February 2019 Screening Compliance Update


February 2019 Screening Compliance Update

State Developments

Ban the Box: Detroit City Council Passes Fair Chance Housing Ordinance
Detroit City Council unanimously approved the Fair Chance Housing Ordinance on Tuesday, preventing landlords from asking potential renters about their criminal background up front. The ordinance will require most rental housing to use a “ban the box” policy, a campaign by civil rights groups and advocates for ex-offenders, that aims to persuade employers to remove a check box from applications that asks if candidates have a criminal record.

Ga. – Atlanta Mayor Bans Salary History Questions on City Job Applications
Prospective hires to the city of Atlanta will no longer have to answer questions about the history of their salaries on their job applications. Mayor Keisha Lance Bottoms banned the questions Monday in an effort to prevent wage discrimination and close the gender pay gap, according to a city news release.

MA New Data Breach Requirements
On Feb. 26th, Massachusetts enacted a new law requiring any holder of consumer data to provide free credit-monitoring services in the event of a data breach and prohibits credit bureaus from charging a consumer a fee to place or lift a security freeze, among other requirements

Denver’s New Program to Erase Low-Level Marijuana Convictions Launches Saturday
Starting Saturday, people in Denver who were convicted of low-level marijuana offenses prior to legalization can begin the process to get those wiped off their record. The “Turn Over a New Leaf Program,” announced last month by Mayor Michael Hancock and District Attorney Beth McCann, is part of a wider effort to reverse the impact of the war on drugs that disproportionately affects Black and Latino communities. The program will allow people charged in Denver to completely erase convictions for offenses that are now legal in the state, such as small-scale possession of marijuana or paraphernalia. About 13,000 people are eligible for the city’s free program, although fewer are expected to participate. Those wishing to take advantage of the program only need a driver’s license or other government-issued ID. While participants can go through the process online, there will also be in-person clinics where people can get assistance from city staff. If the case is eligible for expungement, a city representative will then draft documents and the candidate will receive information about what to expect next.

More Than 9,000 Marijuana Convictions Dismissed in Latest Case of Cities Taking Action
San Francisco has become the latest city to push for old marijuana-related criminal offenses to be cleared, with the city’s district attorney announcing that thousands of people will have their cases dismissed and sealed. In all, 9,362 people will be eligible for dismissal, according to George Gascon, the San Francisco District Attorney. Each of them had received either a misdemeanor possession convictions or felony convictions for possession with intent to sell, sales or transportation of marijuana or the cultivation of more than six marijuana plants. Gascon and his team worked with Code for America, a non-partisan group focused on improving government services through technology, to identify the cases — an effort that had been ongoing since January 2018. “It’s important because when people have criminal convictions — especially felony convictions — they are precluded from participating in society in many ways,” Gascon said, adding that “we as a society” have determined that the so-called “war on drugs” has been ineffective and this is one way to fix it. “It’s time to unwind the damage that we did,” he said. The move comes as cities and states across the nation work to dismiss similar cases related to marijuana convictions. In January, Denver announced its “Turn Over a New Leaf” program. So far, it hasn’t required candidates to pay for any part of the dismissal or sealing process, according to the Denver District Attorney’s Office communications director Carolyn Tyler. She said that courts will waive certain fees while a marijuana advocacy group pays the fee for approved candidates to have their records sealed. It’s unclear how long this funding will last, though. As of Feb. 27, only 38 people have qualified for the program since the measure only applies to individuals whose arrests took place in Denver. Unlike Denver, San Francisco’s initiative will not require inmates to apply. Instead, inmates will automatically have qualifying records dismissed and sealed, with the option to opt out if they want. In Maine, state legislators are working on a measure to seal or expunge past marijuana convictions throughout the state, the Portland Press Herald reported in January. In September 2018, judges in Seattle dismissed over 500 marijuana possession convictions, and Gov. Jay Inslee announced a plan to pardon people with misdemeanor marijuana convictions, which could apply to thousands more.


Court Cases

Does a violation of FCRA’s “Stand-Alone” disclosure requirement confer standing or not?
Could there be a split brewing with regard to standing to pursue FCRA claims against potential employers for violating the stand-alone disclosure requirement contained in 15 U.S.C. § 1681(b)(2)(A)(i)? Maybe.

Section 1681(b)(2)(A)(i) states as follows: “Except as provided in subparagraph (B), a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless—(i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes…” As Thomas Cull noted in this blog a few days ago, the Central District of California certified a 5,000,000 members class action against Wal-Mart Stores for allegedly violating § 1681(b)(2)(A)(i) by including extraneous information in the supposedly stand-alone disclosure. See Pitre v. Wal-Mart Stores, Inc., 2019 WL 365897 (C.D. Cali. Jan. 17, 2019). In doing so, the Pitre court rejected Wal-Mart’s argument that the Plaintiffs could not demonstrate that common questions or law or fact predominated because since some class members knew that Wal-Mart would conduct a background check on them, those class members could not show a concrete injury sufficient to have Article III standing under Spokeo, causing that standing issue to predominate over all others. Instead, the Pitre court focused on the Ninth Circuit’s decision after the Spokeo remand and held that class members could acquire standing simply by showing Wal-Mart accessed their protected information in violation of their protected rights, which constituted a concrete harm and not a mere technical violation of the FCRA. On the other hand, the District of New Jersey rejected a similar claim on the basis of lack of standing in Baccay v. Heartland Payment Sys., LLC, 2019 WL 337585 (D. N.J. Jan. 28, 2019). In Baccay, Plaintiff attempted to bring a putative class action claim against her former employer for failing to provide a stand-alone disclosure. Critically, however, the Baccay court focused on the fact that Plaintiff admitted that she knew that the former employer would run a background check on her prior to allowing her to begin employment and that she went forward with the employment application anyway. Because of her knowledge, the Baccay court held that, at most, its Plaintiff only suffered a bare procedural statutory violation—the receipt of a disclosure notice containing extraneous information—that did not rise to the level of a concrete injury sufficient to ground Article III standing. Thus, the Baccay court granted summary judgment to the former employer. The Baccay opinion contains a listing of cases that purport to apply what it terms to be the majority rule—the one that it followed—and the minority rule—the one followed by the Pitre court.

Home Depot Accused of Violating Workers’ Background Check Rights
A new lawsuit filed on February 1st, 2019 alleges that Home Depot U.S.A. Inc.’s background check authorization form doesn’t comply with federal fair credit reporting law and has been used in violation to the privacy and other rights of more than 1000 workers nationwide. The form includes language stating that job candidates and existing employees will hold the home improvement giant harmless on any claims they might have stemming from a signed background-check authorization.

8th Cir. Vacates FCRA Class Settlement on Spokeo Grounds
The U.S. Court of Appeals for the Eighth Circuit recently vacated a trial court’s order approving a class action settlement agreement because the trial court did not first determine whether the FCRA class representative had standing. In so ruling, the Eighth Circuit held that a court’s approval of a settlement was a judgment, which is invalid unless the court has Article III standing and subject matter jurisdiction. A copy of the opinion in Schumacher v. SC Data Center, Inc. is available at: Link to Opinion. The plaintiff filed a putative class action in Missouri state court alleging the defendant violated the federal Fair Credit Reporting Act by failing to provide her with a copy of her consumer report and time to explain the report before rescinding her employment offer. She also alleged improper disclosure and improper authorization related to the defendant’s use of a form to procure the consumer report. The defendant removed the case to federal court. Shortly thereafter, the parties reached a settlement agreement during mediation. Days later, the U.S. Supreme Court rendered its decision in Spokeo v. Robins, “holding that the Ninth Circuit failed to properly analyze Article III standing in assessing a claim brought under the FCRA.” The defendant then moved to dismiss for lack of standing, which the trial court denied, reasoning that “[plaintiff’s] standing to bring the FCRA claims underlying this settlement is irrelevant to whether she has standing to enforce the parties’ settlement agreement.” The trial court then directed the parties to “submit their settlement for approval under Fed. R. Civ. P. 23(e)” and approved the settlement. The defendant appealed. On appeal, the Eighth Circuit held that “the trial court erred by not assessing standing before enforcing the settlement agreement.” The Court reasoned that “Article III standing must be decided first by the court and presents a question of justiciability; if it is lacking, a federal court has no subject-matter jurisdiction over the claim.” In addition, the trial court has a continuing obligation to make sure that standing exists throughout the case, not just when the complaint is filed, and this applies to class actions because an order approving a settlement agreement is a judgment, which is invalid unless the court has subject matter jurisdiction to enter it. The Eighth Circuit rejected the class representative’s argument that the trial court did not need to address standing after Spokeo because the defendant was bound by the settlement agreement even if the law changed, reasoning that Spokeo “was not a change in the substantive law bearing on [plaintiff’s] claim that would have ‘altered the settlement calculus.’” In other words, the class representative argued that only changes in the law that directly affect Article III standing or subject-matter jurisdiction would invalidate a settlement. However, the Eighth Circuit rejected this argument, holding that “Spokeo did not change the law of standing and thus was not a post-agreement change in the law. It merely reiterated that an Article III injury must be both particular and concrete.” The Eighth Circuit concluded that because there was no finding in the record reflecting whether the plaintiff had standing, the trial court’s approval of the settlement would be vacated and the case remanded for a determination of whether plaintiff had standing to sue, expressing no opinion “on whether the Seventh Circuit’s opinion on FCRA standing or one of the competing approaches in other circuits is best applied to the facts of this case.”

Another Caution for Employers in Medical Marijuana States
A positive test may not equate to impairment. As marijuana use—and, especially medical marijuana use—becomes widely accepted, employers may have to assess not only whether the employee tests positive for marijuana but also whether the result indicates that the employee was under the influence while at work.

Moreover, it may be necessary for an employer who is challenged in court over a medical marijuana-related termination to have scientific expert testimony about the level of marijuana found in the employee’s system and what that says about the employee’s level of actual impairment.

In Whitmire v. Wal-Mart Stores, Inc., a decision that was recently issued by a federal court in Arizona, the plaintiff, a store cashier who was also the holder of a medical marijuana card, hurt her wrist at work (the injury wasn’t her fault) and was drug tested as part of her medical examination. She tested positive for marijuana metabolites. Walmart’s policy provided for termination of employees who tested positive for illegal drugs. Ms. Whitmire was first suspended without pay and then terminated based on her positive test result. She sued Walmart under the Arizona Medical Marijuana Act, which generally prohibits discrimination against employees who use medical marijuana but allows employers to take action against employees, even if they’re medical marijuana users, if they’re “under the influence” while at work.

However, the AMMA says that “a registered qualifying patient shall not be considered to be under the influence of marijuana solely because of the presence of metabolites or components of marijuana that appear in insufficient concentration to cause impairment.” In other words, an employer in Arizona can’t terminate the holder of a medical marijuana card based solely on a drug test unless the result is so bad that it indicates that the employee was impaired at work. The AMMA has two defenses for employers. It’s legal for an employer to take action against the employee (1) if the test result indicates that the employer had a good-faith basis for believing the employee was actually impaired while at work, or (2) if the employer is subject to other legal requirements, such as U.S. Department of Transportation regulations. (It’s also legal in Arizona for employers to prohibit all possession and use of marijuana on company premises and during work time, but that wasn’t an issue in this case.) Walmart couldn’t very well claim that a store cashier had to comply with DOT drug testing regulations, but it did contend that it should win the lawsuit because, among other reasons, it believed in good faith that Ms. Whitmire was impaired while at work on the day of her drug test. According to a declaration (a sworn statement similar to an affidavit) provided by a company personnel coordinator, Ms. Whitmire’s level of marijuana metabolites was in the highest range that the test registers, and the personnel coordinator said under oath that she believed an employee with that level would be impaired while at work. The court ruled that the opinion of a Human Resources professional on scientific matters such as these wasn’t good enough. To have a good-faith belief based only on a drug test result, the court said, Walmart should have presented evidence from an expert with an appropriate scientific background—perhaps an M.D., or a scientist with the drug testing laboratory. To make matters worse, the personnel coordinator didn’t provide any “foundation” apart from the test result to support her good-faith belief that the plaintiff was impaired while at work. (Presumably, the court would accept testimony from a lay witness about observations—for example, that an employee had dilated pupils, smelled like marijuana, and was stumbling around the workplace on the day in question. But, in this case, Ms. Whitmire’s workplace behavior wasn’t at issue.) Walmart had the burden of proof on the good-faith defense, and the court ruled that the sworn testimony of the personnel coordinator did not satisfy the burden. Accordingly, the court—on its own, without a request from Ms. Whitmire—granted summary judgment to Ms. Whitmire.

This means Ms. Whitmire wins without even having to go to trial. The only issue left to be resolved is how much she gets. So, employers, beware. If you operate in a state that has legal protections for medical marijuana users, and the number of such states is constantly growing, consult with your employment counsel before you take action against a medical marijuana card holder who tests positive for marijuana. In some states, you may even have a duty under state disability discrimination law to consider reasonable accommodations. (Because marijuana is still an illegal drug under federal law, the Americans with Disabilities Act does not prohibit “discrimination” based on an individual’s current use of medical marijuana or require reasonable accommodation of such use.)

Michigan Employers Can Refuse to Hire Medical Marijuana Users
In an unpublished opinion, a state appellate court held the Michigan Medical Marihuana Act (MMMA) did not provide a cause of action for an candidate whose conditional job offer from the City of Lansing was rescinded after he tested positive for marijuana during a mandatory pre-employment drug test. Eplee v. City of Lansing, 2019 Mich. App. LEXIS 277 (Feb. 19, 2019). This is at least the second decision involving failed drug tests, medical marijuana, and the MMMA; both were decided in the employer’s favor. The state appellate court decision focused on the following MMMA provision:

A qualifying patient who has been issued and possesses a registry identification card is not subject to arrest, prosecution, or penalty in any manner, or denied any right or privilege, including, but not limited to, civil penalty or disciplinary action by a business or occupational or professional licensing board or bureau, for the medical use of marihuana in accordance with this act…

The court held the MMMA did not make medical marijuana users a protected class and did not “provide an independent right protecting the medical use of marijuana in all circumstances.” It distinguished the outcome in this case from that in a trio of cases in which a separate Michigan appellate court panel held medical-marijuana-using employees discharged for failing an employer’s mandatory drug test were entitled to state unemployment benefits. In that instance, the employees had a right to unemployment benefits that was denied based on their medical marijuana use. However, in the more recent case, the candidate did not have a right to, or property interest in, employment with the city.


International Developments

Irish DPC Guidance for Brexit
On February 8th, the Irish Data Protection Commission (DPC) published guidance regarding data transfers from Ireland to the U.K. in the event a Brexit deal is not reached. The Irish DPC emphasized that all Irish companies which transfer personal data to the UK or Northern Ireland must comply with the General Data Protection Regulation (GDPR). Because the UK will no longer be an EU member, and instead be considered a Third Country, data transfers will be treated in the same way as transfers to Australia, India, or Brazil. The DPC recommended using standard contractual clauses (SCCs) agreed upon by both parties to protect the personal data and to comply with the GDPR. SCCs may be standalone contracts or incorporated into existing contracts between companies. Reported in Arnall Golden Gregory February 22, 2019 Daily Privacy & Consumer Regulatory Alert.


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