October 2020 Screening Compliance Update


October 2020 Screening Compliance Update

Federal Developments

The Federal Data Protection and Information Commissioner (FDPIC) of Switzerland issued an opinion concluding that the Swiss-U.S. Privacy Shield Framework does not provide an adequate level of protection for data transfers from Switzerland to the United States pursuant to the Swiss Federal Act on Data Protection (FADP). The Commissioner’s opinion follows the recent Schrems II ruling by the Court of Justice of the European Union (CJEU) which invalidated the comparable EU-U.S. Privacy Shield Framework. The U.S. Department of Commerce has stated that the Swiss Commissioner’s opinion does not relieve participants in the Swiss-U.S. Privacy Shield of their obligations under the Swiss-U.S. Privacy Shield Framework.

The Department of Commerce, in conjunction with the Department of Justice and the Office of the Director of National Intelligence, has released a white paper entitled “Information on U.S. Privacy Safeguards Relevant to SCCs and Other EU Legal Bases for EU-U.S. Data Transfers after Schrems II.” The paper addresses concerns raised in the Schrems II decision over U.S. intelligence agencies’ access to data pursuant to Executive Order 12333 and Section 702 of the Foreign Intelligence Surveillance Act (FISA 702). The paper begins by stating that most companies doing business in the EU do not deal in data that is of any interest to U.S. intelligence agencies. It goes on to discusses what the Department of Commerce considers the “robust limits and safeguards in the United States pertaining to government access to data.” Click here to read more.

Opioid Crisis: Employers to Accommodate Opioid Use
While the ravages of COVID-19 turned the nation’s attention away from the opioid addiction crisis, the number of opioid overdose deaths has surged during the pandemic. Recognizing that the social and emotional consequences of the pandemic will likely increase the workplace impact of opioid use and co-morbid health conditions, the Equal Employment Opportunity Commission (“EEOC”) recently issued two guidance documents, one for employees and another for health care providers who treat employees:

The primary focus of each guidance is to help employees currently using opioids with a valid prescription or who have a history of opioid addiction to remain employed and receive necessary reasonable accommodations so they can continue to perform well and work safely. The EEOC guidance clearly reaffirms, however, that current illegal opioid use is not a covered disability and that the ADA allows employers to discharge and discipline employees for illegal use of opioids, even if there are no performance or safety problems.

Although the guidance documents are not directed to employers and do not change any previously existing standards, they increase the likelihood that employment claims will result if employers do not properly respond to employees requesting accommodation or seeking treatment for opioid addiction (termed “Opioid Use Disorder” in the guidance).

Review/Update Policies
Employers should review/update ADA accommodation policies, procedures and postings to ensure that employees know of their right to seek accommodation and understand the process for doing so. It should be noted, however, that the new EEOC guidance emphasizes an employer cannot deny reasonable accommodation merely because an employee did not follow a specific process.

Review/Update Forms
The EEOC guidance to health care providers describes information most likely to support a patient’s request for accommodation. This guidance is helpful to employers wanting to update forms relating to requests for accommodation and medical certifications. Many such forms could be improved by asking more detailed questions about the nature of the patient’s functional limitations and by asking the health care provider to address options for effective accommodation.

Review/Update Training
Training should be considered to ensure that supervisors and HR will (1) recognize what kinds of unwritten statements may qualify as a request for accommodation; (2) understand accommodation options; and (3) commit to engaging in robust interactive processes with employees. Training should also cover best practices for documenting workplace impairment, such as avoiding conclusory statements in favor of clear and detailed factual descriptions of behavior.

Practical Takeaways
Because employees with Opioid Use Disorder can often be considered “problem” employees due to lack of productivity, absenteeism, and other issues arising from opioid use, it is more difficult for supervisors to respond objectively to requests for accommodation. Since the new EEOC guidance broadly states that any request for “some type of change in the way things are normally done at work” may qualify as an accommodation request, training supervisors about properly recognizing and responding to such requests is crucial. Now is a good time for employers to evaluate how prepared they are to properly respond to requests for accommodation, which are now more likely to occur, from employees who legally use opioids or need treatment for Opioid Use Disorder. This will help to avoid expensive litigation down the road.

COVID-19 Bulletin No. 4: Consumer Issues, Foreclosure/Eviction and State Legislation
During the continued COVID crisis, federal agencies continue to extend the foreclosure and eviction moratoriums on residential properties subject to federally backed mortgage loans. Originally enacted by legislative relief in the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, the Federal Housing Finance Agency announced that it is extending foreclosure and eviction suspensions until at least December 31, 2020. The U.S. Department of Housing and Urban Development followed suit shortly thereafter and issued Mortgagee Letter 2020-27, announcing that the Federal Housing Administration was similarly extending foreclosure and eviction moratoriums through the end of the calendar year.

Additionally, on September 4, 2020, the Center for Disease Control and Prevention (“CDC”) published an unprecedented Agency Order temporarily prohibiting evictions of qualified tenants from residential properties on the basis of nonpayment of rent through December 31, 2020. Unlike its federal counterparts, the CDC’s moratorium applies to all residential properties, regardless of whether the properties are subject to a federally-backed mortgage loan. To qualify for the CDC’s protections, tenants are required to show that they earned less than $99,000 during the 2020 calendar year ($198,000 for couples filing jointly), were not required to report any income in 2019 to the Internal Reporting Service, or received a stimulus check pursuant to Section 2201 of the CARES Act. Tenants must also certify that: (1) they are unable to pay rent as a result of COVID-19; (2) they will likely become homeless if evicted; and (3) they made previous efforts to obtain other government assistance to prevent eviction. Under the Agency Order, tenants are still required to satisfy all outstanding rent payments upon the moratorium’s expiration.

Although it is questionable whether the CDC has the constitutional authority to unilaterally order a moratorium on eviction proceedings, it is clear that federal agencies are seeking to extend foreclosure and eviction protections during the ongoing COVID-19 pandemic. As concerns the moratoriums issued on the state level, several of those states, including Alabama, Florida, Iowa, Mississippi, Pennsylvania, Tennessee, and Wisconsin, have allowed their state specific moratoriums to expire. Download the comprehensive spreadsheet capturing the current orders and policies on foreclosures and evictions.

In addition to the protections under the CARES Act and the CDC Agency Order, the following states have issued executive orders and/or legislation that restrict foreclosure and eviction proceedings in response to the ongoing COVID-19 pandemic, including potential remedies for violations of the new laws:

California: On August 13, 2020, the Judicial Council of California voted 19-1 to end its emergency moratorium on evictions and foreclosure actions. However, on August 31, 2020, the Governor signed Assembly Bill No. 3088, which passed the Tenant, Homeowner, and Small Landlord Relief and Stabilization Act (the “Tenant Act”) into law. Among other protections, the Tenant Act prohibits evictions on the basis of missed rent payments resulting from COVID-19 that occurred between March 1, 2020 and August 31, 2020. Beginning on September 1, 2020, and running through January 31, 2020, tenants are obligated to pay at least 25 percent of the total rent owed in order to continue benefiting from the protections of the new law. The Tenant Act does not waive unpaid rent; but rather, converts the outstanding amount owed to consumer debt, which may become collectible in Small Claims Court beginning on March 1, 2021. If a COVID-19 impacted tenant is unable to satisfy the 25 percent minimum, the Tenant Act permits evictions to proceed beginning on February 1, 2021.

The Bill also enacted the COVID-19 Small Landlord and Homeowner Relief Act of 2020 (the “Homeowner Act”) requiring mortgage servicers to provide written notice to a borrower if the mortgage servicer denies a forbearance request. Under the Homeowner Act, if a mortgage servicer denies a forbearance, it must provide the reasons for the denial so long as the borrower was (1) current on payments as of February 1, 2020 and (2) experiencing a financial hardship that prevents the borrower from making timely payments on the mortgage obligation due, directly or indirectly, to the COVID-19 emergency. The Homeowner Act further requires mortgage servicers to comply with applicable federal guidance regarding borrower options following a COVID-19 related forbearance. Under the Homeowner Act, a borrower, who has been harmed by a lender’s material violation, may bring an action to obtain injunctive relief, damages, restitution, and any other remedy to redress the violation. The Homeowner Act further provides that a prevailing borrower may be awarded reasonable attorneys’ fees and costs with respect to such an action.

Illinois: On October 16, 2020, Governor J.B. Pritzker signed Executive Order 2020-59 and announced the suspension on residential evictions will be extended through November 14, 2020. Specifically, the Executive Order prohibits the enforcement of residential eviction judgments, unless the tenant poses a direct threat to the health and safety of other tenants, an immediate and severe risk to property, or a violation of any applicable building code, health ordinance, or similar regulation. However, nothing in the Executive Order is to be construed as relieving any individual of the obligation to pay rent, to make mortgage payments, or comply with any other obligation that an individual may have pursuant to a lease, rental agreement, or mortgage.

Currently pending before the Illinois Legislature is the Emergency Economic Recovery Renter and Homeowner Protection Act. This Act proposes comprehensive protections to mortgagors, renters, and landlords during the COVID-19 pandemic. Specifically, Section 15 of the Act proposes a cancellation of rental debt for tenants diagnosed with COVID-19 or advised by a health care provider to self-quarantine; have lost income through furloughs, layoffs or other employment interruption; or are paying more for household expenses, child care, or health care during the moratorium. Section 15 also prohibits landlords from charging fees or negatively reporting to a consumer agency or credit bureau with respect to a tenant’s nonpayment of rent.

Sections 20, 30, and 35 summarily offer a 180-day moratorium on foreclosures and prevents new eviction filings and enforcement of judgments. Furthermore, Section 25 proposes a 180-day suspension on mortgage payments for homeowners and forbearance on taxes, insurance, and association fees. Additionally, the Act provides that mortgage servicers shall establish loss mitigation criteria and procedures for borrowers who request forbearance and affirm that they are experiencing a COVID-19 related hardship.

Under the proposed legislation, an injured party may file an action in a court of competent jurisdiction against a person who violates the Act. Notably, if the alleged injury occurred under a Section of the Act that expires at the end of the moratorium period, an injured party is not enjoined from filing an action after the moratorium period expires, subject to any applicable statute of limitations. Under the proposed law, an injured party may recover $1,000.00, or the actual and consequential damages resulting from the injury, whichever is greater, for each violation of this Act, as well as costs and reasonable attorney’s fees.

Additionally, the Attorney General or State’s Attorney may request, and a court may impose, a civil penalty against a non-compliant lender in a sum not to exceed $50,000.00 against any person found by the court to have engaged in any violation of the Act.

New Jersey: On June 25, 2020, the New Jersey Supreme Court issued the Fifth Omnibus Order on Court Operations and Legal Practice and terminated the previous restrictions placed on the Office of Foreclosure. In essence, the Fifth Omnibus Order permits New Jersey courts to resume the processing of foreclosure Final Judgments and Writs of Executions. However, on September 25, 2020, Governor Murphy signed Executive Order No. 186 and extended the prohibition on removing individuals from properties due to an eviction or foreclosure proceeding. The Executive Order enjoins the enforcement of judgments, Writs of Possessions, or Warrants of Removal for at least 60 days following the expiration of the Public Health Emergency. New Jersey’s Public Health Emergency is currently scheduled to expire on October 25, 2020, although it may continue to be extended.

Pending before the New Jersey Senate is Bill No. 2340, which provides certain protections to homeowners, tenants, and landlords during the COVID-19 pandemic. Under the proposed legislation, lenders would be required to grant a mortgage forbearance to an impacted homeowner if the homeowner submits a written request affirming a reduction of income or other financial hardship resulting from COVID-19 pandemic. The minimum initial mortgage forbearance period would be 90 days, but a homeowner may receive a subsequent forbearance period for at least 90 days, for a minimum total of 180 days. Under the proposed legislation, an impacted homeowner or the Attorney General may bring an action alleging a violation of protections. Under the proposed law, if a violation is found to have occurred, a court may impose fines, which may not to exceed $5,000 per violation. Alternatively, the Court may order a non-compliant lender to pay an award of damages to the impacted borrowers that shall not exceed 25 percent of the debt attempted to be collected. The court may further order a non-compliant lender to pay an impacted homeowner’s reasonable attorneys’ fees in connection with bringing such an action for relief.

Additionally, the proposed legislation provides that, in order to avoid mass evictions following the conclusion of the moratorium, landlords shall offer a tenant who missed any rental payment the ability to enter into an agreement. The agreement would be an addendum to the lease agreement for the repayment of any partial or full rent payments not made during the emergency period, provided that the tenant’s rent payments were current as of March 19, 2020. The Bill would additionally require that, upon written request from a tenant, a security deposit may be applied or credited towards rental payments due or to become due from the tenant during the emergency period.

New York: On October 4, 2020, Governor Andrew Cuomo signed Executive Order No. 202.67 further extending the moratorium on foreclosure actions through November 3, 2020. Specifically, the Executive Order suspends the filing and/or enforcement of foreclosure and eviction actions on the basis of nonpayment when the borrower and/or tenant is facing a financial hardship due to COVID-19.

Moreover, on September 29, 2020, the Governor signed Executive Order No. 202.66, which extended the prohibition of evictions through January 1, 2021. Specifically, the Executive Order suspends the execution or enforcement of any judgment or warrant against a residential tenant suffering from financial hardship during the COVID-19 pandemic.

Oregon: On June 30, 2020, Governor Kate Brown signed HB 4204 and HB 4213 into law, which provides a moratorium on foreclosure and eviction proceedings. Under HB 4204, mortgage lenders are enjoined from treating a borrower’s nonpayment as a default or assess any late fees or charges if the borrower notifies the lender that the borrower will not be able to make the requisite mortgage payments. However, it should be noted that the law’s protections do not apply to judgments of foreclosure and sales that were issued prior to the public health emergency period. HB 4204 also provides a right to a private cause of action, where a borrower suffers an ascertainable loss as a result of a mortgage lender’s violation of the above-referenced protections. A borrower who prevails in the action may further recover the borrower’s court costs and attorneys’ fees.

Oregon’s legislation similarly provided protections to tenants from eviction proceedings under HB 4213 by prohibiting landlords from initiating or continuing any eviction action on the basis of nonpayment of rent or without cause. HB 4213 further provides a six-month repayment period following the expiration of the moratorium. Landlords will also be prohibited from reporting late rent payments to credit reporting bureaus during the moratorium. Landlords are, however, permitted to notify tenants of owed rent. In turn, tenants will have fourteen days to advise landlords of their intention to use the six-month grace period as a repayment option.

Governor Brown subsequently signed Executive Order No. 20-37 and Executive Order No. 20-56, which collectively extended the foreclosure and eviction moratoriums, as set forth in HB 4204 and HB 4213, through December 31, 2020


State Developments

Colorado Executive Order Pardons Thousands Convicted of Marijuana Possession
As marijuana reform happens across the country, Colorado continues to lead the way. On October 1st, Governor Jared Polis signed an executive order that pardoned almost 3,000 Coloradans who were convicted by the State of possession of one ounce or less of marijuana, thereby restoring all rights of citizenship without condition. In doing so, Gov. Polis stated that Colorado was “…finally cleaning up some of the inequalities of the past…” that were created by former anti-marijuana policies. The power to issue the pardons was included in a bipartisan bill signed into law in June that included provisions promoting social equity in Colorado’s legal marijuana market.

HB20-1424, titled Social Equity Licensees in Regulated Marijuana, changed the term “accelerator licensee” to “social equity licensee” in the Colorado Marijuana Code, as well as, amended those who qualified for such licensees. The accelerator licensing program pairs established marijuana business owners with disadvantaged candidates who may not have the necessary skills or access to traditional funding sources to enter the space. Under the new bill, social equity candidates can now apply for these licenses if the candidate is a Colorado resident and has not been the owner of a revoked cannabis license, and can demonstrate at least one of the following: 1) The candidate has resided for at least fifteen years between the years 1980 and 2010 in a census tract designated by the office of economic development and international trade as an opportunity zone or designated as a disproportionately impacted area; 2) The candidate or the candidate’s parent, legal guardian, sibling, spouse, child, or minor in their guardianship was arrested for a marijuana offense, convicted of a marijuana offense, or was subject to civil asset forfeiture related to a marijuana investigation; or 3) The candidate’s household income in the year prior to application did not exceed an amount to be determined by the state licensing authority (Colorado Department of Revenue). Additionally, the social equity licensee must hold at least fifty-one percent of the beneficial ownership of the marijuana business license. Unfortunately, Colorado’s new marijuana social equity program has limitations starting with the fact that it will be implemented more than eight years after legalization. The marketplace is largely established and social equity entrants will face stiff competition in a highly regulated industry; however, Colorado is trying to acknowledge, and right, some of the inequities that have disproportionately affected people of color. Gov. Polis’ executive order pardoning those who were convicted of marijuana possession is another step in the right direction.

California Enacts Law Requiring Employers to File an Equal Pay Report
on September 30, 2020, California Governor Gavin Newsom signed into law Senate Bill 973 (SB 973). This will law require employers to annually submit various pay and hours data for its workforce in a manner very similar to the now rescinded federal EEO-1 pay report (“EEO-1 Component 2”). This bill is a repeat of three prior bills, two of which were held in committee in 2018 and 2019 and one of which was vetoed in 2017.

What Does California’s Annual Pay Data Report Require?
Under the new law, on or before March 31, 2021, and each year thereafter, private employers with 100 or more employees, are required to submit a pay data report to the California Department of Fair Employment and Housing (DFEH) that includes the number of employees by race, ethnicity, and sex in the following categories, which track the federal EEO-1 categories:

  • Executive or Senior Level Officials and Managers.
  • First or Mid-Level Officials and Managers.
  • Professionals;
  • Technicians;
  • Sales Workers;
  • Administrative Support Workers;
  • Craft Workers;
  • Operatives;
  • Laborers and Helpers; and
  • Service Workers.

The pay data report must include previous year W-2 earnings and hours worked for all employees and must be submitted in a searchable and sortable format. Employers must submit information based on an employee workforce snapshot taken from the end of any pay period between October 1st and December 31st. The submission must account for and include all employees who were active as of that snapshot pay period.

Like the rescinded federal EEO-1 Component 2 report, the W-2 income data will be reported by tallying the number of employees in each of the job categories and categorizing their pay in pay bands as established by the Bureau of Labor Statistics in the Occupation Employment Statistics Survey.

The filing deadline for each year is March 31st of the following year. So, for example, the 2020 annual pay data reports must be submitted by March 31, 2021.

What Does the DFEH Do With the Data?
The law requires the DFEH to make the reports available to the Department of Labor Standards Enforcement (DLSE) upon request and to maintain the pay data reports for a minimum of 10 years and authorizes the DFEH to seek an order requiring non-reporting employers to comply.

The pay law also prohibits any officer or employee of the DFEH or DLSE from making public any individually identifiable information obtained from the report prior to the institution of certain investigation or enforcement proceedings and requires the Employment Development Department to provide the DFEH with the names and addresses of all businesses with 100 or more employees.

Critics say this requires California employers to submit potentially incomplete or misleading pay data to state agencies that may allow advocates to characterize a false impression of wage disparity where none exists.

Concerns With California’s Proposed Annual Pay Data Report Law
There are significant issues implicated by the collection of compensation information in SB 973 which were not addressed before Governor Newsom signed the bill into law. While employers will have the opportunity to provide “clarifying remarks,” that is insufficient to remedy the major issues with SB 973’s pay data reports.

  • SB 973 requires overly broad aggregation of dissimilar jobs into artificial pay groupings. For instance, the annual pay data report will require a reporting hospital to combine lawyers, doctors, accountants, nurses and dieticians — all grouped as “professionals” — to somehow determine whether there are pay disparities based on gender, race or ethnicity. SB 973 does not consider whether the employees perform “substantially similar work.” No existing law permits comparisons of such diverse workers so the planned of objective of allowing for “targeted enforcement of equal pay or discrimination laws,” will lead only to confusion.
  • Eligibility for overtime, commissions, and bonuses are typically not the same for full-time, and partial-year or part-time employees yet the report requires this kind of apples/oranges comparison.
  • In addition to the concerns with the report itself, there are significant outstanding data privacy concerns for employers.
  • Finally, the law does not clarify the scope of coverage. Specifically, it does not specify whether only California employees will be reported in the pay report. It also does not clarify if the reporting requirements applies only to employers with 100 or more employees in California, or 100 or more employees overall.

The First Report Will Cover 2020 Data so Employers Should Start Developing a Plan Now
The pay data report due in March 2021 will be based on 2020 pay data, so employers should begin to evaluate their readiness for compliance as soon as possible. For instance, employers should begin the process of determining how to adjust their systems and practices to ensure that the data will be available in the format mandated by the DFEH, if needed.

Employers would also be well-advised to conduct a proactive pay equity analysis now, to address any areas of concern. While the data to be reported and analyzed by the DFEH will not likely be very meaningful given the significant issues outlined above, the new pay report will likely put more emphasis on pay equity and employers should be prepared for this heightened scrutiny.

Portland, Oregon Imposes Strict Ban on Use of Facial Recognition Technology in Public and Private Sectors
In the wake of concerns for inequities and disparities against minorities in the use of facial recognition technologies, the city of Portland in the State of Oregon passed two municipal ordinances banning the use of face recognition technologies.

The first ordinance, effective immediately, bans the use of face recognition technology by all city agencies and offices. The second ordinance, effective January 1, 2021, and unprecedented in the United States, bans facial recognition technology in places of public accommodation by private entities within the city’s boundaries. Violations of the ordinance banning private-sector use are subject to compensatory damages of up to $1,000 per day per injured individual, plus attorney fees.

Both ordinances include several exceptions to the ban, in case the use of facial recognition technology is necessary to comply with the law, to access a personal or employer-issued electronic device, or in social media services.

Both bans will remain in effect until Portland adopts or revises a comprehensive data protection framework that addresses the appropriate use or prohibition of face recognition technologies and the information derived from them.

CLICK HERE to read Portland’s ordinance banning the use of facial recognition technology by city agencies. CLICK HERE to read Portland’s ordinance banning the use of facial recognition technology by private entities.

More States and Localities Enact and Strengthen Ban the Box Laws
Nationwide, 36 states and over 150 municipalities have adopted “ban the box” laws that prohibit employers from asking candidates about their conviction or arrest records on their initial applications. This article provides updates on recent changes and updates in Hawaii, California, and St. Louis, Missouri.

Hawaii has one of the oldest laws that limits an employer’s ability to consider older conviction records in making hiring decisions. Effective September 15, 2020, Hawaii SB 2193 prohibits most private sector employers from considering conviction records that are less than seven years old for felony convictions, and less than five years old for misdemeanor convictions, excluding periods of incarceration. Hawaii shortened its 10-year lookback period “to reduce unnecessary employment discrimination against individuals with old and relatively minor conviction records, in furtherance of economic self-sufficiency, and to reduce crime and recidivism rates.”

The California Department of Fair Employment and Housing (“DFEH”) recently released Frequently Asked Questions (“FAQs”) for California’s Fair Chance Act. The FAQs provide guidance on the Fair Chance Act, discuss how the law works, employers subject to the law, and requirements for employers to follow when they want to inquire about an candidate’s criminal history.

California’s Fair Employment and Housing Council has also updated regulations governing criminal background checks. The amended regulations, effective October 1, 2020, incorporate the requirements of the Fair Chance Act into existing regulations addressing the consideration of criminal history in employment decisions. The new regulations expand the definition of “candidate” to include individuals who are conditionally offered employment but begin working while an employer undertakes a post-offer consideration of the individual’s criminal history; and expand the scope of the Fair Chance Act by requiring that labor contractors and union hiring halls comply with the regulations when selecting workers for pool or availability lists; among other requirements. The regulations also state that employers may be subject to local ordinances that impose additional requirements.

St. Louis, Missouri
Effective January 1, 2021, employers in St. Louis with 10 or more employees are prohibited from:

  • Basing a hiring or promotion decision on an candidate’s criminal history or related sentence, unless the employer can show that its decision is based on all relevant information reasonably available to it, including the frequency, recency, and severity of the criminal history, and that the decision regarding the candidate’s criminal history is reasonably related to the duties and responsibilities of the position.
  • Posting job advertisements that exclude candidates based on criminal history and using exclusionary language in job applications and other forms used in the hiring process.
  • Inquiring into or requiring candidates to disclose their criminal history on initial job applications and forms.
  • Seeking publicly available information regarding an candidate’s criminal history.

However, an employer may ask about an candidate’s criminal history:

  • After deciding the candidate is otherwise qualified for the position;
  • After the employer interviews the candidate; and,
  • Only if the criminal history inquiry is made of all candidates in the post-interview selection pool.

These updates are good reminders for employers in states and municipalities with “ban the box” laws, regulations, and ordinances to:

  • Review and update post-offer, pre-employment questionnaires and forms that ask candidates to disclose their criminal history;
  • Review and update policies and procedures to reflect their “ban the box” practices; and,
  • Ensure that their relevant personnel responsible for hiring are well versed in “ban the box” requirements.



Court Cases

Incomplete Doesn’t Always Mean Inaccurate: Fifth Circuit “Hammers” In Denial of Plaintiff’s Complaint
A new opinion from the Fifth Circuit found that an incomplete credit report can still be “accurate” under § 1681e(b)—even where the credit report omits a favorable item from a consumer’s credit report that could be germane to the consumer’s credit history. Although plaintiff had argued that, in deleting a favorable credit item, Credit Reporting Agencies (“CRAs”) had failed to ensure “maximum possible accuracy” of his credit report under § 1681e(b), the court instead ruled that an incomplete report is not always “inaccurate” to the point of being misleading. The Fifth Circuit affirmed the district court’s dismissal of plaintiff’s complaint, and further found that the CRAs did not have a duty to reinvestigate where plaintiff disputed the completeness, rather than an item, of his credit report.

In Hammer v. Equifax Info. Servs., No. 19-10199, 2020 U.S. App. LEXIS 28800, at *5 (5th Cir. Sept. 9, 2020), plaintiff had continually made timely payments to a credit card, and wanted the favorable account included on his credit report. The account associated with the credit card was reported by the three major CRAs until 2017. When plaintiff learned that the CRAs had stopped reporting the account, he requested that it be restored to his credit reports; Equifax and Experian, the defendant CRAs, refused. After several disputes from plaintiff, they added the credit account to his report, but one, Equifax, ultimately removed it again. Plaintiff’s credit score fell after the removal, and he sued Equifax and Experian for negligent and willful violations of the FCRA. The district court granted defendants’ motions to dismiss the complaint, and plaintiff appealed.

The Fifth Circuit determined that the CRAs had not violated § 1681e(b), finding that a credit report is not “inaccurate,” in violation of the statute, every time a report is incomplete—it is only inaccurate when an omission renders the report misleading in a way that would adversely affect credit decisions. Plaintiff’s credit score falling did not suffice for that adverse impact. The court looked to a prior case, Sepulvado v. CSC Credit Servs., Inc., 158 F.3d 890, 895 (5th Cir. 1998), in which a credit report included an entry that had been assigned but did not report that the obligation had arisen six years earlier. Although the consumer in Sepulvado had argued that the omission made the report inaccurate or misleading, the Fifth Circuit had held that the credit report may have been incomplete, but that did not mean it was inaccurate. The same was true in Hammer: the omission of the favorable account did not render the credit report so misleading that it was “inaccurate” under § 1681e(b). The Hammer court noted that businesses have no reason to believe that a credit report reflects all available information about a given consumer—and that such a requirement would actually be impossible for any CRA to satisfy, because creditors only furnish CRAs with consumer information on a voluntary basis.

Plaintiff had also alleged that defendants violated § 1681i(a) for failing to investigate the omission of the favorable credit account from his credit report. The court disagreed, observing that § 1681i(a) concerns the accuracy of “item[s] of information.” The CRAs’ duty to investigate under § 1681i(a) had not been triggered because plaintiff had not disputed the accuracy or completeness of an item of information, but instead of his credit report as a whole, which plaintiff claimed was incomplete.

Plaintiff’s claim that Equifax violated § 1681i(a)(5)(B) fared no better. While plaintiff claimed that the CRA failed to give him the required statutory notice that it reinserted the credit account into his credit report, the court noted that plaintiff’s brief had not argued that the CRA removed the credit account from plaintiff’s credit file—only from his credit account—and so there was no duty to inform under § 1681i(a)(5)(B). And, although plaintiff argued that he should be allowed to amend the pleading even if he failed to state a claim under § 1681i(a)(5)(B), the court disagreed, finding that the district court had already given plaintiff two opportunities to amend, and each time he had claimed that Equifax never deleted the credit account from his credit file.

So what’s the right standard? Although CRAs must follow “reasonable procedures to assure maximum possible accuracy” of a credit report under § 1681e(b), Hammer shows that there is no one-size-fits-all test for either “reasonable procedures” or “maximum possible accuracy.” Even where plaintiff’s credit score had fallen as a result of the omitted information, the court still saw the favorable account as a “single credit item,” and leaving out that single item did not make the report inaccurate or misleading. Hammer also highlights the critical difference between a credit entry and a credit report under § 1681i(a). Plaintiff had not disputed that the favorable credit account was inaccurate as a credit entry, or that it was incomplete. Instead, he disputed the entire report based on the fact that he believed another entry should have been included—and did not trigger a duty to investigate as a result.

Suspension of Employee Based on Marijuana Odor and Positive Test Result Did Not Violate CBA
A strong odor of marijuana was sufficient to constitute reasonable suspicion to test, and a positive drug test result constituted just cause for a ten-day suspension, an arbitrator ruled in denying an employee’s grievance. ZF Active and Passive Safety and UAW, Local 1181, 20-2 ARB ¶ 7646 (Mar. 17, 2020).

The union and the employer, a manufacturing plant, were parties to a collective bargaining agreement (“CBA”) that permitted the employer to order a drug or alcohol test if the supervisor had reasonable suspicion to believe the employee may be under the influence of drugs or alcohol. The CBA also provided for a 10-day suspension on the basis of usage.

Here, the employee brought work-related concerns to the attention of management and then went on a scheduled break. After the employee returned from his break, the employee’s supervisors went to his work area to address his concerns. The supervisors observed a strong smell of marijuana and ordered that he submit to a drug test in accordance with the CBA. When informed he would be sent out for drug testing, the employee admitted to Human Resources that he would test positive. Predictably, the employee tested positive and thus, the employer imposed a 10-day suspension.

In challenging the suspension, the union argued that a combination of smelling marijuana and the positive test result were insufficient to justify the suspension because the CBA—in using the term “usage”—required evidence of impairment. The arbitrator disagreed and determined “usage” was proven by the positive test results, i.e., a positive drug test can be equated with being under the influence regardless of the status of observational evidence. Under the parties’ CBA, the employer had just cause to issue the 10-day suspension from a combination of smelling marijuana and the positive test result. Accordingly, the arbitrator denied the employee’s grievance.

Federal Court Finds Pennsylvania’s Medical Marijuana Act Contains Implied Private Right of Action
On September 25, 2020, the U.S. District Court for the Eastern District of Pennsylvania became the first federal court in the Third Circuit to rule that Pennsylvania’s Medical Marijuana Act (MMA) allows an employee to bring a private lawsuit against his or her employer for taking an adverse employment action “solely on the basis of such employee’s status as an individual who is certified to use medical marijuana.” In Hudnell v. Thomas Jefferson University Hospitals, Inc. No. 20-01621, the court found in favor of the employee who argued that there is an implied private right of action under the MMA’s employment discrimination provision.

Donna Hudnell began working for Thomas Jefferson University Hospital (TJUH) as a security analyst in 2016. By 2018, Hudnell began experiencing chronic back pain, for which her physician prescribed medical marijuana. The following year, Hudnell requested, and was granted, a leave of absence to undergo back surgery. In October 2019, Hudnell asked to return to work. Due to the length of her leave, TJUH required Hudnell to undergo a drug test prior to returning to the workplace. Hudnell appeared for the drug test and provided her prescription medications, including her medical marijuana card, to the nurse collecting her sample. The nurse determined that the medical marijuana card had expired two months prior, in August 2019. Hudnell informed the nurse that she had an appointment scheduled with her doctor later that month for the purpose of recertifying her need for medical marijuana.

After the drug test reflected the presence of marijuana metabolites, TJUH terminated Hudnell’s employment. By the time TJUH communicated the termination decision, Hudnell had been recertified for the use of medical marijuana, and she offered to provide her renewed card to the company. TJUH declined, taking the position that the recertification was irrelevant because Hudnell did not have a valid medical marijuana card at the time she tested positive for marijuana. Hudnell’s doctor also submitted a note to TJUH stating that (1) he had certified Hudnell for medical marijuana use, (2) that she was able to purchase up to a one-month supply of marijuana until her card expired in late August 2019, and (3) that medical marijuana would remain in Hudnell’s system for up to two months after her last use. TJUH remained firm in its position and notified Hudnell that there was insufficient evidence to overturn the termination decision. Hudnell sued TJUH, alleging discrimination under Section 2103(b)(1) of the MMA (among other claims).

TJUH moved to dismiss Hudnell’s MMA claim, arguing that the MMA does not contain a private right of action that allows employees to file suit in court. Instead, TJUH argued, the MMA requires aggrieved employees to seek relief from the Pennsylvania Department of Health. The court disagreed with TJUH’s argument and predicted that the Supreme Court of Pennsylvania would recognize an implied private right of action under the MMA’s employment discrimination provision. In reaching this conclusion, the court relied upon a recent Pennsylvania state court case, Palmiter v. Commonwealth Health Sys., Inc. (Pa. Com. Pl. Lackawanna Cnty. Nov. 22, 2019), as well as several decisions interpreting other states’ medical marijuana statutes. Without an implied private right of action, the court held, the MMA’s antidiscrimination provision would be meaningless, and there was “no mistaking the General Assembly’s intent to protect employees from discrimination” under the MMA. Therefore, the court allowed Hudnell’s MMA claim to proceed.

Key Takeaways
This opinion has important implications for Pennsylvania employers. There have now been decisions at both the state and federal levels that the MMA contains a private right of action that will allow aggrieved employees to sue in court, and as of yet, no court has held to the contrary. Additionally, it is worth noting the court’s determination that an expired medical marijuana card does not necessarily prevent an employee from stating a claim under the MMA. Employers facing a situation like the one in Hudnell may want to consider investigating whether the positive drug test result could have stemmed from lawful usage, prior to the card’s expiration. Finally, employers may want to keep in mind that other federal, state, and local employment discrimination statutes, such as the Americans with Disabilities Act, the Pennsylvania Human Relations Act, and the Philadelphia Fair Practices Ordinance, may be implicated when an employee seeks an accommodation for the use of medical marijuana.


International Developments

Personal Data Handling and Processing in Mexico

Legitimate Processing of PII

Legitimate processing—grounds
Does the law require that the holding of PII be legitimized on specific grounds, for example to meet the owner’s legal obligations or if the individual has provided consent?
In Mexico, the ruling principle for the collecting and processing of personally identifiable information (PII) is consent.

The law provides eight main standards for the processing of PII:

  • Legality: PII controllers must always handle PII in accordance with the law. All personal data shall be lawfully collected and processed, and its collection shall not be made through unlawful or deceitful means.
  • Consent: PII controllers must obtain consent from individuals for the processing and disclosure of their PII. In this regard, the consent of individuals shall not be required if:
    • PII is contained in publicly available sources;
    • PII cannot be associated with the individual, or if by the way its structure or content cannot be associated with the individual;
    • PII processing is intended to fulfill obligations under a legal relationship between the PII controllers and individuals;
    • there exists an emergency situation in which the individual or its properties may be potentially damaged;
    • PII is essential for certain medical or health matters where the individual is unable to provide consent under applicable laws; or
    • a resolution is issued by a competent authority to process and disclose PII, without the required consent.
  • Information: PII controllers must notify the individual of the existence and main characteristics of the processing that will be given to the PII.
  • Quality: PII handled must be exact, complete, pertinent, correct and up to date for the purposes for which it has been collected.
  • Purpose (the ‘finality principle’): PII may only be processed in order to fulfill the purpose or purposes stated in the privacy notice provided to the individual.
  • Loyalty: PII controllers must protect individuals’ interests when handling their PII.
  • Proportionality: PII controllers may only handle the PII necessary for the purpose of the processing.
  • Responsibility: PII controllers are responsible for the processing of the PII under their possession.

Legitimate processing—types of PII
Does the law impose more stringent rules for specific types of PII?
The law makes a distinction regarding ‘sensitive’ PII. This information is deemed the most personal of the individual, and if mistreated, could lead to discrimination or to general risk to the individual (i.e. racial or ethnic origin, present or future health status, genetic information, religion, political opinions, trade union membership or sexual orientation).

In view of this, the Federal Law for the Protection of Personal Data (the Law) provides more stringent rules for the processing of this sensitive PII, such as the obligation for PII controllers to always get written and express consent from individuals for the processing of their sensitive PII. Likewise, PII controllers may not hold sensitive PII without justified cause pursuant to the purpose of the processing.

Several additional limitations apply to the general handling of this type of information (e.g. PII controllers must use their best efforts to limit the processing term of sensitive PII, the privacy notice must expressly point out the nature of such information when required; and, as previously pointed out, when it comes to penalties for the breach or mistreatment of PII, these may double when processing sensitive PII).

Data Handling Responsibilities of Owners of PII

Does the law require owners of PII to notify individuals whose PII they hold? What must the notice contain and when must it be provided?
The personally identifiable information (PII) controller must have a privacy notice available for all individuals whose data is in their possession or collected for use and processing. According to the Federal Law for the Protection of Personal Data (the Law) and its Regulations, there are three types of privacy notices:

  • an integral privacy notice;
  • a simplified privacy notice; and
  • a short privacy notice.

The privacy notice must include, at least, the following information:

  • the identity and address of the PII controller;
  • PII that would be subject to processing;
  • the purpose of the processing;
  • the mechanisms provided by the PII controller to the individuals to limit the use or disclosure of the information;
  • the means for individuals to exercise their rights to access, rectify, cancel or oppose the processing of their PII;
  • any transfer of the PII to be made, if applicable;
  • the procedure and vehicles in which the PII controller will notify individuals about modifications to the privacy notice;
  • the procedure and means by which the PII controller should notify the individuals of any modification in such privacy notice; and
  • regarding sensitive PII, the privacy notice shall expressly state that the information is of a sensitive nature.

In addition and pursuant to the privacy notice rules, the notice must take into account the following characteristics:

  • inaccurate, ambiguous or vague phrases must not be used;
  • the individual’s profile must be taken into account;
  • if an individual’s consent is granted through tick marks in text boxes, these must not be pre-ticked; and
  • reference to texts or documents not available to individuals must be omitted.

Exemption from notification
When is notice not required?
A privacy notice is not necessary when:

  • exemption is available in a specific provision of applicable law;
  • the data is available in public sources;
  • PII data is subject to a prior dissociation procedure (anonymized data);
  • there is an existing legal relationship between the individual and the PII controller;
  • there is an emergency situation that could potentially harm an individual or his or her property;
  • it is essential for medical attention, prevention, diagnosis, health care delivery, medical treatment or health services management, where the individual is unable to give consent in the terms established by the General Health Law and other applicable laws, and said processing of data is carried out by a person subject to a duty of professional secrecy or an equivalent obligation; or
  • a resolution is issued by a competent authority.

Control of use
Must owners of PII offer individuals any degree of choice or control over the use of their information? In which circumstances?
The Law provides individuals with ‘ARCO’ rights:

  • to access (the right to know what information is being held and handled by the PII controller);
  • rectify (the right to request at any time that the PII controller correct the PII that is incorrect or inaccurate);
  • cancel (the right to request the PII controller to stop treating their PII); or
  • oppose (the right to refuse) the processing of their PII.

However, there is room for enhancement as to the regulation of the obligation of PII owners, to offer individuals better degrees of choice or control over the use of their information.

Data accuracy
Does the law impose standards in relation to the quality, currency and accuracy of PII?
Personally identifiable information has to fulfill the standard of quality (PII should be exact, complete, pertinent, correct and up to date).

Quality is presumed when PII is provided directly by the individual and remains such until the individual does not express and prove otherwise, or if the PII controller has objective evidence to prove otherwise.

When personal data has not been obtained directly from the individual, the PII controller must take reasonable means to ensure the quality standard is maintained.

Amount and duration of data holding
Does the law restrict the amount of PII that may be held or the length of time it may be held?
The Law provides a ‘need to hold basis’; PII controllers must not hold PII any longer than the time required to fulfill its purpose (as stated in the privacy notice). After the purpose or purposes have been achieved, a PII controller must delete the data in its collection after blocking them for subsequent suppression.

Finality principle
Are the purposes for which PII can be used by owners restricted? Has the ‘finality principle’ been adopted?
The Law does provide a ‘finality principle’, whereby a PII controller is restricted to using the PII only in order to fulfill the purpose or purposes stated in the privacy notice provided to the individuals, the purpose of which must comply with the legality standard. If the PII controller intends to process data for other purposes that are not compatible with, or similar to, the purposes set out in the privacy notice, an individual’s consent must be collected again for such additional purposes.

Use for new purposes
If the finality principle has been adopted, how far does the law allow for PII to be used for new purposes? Are there exceptions or exclusions from the finality principle?
The PII controller is not allowed to use PII for any purposes other than that authorized or notified to the individual, unless such new purpose is authorized by or notified to (in such cases where express authorization is not required) the individual, or unless such use is explicitly authorized by law or regulation.

Law Stated Date

Correct on
Give the date on which the information above is accurate.
25 June 2020.


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