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New Laws Impact Employment Screening in 3 Key Areas

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When it comes to background checks and employment screening, there are more rules and laws than ever regulating what information an employer is legally allowed to consider in the hiring process, when they can consider it, and what action can be taken.

In this article, I’ll share three key areas of compliance where employers need to take special care when running background checks and provide compliance best practices to help you follow the law and mitigate risk.

New Laws Affect Employment Screening in Three Key Areas:

  1. Medicinal and recreational marijuana and its impact on workplace policies
  2. State and local laws restricting inquiries into candidates’ salary and credit histories
  3. Ban-the-box initiatives in local jurisdictions where employers need to juggle local, state, and federal requirements for criminal history inquiries

1. Marijuana Legalization and Drug Screening

Under federal law, marijuana use remains illegal. And while you may be used to zero-tolerance drug policies, where you may have the right to refuse to hire or the ability to terminate based on marijuana drug use, all of that is changing—and quickly.

Now that 33 states have legalized medical marijuana use, and 11 states have also legalized recreational use, recent employment discrimination suits based on medical marijuana use are on the rise due to state protections for medical marijuana card holders. Some states, such as Illinois, even provide employee protections for recreational use (effective January 2020).

For example, New Jersey just expanded its medical marijuana law after an employee who was fired for a positive marijuana screen sued his employer for disability discrimination for failing to accommodate his medical marijuana use outside of the office. Under the amended law, employees and job applicants who use medical marijuana outside of work are now expressly protected from discrimination. Outside of a few exceptions, employees in New Jersey can’t be fired, or rejected from a job, simply because they test positive for marijuana.

Eleven states where marijuana is legal in some form have specifically carved out legal protections for employees who use medical marijuana. These employee protections will continue to be enacted as states and localities pass new laws across the country, and in many locations employers looking to mitigate the risk of discrimination claims are discontinuing their screening for marijuana.

What does this mean for you? Employers now need to carefully tailor their drug screening policies to ensure that drug testing is administered in accordance with state and local laws in order to steer clear from legal claims.

Compliance Best Practices:

  • Research your state and city laws and stay up-to-date on marijuana laws that may apply to your organization.
  • Discuss legal nuance around medical marijuana discrimination with your counsel and determine with corporate stakeholders whether your organization wants to screen for marijuana use.
  • Develop a thorough, granular Drug Screening Policy that incorporates state and local laws related to medical marijuana.
  • Revise your Drug Screening Policy as laws change. Zero-tolerance policies are no longer recommended, even for employers subject to the Drug Free Workplace Act.

2. Salary and Credit History Inquiries

Many states and cities have implemented laws that restrict the use of salary history and credit history during the screening process. Designed to help put an end to pay discrimination, 17 states and a handful of cities have restrictions against salary-history questions.

And 10 states and Washington DC, as well as several cities, have implemented laws to restrict the use of credit history checks for employment. However, in some jurisdictions a credit history check for employment may be allowed if the employer or employee falls in a category in which an applicant would:

  • Handle large amounts of money
  • Work in a managerial capacity
  • Have access to trade secrets or sensitive information
  • Work in a field (such as financial services) in which regulations require credit reports

What does this mean for you? This patchwork of state laws makes it challenging for employers and recruiters to keep up with ever-changing laws and know when they can inquire about salary history, or run a credit check on a prospective employee.

Compliance Best Practices:

  • Research your state and city laws and stay up-to-date on salary history and credit history bans that apply to your organization. (GoodHire offers a great resource.)
  • Develop a company-wide policy around salary inquiries that focuses on salary expectations versus salary history.
  • If you wish to inquire into a candidate’s credit history due to the nature of the role, consult with counsel prior to doing so. Make sure you’re providing your candidates any required credit-specific disclosures prior to procuring a credit report.
  • Ensure your background screener does not conduct salary or credit history investigations in jurisdictions where it is not compliant to do so. Also ensure that your Applicant Tracking System (ATS) isn’t providing template applications that include salary history questions.

3. Ban the Box

Ban-the-box and fair-hiring laws have been enacted in more than 180 jurisdictions, including 35 states, across the country, and many are applicable to private employers in addition to public employers. These laws require employers to remove the box on job applications that inquire about criminal history. The goal behind these laws is to provide opportunities for people with criminal records to get jobs and thus reduce recidivism.

All ban-the-box laws affect the timing of a criminal history inquiry. When you can ask this question and when you can run a background check will vary depending on the jurisdiction, but ban-the-box laws typically require that an employer wait until after a conditional offer is made or after an initial interview.

What does this mean for you? Since the laws vary greatly from each state, county, and city, the challenge is understanding which ban-the-box laws apply to your organization and what each law requires. (GoodHire offers a ban-the-box guide with easy-to-understand details of each law by jurisdiction.)

Aside from the delayed inquiry, following are examples of how ban-the-box requirements vary by jurisdiction:

  • Administrative requirements: Notice and posting, record keeping, and reporting to an enforcement agency
  • Criminal record requirements: Consideration of criminal records (type and age)
  • Assessment requirements: Targeted screen and individualized assessment (over 70 locations)
  • Adverse action requirements: Content of notices and time afforded applicant before final adverse action notice is sent

Compliance Best Practices:

  • Research your state, county, and city laws and stay up-to-date on laws that apply to your organization.
  • Consider removing prior conviction questions from your applications: Ban-the-box laws will continue to spread, and it’s only a matter of time before most states enact a version of the law (be proactive!).
  • Or provide room for applicants to add context: If your organization prefers to keep the question on its application, request that the applicant elaborate on any circumstances he/she feels should be considered.
  • Work with a reputable screener that understands the complexities of these laws and can provide you with a solution that incorporates targeted screens and individualized assessments (such as GoodHire).

The Takeaway? Be Vigilant!

The ever-changing landscape of screening laws being enacted around marijuana use and employee protections, salary history bans and credit history checks, as well as new fair-hiring laws, means employers need to be vigilant. Develop and implement a process within your organization to monitor employment screening laws and regulations, and work with your employment screening provider and your legal counsel to ensure your program incorporates compliance best practices at every level.

Disclaimer: The resources provided here are for educational purposes only and do not constitute legal advice. We advise you to consult your own counsel if you have legal questions related to your specific practices and compliance with applicable laws.

Elizabeth McLean is GoodHire’s General Counsel, an FCRA-compliance attorney, and expert in the background screening legal landscape. She monitors the FCRA and EEOC, and follows new legislation and court decisions to advise the company on processes that follow compliance best practices.


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