing Act allows disparate impact suits. The case before the Supreme Court is Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. American Insurance Association v. U.S. Department of Housing and Urban Development, No. 13-00966 (D.D.C., Nov. 3, 2014).

International

The German Federal Court referred to the European Court of Justice a case questioning whether IP addresses are “personal data.”
https://translate.google.com/translate?sl=auto&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fjuris.bundesgerichtshof.de%2Fcgi-bin%2Frechtsprechung%2Fdocument.py%3FGericht%3Dbgh%26Art%3Dpm%26Datum%3D2014%26Sort%3D3%26nr%3D69184%26pos%3D0%26anz%3D152&edit-text=&act=url

Other Developments

Data Breach
On November 10th, the U.S. Postal Service (USPS) announced a breach of the personal information of approximately 800, 000 employees and of the personal information of an unspecified number of customers. USPS did not identify the cause of the breach except to note that “this intrusion was similar to attacks being reported by many other federal government entities and U.S. corporations.” Various news outlets reported that investigators so far believe that the Chinese government orchestrated the attack. Potentially compromised personal information includes employee names, addresses, dates of birth, Social Security numbers, dates employment, and emergency contact numbers, as well as customer service callers’ names, telephone numbers, e-mail and mailing addresses, and other information provided during customer service calls. USPS announced that it will provide one year of credit monitoring at no cost to employees. In a press release, USPS advised customers that, “at this time, we do not believe that potentially affected customers need to take any action as a result of this incident.”
http://about.usps.com/news/fact-sheets/scenario/media-statement-final.pdf
http://about.usps.com/news/fact-sheets/scenario/customerFAQs_Final.pdf

Please Note: The information contained herein is a monthly summary of the daily information provided by Arnall Golden Gregory LLP, an Atlanta firm servicing the business transactions and litigation needs of background check companies. The information described is general in nature, and may not apply to your specific situation. Legal advice should be sought before taking action based on the information contained herein. For more information about Arnall Golden Gregory LLP, please visit www.agg.com or contact Bob Belair at 202.496.3445 or robert.belair@agg.com.