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Background Investigations

Background
HR professionals seek to find the best job candidates to ensure organizational success. Background investigations, including reference checks, credential or educational certification checks, criminal history checks, credit checks, and drug tests, can play an important role in the hiring process. Indeed, some jobs—for example, those in law enforcement or those involving vulnerable populations—require employers by law to conduct a criminal background check on candidates. At the same time, there is growing national interest in providing individuals a second chance without having their criminal past serve as a bar to employment.

The Fair Credit Reporting Act of 1970 governs the use of consumer reports and has explicit protections for consumers. Further, Title VII of the Civil Rights Act of 1964 bars employment decisions based on policies or tests, such as credit or criminal background checks, that discriminate against protected groups.

Issue 
Recent action on background checks has occurred primarily at the state level. Eleven states and the District of Columbia currently limit employers’ use of credit information in employment: California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington. 

Thirty states plus the District of Columbia have adopted “ban-the-box” restrictions. “Ban-the-box” requires that employers remove from employment applications the checkbox that asks whether the job applicant has any criminal convictions; these states are Arizona, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Illinois, Indiana, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Utah, Vermont, Virginia and Wisconsin. 

Ten of these jurisdictions expand the requirement beyond public employers to include private-sector employers. 

SHRM Position 

  • SHRM supports preserving employers’ ability to conduct background checks for employment purposes. These checks serve as an important means to promote a safe and secure work environment for employees and the general public.
  • SHRM believes that proposals to “ban the box” on employment applications should not restrict an employer’s ability to conduct a background check during the employment process.
  • SHRM supports protections for employees and job applicants that are found in the Fair Credit Reporting Act, Title VII of the Civil Rights Act, and Equal Employment Opportunity Commission enforcement guidance on the consideration of arrest and conviction records in employment decisions.

California Corporate Board Diversity

Background
All public companies in California must have a board of directors that is mandated to establish policies for corporate management and oversight. A corporation’s bylaws establish the structure and the power of the board, as well as the way the board is elected. Many boards are elected by shareholder votes at the corporation’s annual meeting. The bylaws also establish how often the board will meet and the exact number of members for the board.

Issue 
In 2018, state Senator Hannah-Beth Jackson introduced SB 826, a bill that she said was intended to improve diversity on public company boards in California. She added that “gender diversity on corporate boards is associated with increased profitability, performance, governance, innovation, and opportunity.” Governor Jerry Brown signed the bill into law and, as a result, California corporations must now adhere to the following rules: No later than the close of the 2019 calendar year, a publicly held corporation whose principal executive offices, according to the corporation’s Securities and Exchange Commission 10-K form, are located in California must have a minimum of one female on its board of directors. No later than the close of the 2021 calendar year, these corporations must have two female directors if the corporation has five directors and three female directors if the corporation has six or more directors. The California Secretary of State will impose fines for violations of this law, including a $100,000 fine for the first violation and a $300,000 fine for a second or subsequent violation. 

SHRM Position 

  • SHRM believes that corporations must ensure equal employment opportunity without discrimination or harassment on the basis of race, color, religion, sex, sexual orientation, gender identity or expression, age, disability, marital status, citizenship, national origin, genetic information, or any other characteristic protected by law.
  • SHRM believes that corporate boards of directors should be diverse and encourages corporations to include directors from all protected classes. 
  • However, SHRM believes that focusing on only one protected class—gender—may lead to that class being elevated to the detriment of others, such as race, sexual orientation, national origin, etc. 
  • SHRM believes that corporations should be encouraged, not mandated by law, to include females on their boards of directors.