Licensed to Spy?

Recently, MSN ran an article by journalist Liz Pulliam Weston entitled “Is your boss spying on you?". Ms Pulliam Westin is a personal finance columnist for MSN Money and author of the question-and-answer column "Money Talk," which appears in newspapers throughout the country. I have read some of her articles and enjoyed them. However, in her recent article Weston wades neck deep into subject matter with which she is only marginally familiar. In 300 words or less, this journalist solidified her anti-business bias by managing a mischaracterization of facts that can only be described as treacherous. Under the pretense of alerting unsuspecting consumers, Pulliam Weston dons her advocate clothes and offers that the government has issued American businesses a license to spy on their employees. My concern, for those that may have read her article, is that some employers and employees may actually buy it.

The culprit, according to Ms. Weston, is the 2003 FACT Act (FACTA). Specifically, she is concerned with certain FACTA provisions that corrected an FCRA mandate that required employers to notify employees, in advance, if a consumer reporting agency was asked to provide a background check pursuant to an employee misconduct investigation. This unintended FCRA requirement left Human Resource and Security executives reeling in disbelief. To notify an employee in advance that he/she was being investigated for sexual harassment or misconduct opened the door to the potential for the destruction of evidence or threats against witnesses. Moreover, this requirement handicapped many small companies that used investigative firms (a.k.a. consumer reporting agencies) because they lacked the resources to conduct internal investigations in house. Thankfully, through intensive lobbying this unintended aspect of the FCRA (mandated by the notorious Vail opinion) was overturned in FACTA.

So, where is the FACTA issued license to “spy” about which Westin feels compelled to alert employees? The journalist believes it lies in the FACTA provision that reinforced an employer’s ability to conduct post-hire background checks such as driving history, criminal, OFAC and other exclusionary lists to investigate “compliance with Federal, State, or local laws and regulations, the rules of a self-governing organization, or any preexisting written policies of the employer” – without notifying the employee beforehand. All, by the way, common and perfectly appropriate business practices long before the notorious Vail Opinion letter. Leave it to the Feds to issue one law (FACTA) authorizing employers to adhere to yet another law (OFAC).

Many organizations, both public and private, are mandated to conduct on-going, post-hire background checks. It is prudent and necessary for child care, financial, transportation, security, law enforcement, technology and other industries to protect their customers, assets, employees and shareholders from persons engaged in illegal activities. In order to comply with OFAC, all businesses are required to screen employees using this agency’s database; not only at the point of hire but on an on-going basis. Why, because employment is a financial arrangement. The post-hire requirement comes into play because the OFAC list is updated periodically, and businesses must ensure that a current employee has not been placed on the list after they were initially hired. The same reasoning applies to post-hire criminal checks, although they are not mandated in quite the same way. For example, child care agencies or schools need to know if an employee has been arrested or convicted of an offense that would place children in danger. Businesses, in general, ought to be in a position to know if an employee has been arrested or convicted of an offense that could place other employees, customers, or the company’s reputation at risk. FACTA made no material changes in a company’s ability to conduct pre or post-hire background checks for “employment purposes”. The Vail letter, which FACTA negated, only served to confound an employer’s ability to conduct legitimate misconduct investigations.

What then does the journalist find so insidious in FACTA? Perhaps it is that FACTA reinforces an employer’s right to investigate compliance with “pre-existing” company policy. For example, if a company policy states that an employee who drives on company business must maintain an acceptable driving record, generally defined by the employer’s insurance company, then the company would be justified in running post-hire driving record checks. Apparently, Ms. Westin finds this offensive. Moreover, if company policy states that a person who works with children must not be convicted of a sex crime or crime of moral turpitude, that that employer is justified in conducting post-hire criminal record checks to protect clients and other employees is offensive too. Likewise, if an employer has a policy that states, as many do, that an employee must report a felony or misdemeanor conviction, that the employer is justified in conducting post-employment criminal record checks to monitor compliance with this policy is an affront to this journalist’s values.

Clearly, Ms. Pulliam Westin equates this with a license to spy. She rails, “your employer doesn’t need any reason to suspect you of misconduct to set the background bloodhounds on your trail……employers don’t have to notify you in advance……. and, employers don’t have to get your written consent.” Bottom line, “in many cases employers can fire workers for what they find.” She suggests, as some have, that FACTA provides employers a safe harbor that shields them from actions associated with post-employment background checks. It has been a long time since I have seen a more re out-of-context, mischaracterization of facts

Let’s take a look at each of her contentions. 1) “Your employer doesn’t have to notify you in advance….and doesn’t have to get your written consent”: This is partially true. However, in most cases employees have been given advance notice and have consented to on-going background checks in the release signed prior to employment (except for credit reports which FACTA requires the employer obtain an additional release to pull). 2) “In many cases, employers can fire workers for what they find”: True, if your employment is “at will”. But if that is the case, your employer doesn’t need a background check to terminate you. Moreover, the overall concept of “employment at will” has been heavily challenged of late. Employers must be extremely careful when discharging workers, even in “at will” states. Many states have specific laws governing the use of background checks in the context of employment. Employers must use the same guidelines in making a post-hire decision based upon a background check as they would in making a pre-hire decision (i.e. job-relatedness, etc). This is where one must pay close attention to the FACTA verbiage relating to investigating compliance with “pre-existing company policy”. Clearly, the intent here was to link the use of the information obtained from background checks to some aspect of company policy.

Again, the hidden danger in this article lies in the out-of–context and summary treatment afforded this key business issue. The risk, is that based upon her article, an ill-informed employer might undertake post-hire background checks not fully understanding the rules. So, here they are:

• If you are going to conduct post-employment background checks of any kind, add this wording to you company’s pre-employment release form. Write a formal company policy documenting the fact that post-employment background checks will conducted and explaining the reason for their use.
• A separate release and notification is still needed for post-hire credit reports.
• If a consumer report is to be used as the basis for a negative post-employment action, employers must provide the employee with a summary of the information contained in the report but not necessarily the report itself.
• Be consistent in your application of company policy and in your use of background checks.
• To avoid discrimination claims, screen all employees rather than conducting random, periodic checks. If your company screens only certain positions or security levels then screen all employees in those positions or at those levels.

Businesses have an obligation to protect their employees, customers and shareholders. All FACTA did was to restore the employer’s ability to conduct due diligence to where it was for years prior to Vail. I have run background screening programs for several multi-national corporations and I am here to tell you that time and money are too tight to run checks for any reason other than for legitimate business purposes. Is it possible for an unscrupulous person to run a criminal history report on an employee out of curiosity, or for other than legitimate reasons? Sure it is. But it is just as easy and probably more likely that your friends and neighbors will check on you by accessing local public court records. Ms. Pulliam Westin – please get a life!