Sunday, December 08, 2019

To Test or Not to Test; That is the Question

Posted by OnCourse Staff March 24, 2011 11:14am

Photo Credit: Miguelima

Employee testing is a controversial topic.  Ask five people their stance on this topic and you will get five different, often heated opinions.   Business owners, executives, and managers tend to respond in the pro-testing camp, citing customer protection, business intelligence, and other employee’s welfare as justification.  Employees, government agencies, and activist groups tend to respond in the anti-testing camp, citing employee privacy, data protection, and employee rights against discrimination as reasons not to test.  So, the question is: to test or not to test employees?  This blog will attempt to make sense of the conflicting opinions and offer suggestions on how to develop a testing program that will not alienate your current and prospective employees [1]. 

Drug testing and credit check / background screens for newly hired employees as part of a pre-employment screening process have become more common.   Since drug use (or abuse) can have a harmful impact on not just the individual but also on the safety of customers and other employees, drug testing especially for new hires is widely accepted.  Drug testing is permissible providing you treat all incoming employee in the same manner.  If you drug test the newly hired teller, you also have to drug test the incoming CFO.  To avoid issues of discrimination, treat the results the same.  If you would rescind the offer from newly hired teller for a positive drug test, you should also rescind the offer from the CFO.  Whereas guidance on drug screening is clear, credit checks and background screening is very muddy.

Complaints to the EEOC (Equal Employment Opportunity Commission) for discrimination arising from the use of credit checks/background screening as a qualification for employment has been and is on the rise.  The reason why complaints are rising is the manner in and use of the data gathered during the credit check / background screen can interpreted differently thus causing a potential discriminatory impact.  There is growing case law (EEOC vs. Kaplan Higher Education Corp & EEOC vs. Freeman) where the EEO is claiming credit checks / background screening caused the rejection of applicants based solely on their credit histories had a discriminatory impact on minorities.  The argument the EEOC is making is that credit histories / criminal background may not be bona fide occupational qualification upon which to reject a candidate or rescind an offer.  In fact, due to these recent complaints and the high level of unemployment, Congress is debating new legislation, the Equal Employment for All Act (H.R. 3149) which would amend the Fair Credit Reporting Act (FCRA) to further restrict the use of credit reports /background screens for hiring decisions.   

There are steps employers can take to avoid charges of discrimination.  Some of them are basic and some will require training (for specific advice on your program, please discuss with an employment attorney):

  1. Follow current law and have a clear policy.  The FCRA lays out parameters that employers must follow prior to conducting a pre-employment credit check/ background screening.  Make sure you receive consent from the candidate prior to conducting the search and never use a minimum credit score as floor for employment.
  2. Be reasonable with the scope of the background check.  There might not be a need to look under every rock for every position. 
  3. Be sure the credit check / background screening has a business relationship to the position applied for.  For us in the banking community, our employees interact with clients, provide financial advice and handle monies.  A statement that we perform credit checks / background screenings because of the nature of our business would be understandable. 
  4. If you find the credit check /background screen rejects protected groups (protected groups are defined as race, color, national origin, religion, age or disability), then you should look for and implement alternative screening criteria.
  5. Ensure that credit checks / background screens are not conducted by managers that do not understand the process, current law, or company policy.  A best practice would be to have the credit checks / background screens centralized through Human Resources or a single individual properly trained.

One of the most important ways to avoid a charge of discrimination is to keep current with changes in legislation, EEOC and court rulings.  This is a growing area of complaints and will continue to grow as employers redefine the employment relationship.

Testing current employees is very tricky and there is no clear consensus on how to best develop a testing program.  Testing current employees can breed resentment and a possible employee claims of discrimination, especially if the testing appears targeted at an individual or group.  As with testing prospective hires, there is a difference between drug testing and credit check / background screens.  Drug testing, even for current employees, is mostly permissible.  The standard for drug testing current employees is reasonable suspicion that the employee is using and or abusing drugs (alcohol would also fit in this category).  Reasonable suspicions is construed liberally and below are a few sound guidelines:

  1. Abnormal conduct,
  2. Report from a reliable source of use and/or abuse, and
  3. Direct observation or physical symptoms of drug use/or abuse.

In many states (again, please confer with an employment lawyer to discuss your specific situation) it is permissible to test employees without reasonable suspicion in limited situations, which are: (a) provided you give employees advance notice of the test and (b) their job responsibilities pose a danger to others.  As mentioned earlier, credit checks / background screening on current employees is much more controversial and there is no clear consensus on how to develop a program that will reduce claims of discrimination.   Best guidance would be:

  1. Ensure there is a business rationale which is communicated clearly too all employees.
  2. Use the information in a non-discriminatory manner.  Treat the CFO the same as the teller.
  3. Ensure the data collected is kept private.  Ensure managers are trained in how to conduct, use, and store the information.
  4. Get employee consent before completing the credit test / background screen.  Follow current laws: FCRA, Title VII of the Civil Rights Act, ADEA, ADA, current EEOC rulings, are just a few that have provisions concerning testing in the workplace.   Keep abreast to attitudes toward pre-employment credit checks / background screenings as they will provide a guide for how testing overall will be treated.  Should Congress pass the Equal Employment For All Act, that is a good barometer on how credit checks / background screens for current employees will be viewed by courts.
  5. Consult an employment attorney. 
Whereas having a credit check / background screening program for current employees is not impossible, it certainly has more risk than drug testing.  You need to ask yourself, is the risk of an employee discrimination complaint out weighted by what you will find?  That brings us back to the first question: To Test or Not to Test?

[1] For purposes of this blog, employment screening will mean drug testing and credit checks/ background screening.  There are many other forms of testing but this blog will concentrate on those two.  If you have questions concerning other types of employee screening, please email me at promm@pgcpa.com.

Comments

Add a comment

  • Required fields are marked with *.

If you have trouble reading the code, click on the code itself to generate a new random code.



 Image

OnCourse Staff

The OnCourse writing staff work to keep you informed about the most pertinent financial industry news of the moment



OnCourse Staff's Posts Subscribe to RSS Feed



Flood Coverage – Still a Hot Regulatory Issue
Interagency Statement on Sharing BSA Resources and Challenges
New Jersey's Corporate Business Tax Legislation: A Look at the Impact for Banks
Correspondent Banking: The Challenges of Data Transparency
Regulation E and Business Account Errors
Controls over Employee and Officer T&E Expenses
Is Regulation CC Put on the Back Burner?
Training – An Investment and Risk Management Tool
Are You Gambling with Your BSA Program?
The Case of Foreign Banks and Heightened Scrutiny
IRS and New Jersey Tax Audits of Banks
State Taxation of Financial Institutions in Today's Environment
Does your 401(k) Plan need an Audit?
De-Risking of Foreign Correspondent Banks
Same Day ACH Credits – Phase One
FinCEN Finalizes Ruling on Beneficial Ownership and Ongoing Customer Due Diligence
Keep an Eye On Your Chip!
Is the IRS Status of your Defined Benefit plan in Jeopardy?
The Dilemma of Banking Medical Marijuana Businesses and Other Indirect Risks
Is your Institution Monitoring Working Capital Lines of Credit?
Financial Reporting and Regulatory Update on the Horizon
BSA/AML Training: Is your program effective?
Planning in a Consolidating Banking Industry
To opt-out or not to opt-out, that is the question – A reminder on March 31, 2015 Call Report, Schedule RC-R, item 3.a
Anti-Money Laundering – The Age of Technology
Top Compliance Topics Discussed at the NJ Bankers Compliance University
Some tips and tricks for dealing with Regulatory Examinations
Updated Regulation E Booklet from the OCC!
Is Flood Disaster Still on the Heat Map?
Have You Implemented Your Plan yet?
FDIC Consumer Newsletter
More Flood Insurance Changes...
Same Sex Married Couples - Ensuring Equal Treatment – Announcement from Consumer Financial Protection Bureau
Truth in Lending (Regulation Z) Annual Threshold Adjustments (CARD ACT, HOEPA and ATR/QM)
FFIEC Releases Revised BSA/AML Examination Manual: So what’s new?
OFAC Consolidates Non-SDN Listings
Coping with HOPA
Coping with the CFPB’s Ability-to-Repay Rule
ABA Survey on Impact of Dodd Frank Compliance
ABA Mortgage Origination Deskbook
Who handles Your Dormant Accounts?
Appraisal Disclosure Rule
Cybercriminals Broaden their Attacks in Social Networks
The Importance of Segregating a Bank’s Credit Function from its Lending Function
Appraisal Management Companies in Regulatory Crosshairs
All About the Home Owners Protection Act
Requesting Current Financial Information
Countdown to Windows XP End of Life and Support: Are you still at Risk?
314(b) Distinct Advantages for Financial Institutions
Where is the Document?
Building a Better Hen House
Ready the Ramparts! : IT Security and the Modern Bank
The Credit -- Er, IT Crisis?
Keeping the Balance: IT Security and the Org Chart
IT Security: "IT's" About Process
Wag the Dog
Consumerization of Technology and its influence on Information Security
Detective, Reactive and Preventive: Evolving Your IT Security
Do You Know The Security Features of the New $100 Bill?
Segregation of Duties for Wire Transfer Processing
How do you charge Early Withdrawal Fees on Time Deposits?
Do you still offer NOW Accounts?
Policy Changes Required – Do you Wait until Annual Approval?
Summarizing ACAMS White Paper on EDD and AML Risk Assessments (Industry Survey)
ACAMS to provide Free Webinar
ACBB Changes its Name
Who Do You Give Cash to?
ABA Briefing to Help Banks Address Cyber-security Threats
The OCC Issues Booklet: “A Common Sense Approach to Community Banking”
Safe Deposit Box Contents are not insured – But They COULD Be!
Allowance for Loan Loss Tips and Tricks
FDIC Can Review New Products
Let’s Talk About Overdrafts!
Community Banks Slowly Warm Up to Private Student Loans
Has your Bank updated the Adverse Action Notice?
Regulation E and NACHA Rules: When you Want to Stop Payment on a Recurring Debit
CFPB Stands Up Against Poor Debt Collection Practices
Don’t Forget the Small Stuff
Double Endorsed Checks: What is the Risk?
Social Media – Will the Regulators Do Spot Checks?
How Does Your Bank Handle Customer Requested Maintenance Changes?
OCC Releases Booklet on "Common Sense" Community Banking
New SAR Filing Updates
Is your BSA/AML automated monitoring system up to par?
The Importance of BSA Training
Office of Foreign Assets Control (“OFAC”) introduces the OFAC SDN Fuzzy Logic Search Tool
Filing the New CTR Forms: What you need to Know
FFIEC Proposed Risk Management Guidance on Social Media: Beware and Prepare
Solutions to Reducing Dormant Accounts at Your Institution
Pandemic Preparedness: Are you testing your Pandemic Plan?
Regulation E Foreign Remittance Rules
FFIEC issues revised “Supervision of Technology Service Providers” booklet
Expiration of Unlimited Deposit Insurance for NIBTAs
Is Your Institution's Marketing UDAAP Compliant?
What is Enterprise Risk Management?
New OCC Guidance Released on Investor Owned Properties
Electronic Work Papers - Why P&G Made the Switch
OCC to Toughen Exams in Response to United States Senate Permanent Subcommittee On Investigations
Clarifying Regulatory Obligations Regarding Continuing Activity SAR Filings
Federal Regulatory Agencies Proposal New Rule
Risk management - Smaller institutions and the benefits of ERM
Strengthening Your Loan Maintenance Monitoring
New Lending Proposal from CFPB
FDIC Reaches Settlement on Overdraft Fees
FRB Guidance on Foreclosures
Loan Denials and Withdrawals – Tips to Sure Up your Process
Regulation O – 5 Easy ways to avoid violations
The Summer of CFPB Proposals
Community Lenders Seize Market Share From Big Banks by Using Advanced Online Lending Technology
Dodd-Frank Rule to Change Legal Lending Limit Monitoring Requirements
The ABCs of a TDR
Supreme Court ruling for the Freeman, et al. v. Quicken Loans, Inc case
New FinCEN Guidance for CTR Aggregation for Businesses with Common Ownership (FIN – 2012 –G001)
Senior member of House of Financial Services Committee Introduces Overdraft Protection Act
FinCEN is looking to streamline the financial institution reporting process by issuing mandatory E-filing reporting requirements.
Curry: Operational Risk Now OCC’s Top Concern
JOBS Act Client Alert - Rules 506 of Regulation D
New Rules Proposal for Servicers Coming from the CFPB
Wall Street Receives Volcker Rule Clarity
De-stressing with stress testing
Banks Participate in Information Sharing to Battle Online Theft
IT security: Is your program still effective?
Banking Solutions: ALLL and GAAP in Agreement
How are the most recent regulatory enforcement trends that banks are facing today affecting internal audit? Why?
What are the most recent regulatory enforcement trends that banks are facing today?
Mobile banking: How do we get there?
UBS further struggles with $2 Billion loss by Rogue Trader
Capital One Becomes Dodd-Frank Test as Nation’s Fifth Largest Bank
Community Banks to receive US Funding for Small Businesses
FDIC fields questions about overdraft guidance
Negligent Hiring – A mistake can cost more than just money!
Regulatory Burden – Managing the Pain
From Embezzlement to Imprisonment: Former Citigroup employee faces charges with $19.2 million in bank fraud
TDR or Not to TDR …Much Ado about Nothing?
Finding the Right Hire
Model behavior: Is your ALM model capturing your bank’s risks?
ALLL best practices: Pay attention to qualitative factors
Abandoned Property Law, and its new New York State of Mind
Consumerization of Technology and its influence on Information Security
FDIC releases Provisions on Dodd-Frank to help Community Banks
Social Media in the Employment Arena – It Gets Funky!
The Proof is in the Pudding: Affects of Dodd-Frank on Community Banks
Banks and Businesses get "swiped" over Fees
A little bit of this, and a little bit of that: Fed Unveils list of Banks Helped during Financial Crisis of 2008
IT Security: "IT's" About Process
To Test or Not to Test; That is the Question
2011 Failed Bank List Hits 25
Wag the Dog
Committee on Financial Services to Hold Hearing on the Effects of Dodd-Frank on Small Biz and Banks Today
2011 Failed Bank List up to 18
A Culture of Whatever: On the Path to Proper Governance
The Test Drive: Leasing or Buying a HR IT Platform
Detective, Reactive and Preventive: Evolving Your IT Security
Cracking the ALLL Code: How to Develop the Right FAS 114 Methodology
Double Digits: Bank Closings up to 11 in 2011
FCIC Releases Report on the Causes of the Financial Crisis
Part of the In Crowd: Thoughts on the Dodd-Frank Act
Another One Bites the Dust: Regulators Close 4 Banks
Keeping the Balance: IT Security and the Org Chart
On Notice: FDIC Issues Rule for Temp Unlimited Deposit Insurance
2011 Failed Bank List Up to 3
Welcome to OnCourse
Stick 'Em Up!
Time for a Tune-Up: The Necessity of a HR Audit
Visa Instituting Two-Tiered Debit Card Interchange Structure
The First Failed Banks of 2011
The Credit -- Er, IT Crisis?
Painting a Masterpiece: The Art of the ALLL Reserve
The Law on Your Side: Understanding HR Regulations in 2011
Building a Better Hen House
Ready the Ramparts! : IT Security and the Modern Bank
No Respite from RESPA