Employers Must Utilize New Fair Credit Reporting Act (FCRA) Summary of Rights Form

Q: My company uses a third-party vendor to conduct background checks on prospective employees.  We heard there is a new model for the “A Summary of Your Rights Under the Fair Credit Reporting Act” notice.  Should we be using it?

A: Yes.

The Fair Credit Reporting Act (FCRA) establishes strict procedures that employers must follow when obtaining background check reports on applicants or employees from a third party “consumer reporting agency.” The FCRA requires employers to provide written disclosures to and seek affirmative consent from applicants and employees before procuring these types of background check reports.

The FCRA also imposes requirements on employers to provide notices to applicants and employees whom the employer intends to not hire, terminate, or demote based upon the results of a background check report. In complying with these notice requirements, employers are required to give applicants and employees a description of their rights under the FCRA.

The Consumer Financial Protection Bureau (CFPB) is responsible for enforcing certain aspects of the FCRA, and publishes a model notice entitled “A Summary of Your Rights Under the Fair Credit Reporting Act” that most employers utilize to comply with the FCRA.

Earlier this year, Congress adopted legislation called the Economic Growth, Regulatory Relief, and Consumer Protection Act. This law requires nationwide consumer reporting agencies to provide “national security freezes” free of charge to consumers, which restricts prospective lenders from obtaining access to a consumer’s credit report, thereby making it harder for identity thieves to open accounts in the consumer’s name.

The newly enacted law requires that whenever an applicant or employee (“consumers” for purposes of the FCRA) is provided a summary of their rights under the FCRA, they must also be informed of the new right to a security freeze.

Earlier this month, the CFPB released a new model “A Summary of Your Rights Under the Fair Credit Reporting Act” notice, which incorporates information about consumers’ right to a security freeze. The new form (“Summary of Consumer Rights”) can be found here. As this new form went into effect on September 21, 2018, employers should begin utilizing the new form immediately.

If you have any questions or concerns about the new form or your business’s compliance with the Fair Credit Reporting Act, please contact any member of the Pepper Hamilton Labor and Employment team.

–Lee Tankle

NLRB Proposes New Rule on Joint Employer Standard

Q.  What is the current rule for determining whether two employers are considered to be “joint employers” under the National Labor Relations Act?

A.  On September 14, 2018, the National Labor Relations Board (NLRB) proposed a new regulation that would make it more challenging to establish joint employer status under the National Labor Relations Act. The proposed rule dictates that two entities will be joint employers only if each exercises substantial direct and immediate control over employees.

As we reported previously, in 2015, the NLRB significantly relaxed the standard for proving that two entities are joint employers in Browning-Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery, 362 NLRB No. 186 (2015). In Browning-Ferris, decided during the Obama administration, the NLRB ruled that entities could be joint employers even if one had only indirect, limited and routine control or the unexercised right to control employees’ terms and conditions of employment. The NLRB reversed course in December 2017 during the Trump administration, overruling Browning-Ferris and reinstating the standard for joint employer status that had existed previously – that entities are joint employers only if each has exercised direct and immediate control over employees. See Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017). The Hy-Brand ruling was short-lived, however. The NLRB vacated that ruling earlier this year due to the conflict of interest of one of the NLRB’s members who participated in the decision. In the meantime, a petition for review of Browning-Ferris is pending in the D.C. Circuit Court of Appeals.

Now, the NLRB seeks to establish a stricter joint employer standard by regulation. Doing so would add more permanence to the joint employer standard than interpreting it through case law, which often changes from one presidential administration to the next. The NLRB explained in its Federal Register notice that it would benefit from public comment on the joint employer standard “given the recent oscillation on the joint-employer standard, the wide variety of business relationships that it may affect (e.g., user-supplier, contractor-subcontractor, franchisor-franchisee, predecessor-successor, creditor-debtor, lessor-lessee, parent-subsidiary, and contractor-consumer), and the wide-ranging import of a joint-employer determination for the affected parties.”

The NLRB’s proposed rule enunciates the following test for joint employer status:

An employer, as defined by Section 2(2) of the National Labor Relations Act (the Act), may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision and direction. A putative joint employer must possess and actually exercise substantial direct and immediate control over the employees’ essential terms and conditions of employment in a manner that is not limited and routine.

The NLRB included 10 examples with the proposed rule “to help clarify what constitutes direct and immediate control over essential terms and conditions of employment.” For example, the NLRB concluded that the following scenario reflects one company’s direct and immediate control over another company’s employees: Company A supplies labor to Company B and, pursuant to the contract between them, Company A is required to pay a particular wage rate. In that situation, Company B exercises direct and immediate control over wage rates. In another example, a franchisor requires its franchisee to operate the franchisee’s store between specified hours. The franchisor does not exercise direct and immediate control over the essential terms and conditions of employment of the franchisee’s employees because the franchisor is not involved in scheduling the franchisee’s employees or in determining shift durations.

The NLRB’s proposed rule will now go through the time-consuming rulemaking process. As employers wait for the publication of a final rule, companies can minimize the risk of joint employer status by avoiding involvement in decisions regarding another company’s employees, including decisions regarding pay, hiring, discipline or termination.

–Susan K. Lessack

 

New York Employers Must Comply with New Sexual Harassment Requirements, Beginning October 2018

Q: I am a New York employer.  How do the upcoming New York State and New York City sexual harassment requirements affect me?  When is the deadline to comply?

A: New York State and New York City have new sexual harassment policy and training requirements for employers.  The New York State requirements go into effect on October 9, 2018 (policy must be adopted by October 9, 2018 and training must be completed by January 1, 2019).  The New York City requirements (training only) go into effect April 1, 2019.  The New York State requirements apply to all employers, and the New York City requirements apply to employers with 15 or more employees in New York City.

The City and State training requirements are similar, so employers that do not yet meet the City threshold of 15 employees should consider complying with the City requirements regardless. That way, should the employer reach the 15 employee threshold, it will already be in compliance.

New York State requires that all employers implement a written anti-harassment policy by October 9, 2018. Employees should sign acknowledgments, and employers should keep the acknowledgments on file for at least three years.  The policy must have a number of elements:

  • State that sexual harassment is a form of employee misconduct and sanctions will be enforced against individuals engaging in sexual harassment and against supervisory and managerial personnel who knowingly allow sexual harassment to continue;
  • Provide examples of prohibited conduct;
  • Include information about the federal and state statutory sexual harassment provisions and remedies applicable to victims of sexual harassment, as well as a statement that there may be applicable local laws;
  • Include a standard complaint form;
  • Include a procedure for the timely and confidential investigation of complaints that ensures due process for all parties;
  • Inform employees of their rights of redress and administrative and judicial forums for adjudicating sexual harassment complaints; and
  • State that retaliation against individuals who complain about sexual harassment or who testify or assist in any proceeding under the law is unlawful.In addition to the above policy requirements, the laws also require annual sexual harassment training. New York State requires that all employees must be trained by January 1, 2019. New York City requires that all employees be trained by April 1, 2020 (one year from the effective date of the law). Employers with employees in New York City must comply with both laws, and thus must complete training by January 1, 2019. The training must be interactive and include:
  • An explanation of what constitutes sexual harassment;
  • Examples of conduct that constitute unlawful sexual harassment;
  • Information about federal and state statutory provisions concerning sexual harassment and available remedies;
  • Information about rights of redress and all available forums for adjudicating complaints;
  • Information about supervisor/managerial conduct and additional responsibilities;
  • Information about internal and external complaint processes; and
  • Information about bystander intervention (New York City specific).Both the City and State require annual training. New employees must complete sexual harassment training within 30 days of beginning work. The training must be interactive, which means the program should include questions for employees and allow employees to ask questions. While a live trainer is the most effective form of training, training can be web-based, so long as it is sufficiently interactive.To prepare for the new requirements, employers should update (or create) compliant sexual harassment policies, and get written acknowledgments of the policy from every employee, and also prepare to meet the requirements for sexual harassment training. New York State has released a model policy and training materials. However, they are still open to public comment until September 12, and may be subject to change.  Employers who would like assistance with policy or training compliance or who have additional questions should contact counsel

–Jessica Rothenberg