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Use of background checks in hiring stirs controversy

Justin D'Heilly never saw it coming.

He was working as a Domino's Pizza delivery driver in St. Paul, Minn., in 2009 when he pulled over to take a call from his manager, who told D'Heilly he could no longer drive for the company.

A background check had found some problems with his motor vehicle history, but D'Heilly wasn't told exactly what the trouble was, nor was he given a copy of the damning report.

When he checked with police to see if his license had been revoked, D'Heilly learned that it was valid and that he had only a couple of speeding tickets. He was fired the following month.

"They never officially told me why," D'Heilly said. "I just kind of faded away from them, I guess I've always been a good employee there. I've never had any kind of disciplinary problems whatsoever, so to get that call out of the blue like that, you know, it just threw me off."

D'Heilly is now a named plaintiff in a budding class-action lawsuit that claims Domino's willfully violated the Fair Credit Reporting Act by running employee background reports without proper authorization and by not sharing the reports with applicants and employees before taking adverse job actions against them, like termination or denial of employment.

Domino's has denied the allegations in court filings. Company spokesman Tim McIntyre wouldn't comment on the case, but in an emailed response, he was clear: "We do not apologize for conducting criminal background checks."

With more than four unemployed workers per opening, the job search has become a contact sport following the Great Recession. The buyer's market for labor has employers relying on criminal and credit background reports to help thin the applicant pool and avoid potential lawsuits for negligent hiring.

A recent survey found that more than 90 percent of employers run criminal checks on job applicants, while 60 percent sometimes screen for credit, depending on the position. Black marks on either report can prove fatal for the estimated 65 million U.S. adults with criminal records and the 25 percent of whites, 33 percent of Hispanics and 50 percent of African-Americans thought to have bad credit.

Identifying potential hires who could pose a threat to a company's assets or the safety of its workers and customers is a serious responsibility with legal ramifications, so consumer background reports are invaluable in helping employers gauge the trustworthiness, judgment, reliability and competence of new employees.

But at a time when jobs are scarce and 5.4 million have been unemployed for more than six months, a robust discussion is brewing among lawmakers, employers and regulators who are re-examining the way that negative background information is used.

Millions who lost jobs through no fault of their own in the Great Recession were left unable to pay their bills, which has hurt their credit standing and made it even harder for them to find work.

And adults with minor or even "stale" criminal convictions that date back 20 or more years can still have trouble finding work even if they've kept their records clean since their conviction. Researchers in 2009 found that a criminal record cut chances for a job callback or job offer by nearly 50 percent.

Sharon Dietrich, a legal aid attorney in Philadelphia who represents mainly poor blacks in employment discrimination cases, said, "It's the single biggest reason" her clients can't get jobs.

These issues have prompted more states to restrict employer use of credit background checks, while a national "ban the box" movement has led growing numbers of states, cities and counties to eliminate the question about a person's criminal history from initial applications for government jobs.

The U.S. Equal Employment Opportunity Commission, which enforces federal civil rights law in the area of fair employment practices, is also addressing the issue. For the first time in 25 years, the commission is revising its guidance to employers on how to properly evaluate criminal records in pre-employment screening.

That prospect, and the commission's stepped-up investigation of job-screening policies that disproportionately hurt minorities, has employers wondering whether new EEOC guidelines will make criminal background checks even more complicated to use and harder to defend in court.

Employers have a tough enough time trying to protect company interests and give former offenders a second chance without new commission guidelines making it even tougher, said Richard Mellor, vice president for loss prevention at the National Retail Federation.

"We do want to give second chances," Mellor said. "We've all made mistakes in our lives, and people deserve an opportunity to improve and to become employed." New EEOC guidelines "could be a real good thing," he added, but new federal "restrictions that prohibit or impede us from [doing] the responsible thing are not."

The new EEOC guidelines will not affect the use of credit checks. But last year researchers at three universities found no connection between a person's poor credit history and their likelihood of behaving badly in the workplace. That gave credence to what many consumer advocates had long believed that individual credit ratings have little, if any, predictive value about future job performance.

That belief has prompted seven states to limit credit background checks only to positions for which the information is pertinent. In January, California became the latest state to do so, joining Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington. Similar legislation passed the Colorado state senate last month.

At least 31 cities and counties and a handful of states -- including California, Connecticut, New Mexico, Massachusetts and Minnesota -- have deferred criminal-background checks until later stages of the interview process for most government jobs. Doing so removes the "box" on employment applications that ask about a candidate's criminal past and allows employers to evaluate the candidate's skills and experience first.