Cannabis businesses understandably want to protect their product — and for retailers, the on-hand cash — from theft. All employers have an interest in a violence-free, safe workplace for their employees, and they want to mitigate against negligent hiring claims. With these goals in mind, many employers go to the extreme and conduct criminal and credit background checks on all prospective employees and ban anyone with a poor history. This is dangerous. A host of local, state and federal laws limit an employer’s ability to dig up dirt on prospective hires.
Employers first need to seek out advice as to what laws apply — generally governed by the laws where operations are located and where their employees work. They are not all the same.
Some state laws, including those in California, restrict or prohibit the use of criminal background checks. Washington state only allows employers to conduct credit checks if it is “substantially job-related” and the reasons are disclosed in writing. Oregon and the city of Seattle both prohibit any inquiry about criminal convictions on the job application or as an initial applicant screening tool. The subtleties and differences of state and local laws are best left to an employer and its legal counsel to determine best compliance methods.
No Blanket Prohibitions
Employers should next become familiar with the Enforcement Guidance issued by the Equal Employment Opportunity Commission (EEOC), the federal agency charged with enforcement of anti-discrimination laws. People with criminal records are not a protected class, but the EEOC believes employers face liability based on two legal theories: “disparate treatment” or “disparate impact.”
Disparate treatment occurs when an employer treats a person in a protected category differently than someone who is not in that same category, such as hiring a white man, while rejecting a black man with the same conviction. A disparate impact can exist when an employer’s apparently neutral policy has the effect of disproportionately screening out a protected class. The EEOC assumes that arrest, and even conviction statistics, demonstrate a disproportionate, or “disparate,” impact on people of color. Hence, the EEOC frowns on any blanket prohibition of candidates with arrest records, and allows convictions to be considered under only specific circumstances. Many states, including Washington, agree.
– Ignore arrest records. Using arrest records has a disparate impact on African-Americans and Hispanics and thus violates anti-discrimination laws. So, don’t even ask.
– No blanket “any conviction” prohibition standard. A policy denying employment to all applicants with criminal conviction records violates Title VII.
After an employer lawfully learns of an applicant’s criminal conviction, that company must consider: (a) the nature and gravity of the offense; (b) the time that passed since the offense or conduct and/or completion of the sentence; (c) and the nature of the job. The employer should consider the applicant’s age at the time of conviction; evidence that the individual performed the same type of work, post-conviction, with no incidents of criminal conduct; the length and consistency of employment history before and after the offense; rehabilitation efforts, such as education and training; employment and other information regarding their fitness for the particular position. Employers also need to be able to articulate how the conviction is related to job performance and consistent with business necessity. It is even better if they can defend their decision with research, evidence or statistics. For example, can a company demonstrate an increased likelihood that applicants with a theft conviction are more likely to steal than applicants without one? The bottom line is that this decision should be an individualized analysis and the employer must be able to give reasons for it beyond not wanting to hire felons.
There is one “easy” situation where other applicable laws prohibit individuals who have been convicted of certain crimes from working in the cannabis industry. In Washington, for example, licensing rules put limits on felony convictions for certain “real parties in interest.” Again, the prudent employer will seek advice on any unique prohibitions that might apply to the job in question.
If employers are conducting background checks themselves, they will need to comply with the federal Fair Credit Reporting Act and similar state laws. Those rules — too complex for this article — essentially require employers to give an applicant notice that they intend to reject an application based on a conviction, as well as time for them to give an explanation and how to correct errors.
Even if employers engage a third-party background check company, they still need a lawful authorization, and it is wise to give the applicant a chance to disclose the conviction. Employers located in a jurisdiction that allows for conviction inquiries on a job application should consider adding the following phrase: “Answering ‘yes’ to any of these questions does not constitute an automatic bar to employment. Among other things, we will consider the nature and gravity of the offense or conduct; the time that passed since the offense or conduct and/or completion of the sentence; and the nature of the job you are seeking. If you answer ‘yes’ to any of the following questions, be sure to provide an explanation.”
Better yet, employers should have their attorneys review job applications, background check authorizations and any questionnaires they intend to have prospective employees complete.
The following checklist will help employers get started with a background check program or audit an existing one.
1. Understand which federal and state laws apply.
2. Develop a policy that is compliant and practical, and allows for individualized decisions.
3. Revise employment applications and applicant authorizations.
4. Develop internal procedures for individualized analysis and protecting applicant confidentiality.
5. Understand notice obligations to the applicant — both before conducting the check and upon learning of a conviction.
At the end of the day, the use of criminal background checks can be an effective risk management tool. Just remember, they must be done carefully and in compliance with applicable laws — before conducting applicant checks.
Catharine Morisset is an attorney in the Seattle office of Fisher & Phillips, LLP, a national law firm committed to providing practical business solutions for employers’ workplace legal problems. She can be reached at email@example.com. The firm only handles labor and employment law, with more than 350 attorneys in 32 offices, including Washington, Oregon and Colorado. This article is not intended as legal advice. Please consult an employment attorney for guidance on your specific situation.