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Legal Clinic

Say What?

Transmitting information in reference and criminal-history screenings -- in both the giving and receiving of the data -- offers a multitude of issues for HR leaders to consider.

Monday, November 5, 2007
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These days, information about current and former employees is just a Google search away. But the accuracy of this information is not always certain, and employers still rely on traditional reference and criminal history checks as a basis for their employment decisions.

Decisions about how much information to provide, and what to do with the information obtained, raise a host of legal concerns. This month we consider two such concerns -- disclosure of a former employee's salary information and termination based on an arrest.

Question: Should a company reveal salary information on an employee when they receive an employment-verification request from another company that an employee has an offer from? Is New Jersey law different than elsewhere?

Answer: New Jersey, like many states, does not impose upon employers an affirmative duty to respond to a reference inquiry about a current or former employee.

If an employer chooses to respond to a reference inquiry it should be sure to provide accurate information.

The New Jersey courts have recognized that an employer may be held liable to the employee or others if it provides false or inaccurate information that causes quantifiable harm to the former employee. See Singer vs. Beach Trading Co., Inc., 876 A.2d 885 (N.J. Super. Ct. App. Div. 2005).

Separate from the liability risk for providing inaccurate information, your inquiry poses the more practical question of whether it is advisable to share this information.

Even in this information age, salary information is generally considered confidential and is not readily disclosed, except on a need-to-know basis. Therefore, it would be prudent not to provide salary information about a former employee at the request of another company absent some advance notice to or the consent of the former employee.

Advance notice or consent for disclosure may be based on a company's written policy or commonly known practice of disclosing such information, an authorization from the former employee or some other evidence of the former employee's consent to the disclosure.

Question: Can an employer terminate an employee who was arrested -- but not yet convicted -- for tax fraud? This occurred in a hospital in Tennessee. Would it be different in any other type of employment setting or different state?

Answer: Under the Equal Employment Opportunity Commission guidelines and most state laws, arrest records alone cannot be used to routinely exclude persons from employment. See Policy Guidance on the Consideration of Arrest Records in Employment Decisions under Title VII, No. 915.061 (EEOC Sept. 7, 1990).

This is because the use of arrest records has been shown to have a disparate impact on some protected groups. Gregory vs. Litton Systems, 316 F.Supp. 401 (C.D. Cal. 1970), modified on other grounds, 472 F.2d 631 (9th Cir. 1972) (finding that nationally, blacks are arrested more often than are whites). Also, arrests are not reliable evidence that a person has actually committed a crime. See Schware vs. Board of Bar Examiners, 353 U.S. 232, 241 (1957).

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Using arrest records in making employment decisions can only be justified where it appears that the individual actually engaged in the conduct for which he or she was arrested and that conduct is job related. See Carter vs. Gallagher, 452 F.2d 315, cert. denied, 406 U.S. 950 (1972).

For example, the courts have recognized that an applicant for a law-enforcement position may be evaluated, in part, based upon his/her arrest record. See Haynie vs. Chupka, 17 FEP Cases 267, 271 (S.D. Ohio 1976). (The police department permissibly made inquiries regarding arrest records and other evidence of prior criminal conduct.)

Using the scenario posed, if the Tennessee hospital had conducted an internal investigation that led it to conclude the employee had engaged in misconduct constituting tax fraud, it could terminate the employee for his or her misconduct.

Such a determination would be based on the hospital's finding of misconduct, and not simply on the fact of the employee's arrest.

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