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JULY 2015
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The information contained in this presentation is not intended to provide legal advice. Universal is not legal counsel; we cannot and do not provide legal advice. Please consult with your legal counsel, risk management or compliance of=icer regarding your
organization’s speci=ic legal obligations.
} NAPBS Accredited Background Screening Agency with 40+ years experience
} HRO Today – Background Screening Top Firm For Customer Sa5sfac5on – 5 Years
} Workforce Management Magazine Background Screening “Hot List” – 5 Years
} Dr. Alan Lasky, Sr. Vice President | Sales – Universal Background } Yvonne Nagel – Senior Account Execu5ve -‐ Universal Background
} Fair Credit Repor5ng Act and State Laws } Descrip5on of Core Services and Process } Use of Reports and EEOC Guidance on Criminal History } Adverse Ac5on and Dispute Process } Hot Topic: Legal Exposure and Class Ac5on Lawsuits } Background Check Best Prac5ces } How Universal and TargetRecruit Can Help
} The FCRA is a Consumer Protec5on Statute ◦ Passed by Congress in 1970 ◦ Amended by the Credi5ng Repor5ng Reform Act in 1996 ◦ Amended 2003 by the Fair and Accurate Credit Transac5ons Act (FACTA)
} As federal law, it applies to everyone, in all states. ◦ However, states can (and some have) extend and expand upon the law.
} It is designed to: ◦ Ensure accurate informa5on is reported ◦ Restricts/Limits what informa5on is reported ◦ Provides a dispute mechanism for consumers
} Despite the name, the Fair Credit Repor5ng Act applies to all types of consumer reports provided by a Consumer Repor5ng Agency.
ü Credit Reports ü Criminal Background Check ü Employment and Educa5on Verifica5ons ü Reference Interviews (Inves5ga5ve CR)
} Laws restrict the informa5on a CRA can report
*13 States established greater limita3ons than Federal law
Data Federal Limita)ons Convic5ons No Federal Limit*
Arrests (Non-‐Convic5ons) 7-‐Year Federal Limit*
Bankruptcies 10 Years
Other “Nega5ve” Informa5on 7-‐ Years
May 2015 (NC) – Screening firm class action lawsuit for using “over 7 year” negative information.
State Time Limit Convic)ons Only Exemp)on?
California 7 Years Yes None
Kansas 7 Years No $20,000
Kentucky None Yes $20,000
Maryland 7 Years No None
Massachusejs 7 Years No $20,000
New Mexico None Yes None
Nevada 7 Years No None
New York 7 Years Yes $25,000
New Hampshire 7 Years No $20,000
Washington 7 Years No $20,000
*Colorado, Maine, Montana and Texas have also passed similar limita3ons, but those laws are deemed to be pre-‐empted by more recent federal law
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◦ Using data found in credit headers and other sources associated with an applicant’s social security number ◦ Provides two main areas of interest � Current and Historical address informa5on � AKA (alias) names ◦ Informa5on may not have been disclosed by the applicant ◦ Useful research tool to iden5fy addi5onal names and loca5ons for further research
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SSNsight Valida)on ◦ Validates the legi5macy of the SSN provided ◦ Approximate Year and State of Issue ◦ Death Master Index check
} Descrip)on ◦ Search for felonies and misdemeanors -‐County Court House � Current and pending cases, convic5ons, dismissed cases (if reported) ◦ Access to court records in over 3,300 US county courts ◦ All checks conducted in person / real 5me ◦ Federally approved search (FCRA) � At least seven (7) year search � Iden5fiers including First and Last Name (Primary), DOB and SSN
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Articles: (OR) 2015 – Daycares want more info on background checks (NC) Killing puts background checks in spotlight (Flying Biscuit Restaurants)
(VA) Day care scandal reveals faulty background checks (39 employees with criminal records at our largest US Army day care center)
(AZ) Man Sentenced to Death for Killing of Student (16 prior felony convictions and had served 20 years in prison for armed robbery and burglary. (MD) Doctor’s sex assault case spurs talk of background checks
} Descrip)on ◦ Not all States have Statewide Criminal Database (CA) ◦ County informa5on (when reported up) ◦ Not always known for “completeness and turnaround” ◦ Search for felonies and misdemeanors � Current /Pending cases, convic5ons, dismissed cases (if reported) ◦ At least seven (7) year search � Iden5fiers including First and Last Name (Primary), DOB and SSN ◦ Florida, Texas, South Carolina and Washington, Ohio
� May 11, 2015 – Ohio Ajorney General Audit Finds Criminal Background Check System Unreliable
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} Court Process ◦ Most federal offenses will not show up on county court or state criminal records/data ◦ Crimes may include: � Mail Fraud – Credit Card Fraud � Kidnapping – Internet Porn � Federal Property Offense – Counterfei5ng � Tax Evasion – Extor5on � Interstate Crimes – Certain Drug Crimes
} 2013 – Cases: Murder, Grand TheO, Drug Trafficking
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} USA CrimSearchTM
◦ Criminal history data from statewide court repositories 22 states and department of correc5ons records 45 states, resul5ng in coverage across 45 states plus the District of Columbia. Addi5onal court data from over 180 individual coun5es.
} USA OffenderSearchTM (na5onwide) ◦ Includes over 240 million criminal, sex offender and security threat records from an unequalled 320 data sources.
} USA SecuritySearchTM
◦ OFAC, SDN and many other Na5onal Security databases.
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} Fully Compliant with Sec)on 613(a) of the FCRA ◦ All informa5on re-‐verified with the original
jurisdic5on to be sure it is “complete and up to date”
} Descrip)on ◦ Reviewing first two lejers of first name in the primary search � Catching variants of the first name (Tim vs Timothy) � Catching hyphenated last names (Smith vs. Smith-‐Danielson) � Where available ◦ Importance due to court iden5fiers first/last name � A More comprehensive search than “exact name match”
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} Descrip)on ◦ Addi5onal names used by individuals that are recorded into data such as credit, legal documents and criminal records. � Cultural � Accidental � For the purpose of hiding true iden5ty ◦ Applicants becoming more savvy in how to use their aliases � Catching Aliases on Social Security Trace and run with Criminal services (i.e., County Criminal, USA CriminalSearch, OIG/GSA)
� Driving Record Search ◦ Ar)cles: NY Daily News– 6/2013 – Woman arrested 396 /mes with 83 aliases
“…92 for thep, 65 disorderly conduct, 59 pros5tu5on, and 5 for robbery” Wisconsin – 1/2012 -‐ Man Named ‘Beezow Doo-‐Doo Zopi>ybop-‐Bop-‐Bop” Arrested
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} Descrip5on ◦ Records in all 50 states plus Washington DC, Puerto Rico, and all Canadian provinces and territories ◦ Most Driving Record Reports, review 36 months of ac5vity ◦ Includes the informa5on about a person’s Character: � Significant traffic viola5ons � Previous suspensions and court ordered ac5ons � Drug offenses that occur in the car (DUI, DWI, In possession of…)
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} Interna)onal Criminal Search ◦ In over 200 Countries
} Interna)onal Employment Verifica)on ◦ Report will include dates of employment, last posi5on held and eligibility for rehire
} Interna)onal Educa)on Verifica)on ◦ Report will include dates of ajendance, degree, major or program, and gradua5on date
} Ar)cle: No system of nurse checks could ‘prevent murder’(2015) ◦ Nurse from Philippines murdering 2 pa5ents /poisoning 19 ◦ An5quated systems, strict rules, lack of importance and unmaintained records
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} Review of degree/history for authen)city ◦ Primary Source verifica5ons ◦ Successful comple5on of the verifica5on ◦ Official documenta5on when possible
} Ar)cle ◦ Rising Tide of Bogus Degrees (May 2015)
◦ Bust in Pakistan running 370 educa5on websites ◦ Columbiana, Barkley, Mount Lincoln school degrees ◦ 3,300 unrecognized universi5es na5onwide ◦ More than 50,000 Ph.D.’s “purchased” every year
} May 2014 (FL) -‐ Admired college professor maintains lie about doctorate for five years un5l he’s revealed as a fraud
} March 2015 (MO) -‐ Cable repairman’s past should have been caught ◦ Fabricated all of his job du5es with mul5ple prior employers ◦ Burglary, forcible sodomy and armed criminal ac5on
} SHRM research ◦ Over 46% of resumes contain falsifica5ons ◦ 70% of college students surveyed would lie on a resume to get the job ◦ 26.5% stated in an AOL study that they would or did lie on a resume
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Federal Criminal Database
Motor Vehicle Reports
Education Veri?ication
Employment Veri?ication
Multi-‐Jurisdictional Criminal Database
50 State + DC Sex Offender Database
County 2 County 1 State A
Additional Due
Diligence Levels
FCRA Level
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All
Juris
dict
ions
All
Alia
ses
State B
Fingerprints DOJ*
*July 2013 - Many FBI criminal background checks for employment contain faulty information (National Employment Law Project)
June 2015 - 73 airport workers
with possible terrorism ties passed TSA background
checks
} Mercy of the Court / An)quated Courts ◦ Mail in lejer to obtain informa5on, furloughs, one order at a 5me, layoffs
} Common Name ◦ Vetng mul5ple hits or addi5onal informa5on as per federal law
} Database is down or corrupt
◦ Certain database streams temporarily down
} Seasonal lag )me ◦ Summer, Vaca5ons, Spring Break, Winter Storms
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} Can be conducted pre or during employment } UA 5 and 10 Panel most reliable and regulated (DOT 5) } Hair & Other Tests } Synthe5c Cannabinoids (Bath Salts)
Workplace drug use 2015
Nearly ½ of all posi)ve tests are for marijuana.
} Legaliza5on of Marijuana States (CO, WA, OR, AK, DC)
Medical Use ◦ 23 States Permit Usage (plus DC)
} Selected State Laws: CA (SF, Berkley), CO (Boulder), CT, DE, IA, ME, MA, MN, MT, NE, NJ, NY, OK, RI, VT, and WV � “Business Necessity” or “Safety Sensi5ve” � Random tes5ng restric5ons (prohibited in SF, CA) � Post offer only (VT, MN and OK)
Does the legaliza)on of marijuana use have any effect on my company’s drug-‐free workplace policies? No. Employers s5ll can have and enforce drug-‐free workplace, zero-‐tolerance policies. Employers with such policies may want to remind their employees that despite the legaliza5on of marijuana in Washington, the employers’ policies have not changed and it is s5ll against company policy to allow any drug use, including marijuana. (Ryan, Swanson & Cleveland, PLLC)
} Quality Assurance and Compliance Department ◦ Reviews reports for federal (FCRA), state and industry compliance ◦ All adverse informa5on reviewed by a senior manager prior to repor5ng
} Proac5ve Communica5on ◦ Advise staff and clients of changes in applicable law � Through Universal’s Legal, NAPBS, daily review of ar5cles ◦ Compliance webinar with all clients and for your organiza5on � Review EEOC, FTC, Federal/State Laws, DHHS, Joint Commission updates ◦ Communica5on of updates through mul5ple means � Website dashboard –Email alerts – Proac5ve call from CSR
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The informa3on contained in this presenta3on is not intended to provide legal advice. Universal is not legal counsel; we cannot and do not provide legal advice. Please consult with your legal counsel, risk management or compliance officer regarding your organiza3on’s specific legal obliga3ons.
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} FTC Inves5ga5ons increase and focus on compliance Newly formed Consumer Financial Protec5on Bureau ◦ Jus5ce Department: USIS -‐ 665,000 (40%) fraudulent /“sloppy” checks (January 2014)
� Email: “Flushed everything like a dead goldfish” ◦ 100+ inves5ga5ons -‐ inves5gators filing fraudulent/falsified records ◦ Screening Firm 1 – (May 2014) – Class Ac5on Current/Pending – Mul5ple cases
� “…lied about using official court records…obtained info from a bulk data collec5on”
◦ Screening Firm 2 : $10 Million sejlement: 13.5 Million sejlement (2013) � Lack of security with 160,000 records compromised � Aggrega5ng informa5on without a person’s knowledge and selling personal records that could be out
of date/inaccurate.
◦ Screening Firm 3 : $2.6 Million � Did not take adequate steps to verify accuracy of criminal checks. � Failed to assure the accuracy of its screening reports, give consumers copies of their reports or
inves5gate disputes raised by consumers about informa5on in their reports.
◦ and many more…
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} Increase as plain5ff ajorneys understand the laws (3x more in 2015)
} Laws more fragmented through ci5es/municipali5es } Increase in sejlements: ◦ Up to $1,000 per person ◦ Ajorneys Fees / Court Costs ◦ Damages
} Recent Cases } January 2015 – Michaels Stores / Sears
� Not providing disclosure form as “solely of the disclosure”
} November 2014 – Publix Super Markets ($6.8M sejlement) � Not providing disclosure forms
} October 2014 – Dollar General ($4.08M sejlement) � Outdated disclosure forms
} September 2014 – Canon Solu5ons America � Not providing a right to dispute informa5on (Adverse Ac5on)
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} Criminal – review “nature and gravity of the offense” ◦ Substan5ally job related / standardized ◦ Severity of the offense ◦ How long ago it occurred ◦ Is person a repeat offender
} No “bright line” / no hire rules ◦ A felony convic5on is an immediate disqualifica5on
} Speak with Legal and have a program in place } Case by case basis – yet standardized } Training for hiring process/procedures
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} EEOC scru5ny regarding disparate impact on racial minori5es
◦ Nearly 80 million Americans with criminal records file ◦ AK, AZ, ME and NE virtually no way to remove criminal records ◦ Pepsi Beverages pays 3 million in racial bias case (1/11/12)
� Discrimina5on lawsuit (arrests vs convic5ons) and relevance � Employers can be found liable for discrimina5on without plain5ff having to show proof of inten5onal discrimina5on
◦ Uber, Washington Metro, Dollar General, BMW, Advanced Auto Parts, Whole Foods, � Violate Title VII of the Civil Rights Act: having a disparate impact on minori5es � Did not follow proper procedures of providing informa5on to candidates
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} Legal Pushback ◦ August 9, 2013 – MD Court dismisses lawsuit vs. Freeman company
� “EEOC’s sta5s5cal expert’s tes5mony was unreliable based on a substan5al number of errors in selec5ng and analyzing data regarding the employers job applicants.”
◦ October 7, 2013 -‐ EEOC v. Peoplemark, Inc., No. 11-‐2582
� “Careful and appropriate use of criminal history informa5on is an important, and in many cases essen5al, part of the employment process of employers throughout the United States.”
◦ Past 2 years courts ordered EEOC to pay $5.6 million ajorney fee’s ◦ Courts rejected EEOC’s posi5on in 8 of 10 cases in which it filed last year ◦ TX Federal suit – Injunc5on blocking enforcement of 2012 Policy
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} States prohibi5ng/limi5ng employment credit checks ◦ OR, HI, WA, IL, MD, VT, CT, CA, CO, NV and NY (2015) limit an
employer’s use ◦ Several state bills under legisla5ve considera5on: DC, GA, IN, LA, MI,
MN, MO, NJ, OH, OK, PA, SC, WI
} Credit ◦ Job related and consistent with business necessity ◦ Speak with your legal regarding best prac5ces for your posi5ons if
using Credit
◦ April 2014 – Kaplan vs. EEOC “Sta5s5cal Impact was Unreliable” ◦ January 2015 – Paramount Studios Class Ac/on Lawsuit “…failing to make and/or obtain the required cer5fica5ons required”
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} Issue ◦ Lack of consistency with background screening
program � A la carte items ordered on some applicants but not
others going out for same posi5on � Risk of perceived discrimina5on and poten5al li5ga5on
} Solu)on ◦ Keep process consistent through ordering packages ◦ Reduces chances of human error and lowers risk of
li5ga5on
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1. Disclosure/Authoriza)on Form • Federal and State compliant • Candidate signs prior to conduc)ng check • Separate document from the Applica)on • Kept in candidate’s file if ever needed
(April / May 2015) – Home Depot 1.8M Settlement/ Sears/ Dollar Tree / Closetmaid
Not a stand alone document, no authorization and not providing a copy of the report (March 2014) – O’Reilly Auto Parts, Whole Foods and Chuck E Cheese Current Class Action
Did not provide disclosure in a stand alone document (CA Supplemental Notice) (April 2014) – Swift Transportation 4.4 million settlement and Extended Stay Hotels
Lack of federal and state language on disclosure and no wrijen authoriza5on provided (March 2011) – 5.9 million settlement FirstGroup
Not providing a disclosure form
2. Summary of Rights Document • Federal Law – give the candidate copy of their rights • Revised January 2013 • Provided at the )me of background screening, verifica)ons, adverse process
(April 2013) – U.S. Express agrees to $2.7 million settlement over disclosures forms
3. Adverse Ac)on • Candidate’s legal right to dispute informa)on June 2015 Hertz Class Action / April 2015 Amazon / January 2015 Johnson & Johnson “Never sent an adverse action letter” September 2014 – Staples “Not providing proper notice nor allowing time to dispute report” December, 2013 – Beverly vs. Wal-‐Mart Stores “Not providing enough time to dispute” November , 2013 – Disney (CA) FCRA class action “Failure to comply with proper hiring procedures” February, 2013 – Kmart settles for 3 million “Failed to provide proper Adverse Ac5on procedure” 3M, Home Depot, Aaron’s, Dominos Pizza, Capital One, O-‐Reilly Auto parts, Aerotek, Allegis Group
} Any decision by an End User that has a nega5ve impact on the consumer. Examples: ◦ Denying employment (rescinding condi5onal offer) ◦ Termina5ng employment (exis5ng or new hire) ◦ Denying promo5on, transfer, etc.
} Why does the law require this process? ◦ To provide the opportunity for the consumer to dispute any informa5on that may be incomplete or inaccurate ◦ Iden5ty thep, common/limited iden5fiers, human error
Before taking any adverse ac5on, you must:
1 • Notify the consumer that you may take adverse action based on the consumer report (Pre-‐Adverse Action Letter)
2 • Provide the consumer a copy of the report
3 • Provide the consumer a copy of the document A Summary of Your Rights Under the Fair Credit Reporting Act and any other applicable state notices
4 • Provide a “reasonable” amount of time for the consumer to receive the notice, review the report and initiate a dispute
Rite Aid Beats Class Action (July 31, 2014)
} What is a reasonable amount of 5me? ◦ FTC: “Some reasonable period of 5me must elapse, but the minimum length will vary depending on the par5cular circumstances involved.” FTC Staff Report 7/2011 ◦ FTC: “Although the facts of any par5cular employment situa5on may require a different 5me, the five day period that you proposed appears reasonable.” Weisberg 6/27/97 ◦ Reardon v. Closetmaid: did not establish 5 days as a minimum wai5ng period � Suggested that anything less than 5 days may put the employer under scru5ny for FCRA viola5ons.
} Aper providing “pre” adverse ac5on no5ce and… ◦ The applicant does not dispute the informa5on ◦ Or, a re-‐inves5ga5on is completed
} Then… issue a “final” Adverse Ac5on No5ce ◦ Include a copy of the report ◦ A summary of the consumer's rights
} Finally… take the applicable adverse ac5on ◦ Rescind Job Offer, Terminate Employment, etc.
} Vendors/Contractors place organiza5on at risk ◦ Staffing Firms Bad Rap Ar5cles
� Could Background Check Have Prevented Rape (BP 2010) � Nursing Student Accused of Sexually Assaul5ng Pa5ent (2014)
◦ Screen vendors the same way � Have Extended Workforce Program for vendors/contractors � Vendors pay for screening at discounted rates
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} Removing ques5on on applica5on: ◦ “Have you ever been convicted of a misdemeanor and/or felony?”
} Over 100 municipali5es and 18 states and DC (May 2015) ◦ States: CA, CO, CT, DE, GA, MD, NE, NM, OH, VT, VA, OR, DC (Public/Gov’t Only) ◦ States: HI, IL, MA, MN, NJ, OR, RI (Private Sector – not asking convic5on ques5on on applica5on) ◦ San Francisco and Bal5more (10 or more employees) ◦ The "Certainty in Enforcement Act of 2014"
� Prevent the EEOC/state agencies/plain5ffs' ajorneys claiming that certain employers are engaged in unlawful employment prac5ce when ac5ng in accordance with federal/state/local laws.
� Included certain industries/fields such as; health care, childcare, in-‐home services, policing, security, educa5on, finance, employee benefits, and fiduciary du5es.
Solu)on ◦ Speak with your legal regarding best prac5ce for your organiza5on. ◦ Increasing background check services to cast larger net ◦ Looking for “interrup5ons” in Employment History
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} Hiring Controversies Due to Social Networking ◦ Up to 98 % of the U.S. online popula5on uses social media (12/2011) ◦ 38% Employers less likely to hire without finding info online (Career Builder 2015) ◦ 51% hiring managers use search engines to research candidates ◦ 70% of those surveyed admijed to rejec5ng candidates based on informa5on they uncovered online (CBS News, 2010)
} Content hur5ng job prospects ◦ Provoca5ve or inappropriate photos (46%) ◦ Informa5on about a candidate drinking/drugs (40%) ◦ Candidate bad-‐mouthing previous company/employees (34%) ◦ Poor communica5on skills (30%) ◦ Discriminatory comments to race/religion/gender (29%)
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} Legal Issues ◦ Accepted by FTC ◦ Most sites do not have a sound verifica5on process � May Violate EEOC Guidelines (Protected Class) � May Violate FCRA (Fair Credit Repor5ng Act) � May Violate ADA (disability) ◦ 20 States protec5ng personal passwords/names
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§ Research suggesting Blacks and Hispanics might adversely be impacted by use of Facebook ratings which tended to favor female and White applicants (Florida State University Study)
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} Establish wrijen policies and procedures that cover all areas related to no5fica5on, authoriza5on, permissible purpose, use, disputes, adverse ac5on, storage and disposal.
} Provide disclosures and obtain wrijen authoriza5on } Follow Pre and Final Adverse Ac5on Procedures and provide an opportunity for the consumer to dispute
} Be Consistent. Be Consistent! Be Consistent!!
} Establish wrijen policies of what qualifies and/or disqualifies a person to: ◦ Work in any posi5on in the Company ◦ Specific posi5on(s) in the Company
} Avoid “blanket” disqualifiers unless you can demonstrate a legi5mate business necessity ◦ Especially important for Credit Reports
} Pay ajen5on to Title VII, EEOC and Disparate Impact
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} Dr. Alan Lasky Senior Vice President – Sales | Universal Background [email protected] 877-‐263-‐8033 x3215 818-‐535-‐3477 cell
} Yvonne Nagel – Mar)n Zanit -‐ Emmanuel Amaro – Lisa Carroll Jocelyn Ellington – Allissa Ditmars – Thomas Ward -‐ Jennifer Schuster Maureen Isacksen -‐ Kate Kearns Senior Account Execu5ve |Universal Background [email protected] 877-‐263-‐8033 x3
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