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Pre-Employment Screening andEmployment Verification –

Vital Legal and Practical Considerations to ProtectYour Organization

February 20, 2008

Association of Corporate Counselwww.acc.com

Presenters:Richard I. Greenberg, Partner, Jackson Lewis LLPKrishna Y. McVey, Managing Attorney, Labor LawGroup, Michelin North America, Inc.

Moderator:Eric D. Reicin, Senior Vice President and DeputyGeneral Counsel-Office of the General Counsel, SallieMae, Inc.

Panel

Webcast OutlineFCRA and State Law Compliance – if 3rd

party consumer reporting agencies are usedTypes of Pre-employment Checks andRelevant ConsiderationsWhat Checks Can an Employer Conduct onits Own/Novel Issues/Litigation ConcernsI-9 Requirements, The New I-9 Form, E-Verify and Related State Laws

FCRA/State Law ComplianceOnly Applies if Third Party ConsumerReporting Agencies Used to Conduct ChecksEmployers Required to Sign End UserAgreement if Checks For EmploymentPurposesMust Obtain Consent fromApplicants/Employees – Electronic Consent isan Unresolved Issue

FCRA/State Law ComplianceDifferent Requirement for ConsumerReports and Investigative Reports – 3rd PartyReference Checking Can = Investigative ReportsPre-adverse ActionAdverse ActionRecordkeepingDestruction Requirements

FCRA/State Law ComplianceCalifornia – specific consent form requiredMaine, Minnesota, Oklahoma, etc. – relevanttangents need to be addressed on consentformWashington, Massachusetts, New Jersey –state summary of rightsWashington – credit check limitations

FCRA/State Law ComplianceDisqualification is NOT an FCRA issueMust Be Careful of “Direct” Claims, as wellas Disparate Treatment and Impact ClaimsIn Regard to “Direct Claims”, Some StatesRequire Job-Relatedness for DisqualificationBased on Certain Type of Information, Suchas Criminal Background – be careful of per sedisqualification policies

Checks and IssuesCriminal Background – Different Forms– be careful of “nationwide” checks not based on upto date information_ note that certain states limit the information thatcan be provided by the consumer reporting agencyEmployment Verifications/References -Educational Verifications -

Checks and IssuesSocial Security Traces – not SSA Database solegality of direct use for disqualification is questionable– however, there are other advantagesCivil Litigation Checks – be wary of obtaininginformation that can support discrimination claimsOFAC Checks

Checks and IssuesCredit Checks – focus on job-relatedness – state ofWashington may be harbinger for future legislationSex Offender Checks – some databases state thatthey cannot be used for employment purposesDMV Checks – focus on job-relatednessOther Public Sources

Can An Employer Run Its OwnChecks?

Absolutely, as long as it has the resources,time and ability to do so.If so, in general, consent, pre-adverse andadverse action requirements do not apply –they potentially do apply if the employer is obtaininginformation directly from databases

Novel IssuesChecking MySpace/Friendster, etc. – whilethere is come concern under state privacy laws inregard to using information for disqualification, no perse prohibitionsHowever, be careful of protected activity –for example, if the state has a smokers’ rightslaw, cannot disqualify for smoking pictures.

Litigation ConcernsApplying minimum credit standards to allPer se disqualification standards– importance of speaking to applicant or employeeregarding potentially disqualifying information beforeimplementing decision – in regard to criminal checks, importance of lawfulemployment application inquiry to supportdisqualification for misrepresentation

Litigation ConcernsWorkers’ compensation checksDisclosing Results of Checks to Clientswithout AuthorizationNot Maintaining the Confidentiality ofObtained Information

Base I-9 RequirementsProperly and fully complete Form I-9 within 72 hours ofemployees’ start of employment.

Certain parts must be completed on day one (1).Documents must be presented within 72 hours.Listed documents must be reviewed to ensure they lookauthentic.There are two (2) schools of thought as to whether tocopy and retain back-up documents.

Employers can also request to see Social Security cards onthe first day of employment for payroll purposes.

The New I-9 FormThe U.S. Citizenship and Immigration Service (USCIS) announced during the Fall of2007 that all employers were required to transition to the revised Form I-9 by December26, 2007.

Employers who fail to use the revised form will be subject to penalties.

The revised Form I-9 applies to all new hires or re-verifications. Employers do not needto complete new forms for existing employees for whom an I-9 has been properlycompleted.

The New I-9 FormPoints to Note:

The employee is not required to provide the Social Security Number in Section one (1)of Form I-9, unless the employer participates in E-Verify.When re-verifying employees, employers must use the new Form I-9 along with itsupdated list of acceptable documents. Updating Section 3 on the old/existing Form I-9 is not an option.All previous versions of Form I-9, in English or Spanish, are no longer valid afterDecember 26, 2007.The Form I-9 is available in English and Spanish. However, only employers in PuertoRico may have employees complete the Spanish version for their records. Employersin the 50 states and other U.S. territories may use the Spanish version as a translationguide for Spanish-speaking employees, but must complete the English version andkeep it in the employer's records. Employees may also use or ask for atranslator/preparer to assist them in completing the form.

E-VerifyA federal program to assist employers inensuring that new hires are lawfully eligibleto work in the United States.Generally not mandatory.Can be done directly or through a third partyagent.Must sign a Memorandum of Understandingand comply with certain procedures.

Influx of Related State Laws

Many states also have imposed obligations on employers toensure employees are authorized to work in the U.S. Litigationhas resulted in many instances.

Do states have the power to regulate this issue?

Uncertainty prevails.

Influx of State Laws: Some ExamplesArizona

On July 2, 2007, Arizona enacted the Legal Arizona Workers Act, which requires allArizona employers, no later than January 1, 2008, to participate in the federal “BasicPilot Program” (E-Verify) which provides for the electronic verification of the identityand work authorization of newly hired employees.

On December 21, 2007 and again in early February 2008, a federal judge dismissedlawsuits challenging the legality of the law.

The Act has been in effect, as scheduled, since the beginning of the year.

The Act appears to apply to all employees of an employer who (1) transacts business inArizona, (2) has a license issued by an agency in Arizona, and (3) employs one or moreindividuals who perform employment services in Arizona.

However, logically speaking, not applying the requirement to employees outside ofArizona is reasonable.

Some Examples (cont’d)Colorado

On July 31, 2006, Colorado enacted a law, which became effective on January1, 2007, requiring all Colorado employers to examine the employmenteligibility of every newly-hired employee. Colo. Rev. Stat. § 8-2-122 (2006).

The law imposes affirmation and document retention requirements.

Within 20 days after hiring a new employee, employer must affirm that theemployer: (1) has examined the legal work status of any newly-hiredemployee; (2) has retained copies of the employee’s federal Form I-9 identitydocuments; (3) has not altered or falsified the new employee’s identificationdocuments; and, (4) has not knowingly hired an unauthorized alien. TheColorado Department of Labor and Employment has prepared a model“Affirmation of Legal Work Status” for employers to use.

Some Examples (cont’d)Colorado (cont’d)

Employers must keep both the affirmation and a written or electronic copy ofthe employee’s federal Form I-9 identity for the entire term of the employee’semployment.

Employers who violate this new Colorado law can be fined up to $5,000 for afirst violation, and up to $25,000 for subsequent violations.

Some Examples (cont’d)Illinois

Illinois introduced an amendment to the state Right to Privacy in the Workplace Act whichprohibits Illinois employees from enrolling in an Employment Eligibility VerificationSystem (EEVS) until the SSA and the DHS make a final determination on 99% of thetentative non-confirmation notices they issue within three (3) days.

The amendment also forbids employers currently enrolled in an EEVS from using thesystem unless the employer meets certain training and posting requirements.

On September 24th, the Bush Administration filed suit against the State of Illinois forimpeding the new federal “no-match” regulations. The Administration plans to initiatelitigation against other state authorities that stall the crackdown on illegal immigration.

The State of Illinois recently agreed not to enforce the amendment, which was to becomeeffective on January 1, 2008, until a lawsuit brought by DHS is resolved.

DHS has/will inform each Illinois employer enrolled in E-Verify that the employer maycontinue to use E-Verify without fear of State enforcement action after January 1, 2008.

What Should Employers Do Today?

Review background check protocols and policies for legalityand risk.

Continue to properly complete new I-9 forms.

Consider E-verify.

Take preventive measures with contractors.

The Material Contained in this Presentation was Prepared bythe Presenters for the Attendees’ Own Reference inConnection with this Seminar. Since the Material andRelated Discussions Are Informational and Educational inNature and Represent the Speakers’ Own Views, AttendeesShould Consult with Counsel Before Taking Any Actionsand Should Not Consider These Materials or RelatedDiscussions to be Legal or Other Advice. ProfessionalAdvice Should Be Obtained Before Attempting to Addressany Legal Situation or Problem.

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