Category: Civil Rights

Office for Civil Rights (OCR) to Begin Phase 2 of HIPAA Audit Program

Mcdermott Will Emery Law Firm

The U.S. Department of Health and Human Services’ Office for Civil Rights (OCR) will soon begin a second phase of audits (Phase 2 Audits) of compliance with Health Insurance Portability and Accountability Act of 1996 (HIPAA) privacy, security and breach notification standards (HIPAA Standards) as required by the Health Information Technology for Economic and Clinical Health (HITECH) Act. Unlike the pilot audits during 2011 and 2012 (Phase 1 Audits), which focused on covered entities, OCR will conduct Phase 2 Audits of both covered entities and business associates.  The Phase 2 Audit Program will focus on areas of greater risk to the security of protected health information (PHI) and pervasive noncompliance based on OCR’s Phase I Audit findings and observations, rather than a comprehensive review of all of the HIPAA Standards.  The Phase 2 Audits are also intended to identify best practices and uncover risks and vulnerabilities that OCR has not identified through other enforcement activities.  OCR will use the Phase 2 Audit findings to identify technical assistance that it should develop for covered entities and business associates.  In circumstances where an audit reveals a serious compliance concern, OCR may initiate a compliance review of the audited organization that could lead to civil money penalties.

The following sections summarize OCR’s Phase 1 Audit findings, describe the Phase 2 Audit program and identify steps that covered entities and business associates should take to prepare for the Phase 2 Audits.

Phase 1 Audit Findings

OCR audited 115 covered entities under the Phase 1 Audit program, with the following aggregate results:

  • There were no findings or observations for only 11% of the covered entities audited;
  • Despite representing just more than half of the audited entities (53%), health care providers were responsible for 65% of the total findings and observations;
  • The smallest covered entities were found to struggle with compliance under all three of the HIPAA Standards;
  • Greater than 60% of the findings or observations were Security Standard violations, and 58 of 59 audited health care provider covered entities had at least one Security Standard finding or observation even though the Security Standards represented only 28% of the total audit items;
  • Greater than 39% of the findings and observations related to the Privacy Standards were attributed to a lack of awareness of the applicable Privacy Standard requirement; and
  • Only 10% of the findings and observations were attributable to a lack of compliance with the Breach Notification Standards

The Phase 2 Audit Program

Selection of Phase 2 Audit Recipients

Unlike the Phase 1 Audit Program, which focused on covered entities, OCR will conduct Phase 2 Audits of both covered entities and business associates.  OCR has randomly selected a pool of 550–800 covered entities through the National Provider Identifier database and America’s Health Insurance Plans’ databases of health plans and health care clearinghouses.  OCR will issue a mandatory pre-audit screening survey to the pool of covered entities this summer.  The survey will address organization size measures, location, services and contact information.  Based on the responses, the agency will select approximately 350 covered entities, including 232 health care providers, 109 health plans and 9 health care clearinghouses, for Phase 2 Audits.  OCR intends to select a wide range of covered entities and will conduct the audits between October 2014 and June 2015.

OCR will notify and send data requests to the 350 selected covered entities this fall.  The data requests will ask the covered entities to identify and provide contact information for their business associates.  OCR will select the business associates that will participate in the Phase 2 Audits from this pool.

Audit Process

OCR will audit approximately 150 of the 350 selected covered entities and 50 of the selected business associates for compliance with the Security Standards, 100 covered entities for compliance with the Privacy Standards and 100 covered entities for compliance with the Breach Notification Standards.  OCR will initiate the Phase 2 Audits of covered entities by sending the data requests this fall and then initiate the Phase 2 Audits of business associates in 2015.

Covered entities and business associates will have two weeks to respond to OCR’s audit request.  The data requests will specify the content, file names and other documentation requirements, and the auditors may contact the covered entities and business associates for clarifications or additional documentation.  OCR will only consider current documentation that is submitted on time.  Failure to respond to a request could lead to a referral to the applicable OCR Regional Office for a compliance review.

Unlike the Phase 1 Audits, OCR will conduct the Phase 2 Audits as desk reviews with an updated audit protocol and not on-site at the audited organization.  OCR will make the Phase 2 Audit protocol available on its website so that entities may use it for internal compliance assessments.

The Phase 2 Audits will target HIPAA Standards that were sources of high numbers of non-compliance in the Phase 1 Audits, including:  risk analysis and risk management; content and timeliness of breach notifications; notice of privacy practices; individual access; Privacy Standards’ reasonable safeguards requirement; training to policies and procedures; device and media controls; and transmission security.  OCR also projects that Phase 2 Audits in 2016 will focus on the Security Standards’ encryption and decryption requirements, facility access control, breach reports and complaints, and other areas identified by earlier Phase 2 Audits.  Phase 2 Audits of business associates will focus on risk analysis and risk management and breach reporting to covered entities.

OCR will present the organization with a draft audit report to allow management to comment before it is finalized.  OCR will then take into account management’s response and issue a final report.

What Should You Do to Prepare for the Phase 2 Audits?

Covered entities and business associates should take the following steps to ensure that they are prepared for a potential Phase 2 Audit:

  • Confirm that the organization has recently completed a comprehensive assessment of potential security risks and vulnerabilities to the organization (the Risk Assessment);
  • Confirm that all action items identified in the Risk Assessment have been completed or are on a reasonable timeline to completion;
  • Ensure that the organization has a complete inventory of business associates for purposes of the Phase 2 Audit data requests;
  • If the organization has not implemented any of the Security Standards’ addressable implementation standards for any of its information systems, confirm that the organization has documented (i) why any such addressable implementation standard was not reasonable and appropriate and (ii) all alternative security measures that were implemented;
  • Ensure that the organization has implemented a breach notification policy that accurately reflects the content and deadline requirements for breach notification under the Breach Notification Standards;
  • Health care provider and health plan covered entities should ensure that they have a compliant Notice of Privacy Practices and not only a website privacy notice;
  • Ensure that the organization has reasonable and appropriate safeguards in place for PHI that exists in any form, including paper and verbal PHI;
  • Confirm that workforce members have received training on the HIPAA Standards that are necessary or appropriate for a workforce member to perform his/her job duties;
  • Confirm that the organization maintains an inventory of information system assets, including mobile devices (even in a bring your own device environment);
  • Confirm that all systems and software that transmit electronic PHI employ encryption technology or that the organization has a documented the risk analysis supporting the decision not to employ encryption;
  • Confirm that the organization has adopted a facility security plan for each physical location that stores or otherwise has access to PHI, in addition to a security policy that requires a physical security plan; and
  • Review the organization’s HIPAA security policies to identify any actions that have not been completed as required (e.g., physical security plans, disaster recovery plan, emergency access procedures, etc.)
ARTICLE BY

Patrick Callaghan
Daniel F. Gottlieb
Edward G. Zacharias
Of:
McDermott Will & Emery

Executive Order Extends Workplace Anti-Discrimination Protections to LGBT Workers of Federal Contractors

Jackson Lewis Law firm

Though it took longer than expected, President Barack Obama has signed an Executive Order extending protections against workplace discrimination to members of the lesbian, gay, bisexual, and transgender (“LGBT”) community. Signed July 21, 2014, the Executive Order prohibits discrimination by federal contractors on the basis of sexual orientation or gender identity, adding to the list of protected categories. It does not contain any exemptions for religiously affiliated federal contractors, as some had hoped. Religiously affiliated federal contractors still may favor individuals of a particular religion when making employment decisions.

The President directed the Secretary of Labor to prepare regulations within 90 days (by October 19, 2014) implementing the new requirements as they relate to federal contractors under Executive Order 11246, which requires covered government contractors and subcontractors to undertake affirmative action to ensure that equal employment opportunity is afforded in all aspects of their employment processes. Executive Order 11246 is enforced by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP).

The Executive Order will apply to federal contracts entered into on or after the effective date of the forthcoming regulations. OFCCP likely will be charged with enforcement authority.

We recommend that employers who will be impacted by this Executive Order review their equal employment opportunity and harassment policies for compliance with the Executive Order. For example, employers who are government contractors should add both sexual orientation and gender identity as protected categories under these policies and ensure that mechanisms are put in place to ensure that discrimination is not tolerated against LGBT employees.

We will provide additional information and insights into the proposed regulations when they are available.

Article By:

Eric J. Felsberg
Michelle E. Phillips
Of:
Jackson Lewis P.C.

U.S. Supreme Court Upholds Michigan’s Law Prohibiting Use of Race in College Admissions

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On Tuesday, April 22, 2014, the U.S. Supreme Court issued an opinion that upholds a Michigan law prohibiting the use of race as a factor in admissions to public collegesand universities. In Schuette v. BAMN, Case No. 12-682 (argued Oct. 15, 2013) the high court reversed a Sixth Circuit Court of Appeals ruling that overturned the voter-enacted state constitutional amendment referred to as “Proposal 2” or Article I Section 26. Although the court’s 6-2 opinion stated “this case is not about the constitutionality, or the merits, of race-conscious admissions policies in higher education,” the decision is likely to influence other states to adopt similar constitutional bans on affirmative action in state-funded higher education.

Since 2003, Michigan has provided a venue for legal challenges to affirmative actionprograms in education. In that year, the U.S. Supreme Court reviewed the constitutionality of race-based admission policies of both the University of Michigan’s undergraduate college and its graduate law school. The outcomes of these cases were mixed. In Gratz v. Bollinger, 539 U.S. 234 (2003) the court struck down the undergraduate admission policy as a violation of the Equal Protection Clause of the U.S. Constitution’s 14th Amendment. In contrast, the court ruled in Grutter v. Bollinger, 539 U.S. 306 (2003) that the school’s more limited admissions policy for its law school was constitutionally permissible. Following those decisions, a number of states, including Texas, California, Oklahoma, Florida and Washington, have adopted constitutional amendments or other laws that prohibit affirmative action in school admissions and public employment.

In 2006, Michigan voters approved the following amendment to the state constitution by a margin of 58-42 percent: “The University of Michigan, Michigan State University, Wayne State University, and any other public college or university, community college, or school district shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.” In a 8-7 decision issued in November 2012, the 6th Circuit Court of Appeals held this language as unconstitutional because Proposal 2 placed “special burdens on minority interests” by targeting a program that “inures primarily to the benefit of the minority.”

In Justice Kennedy’s opinion, joined by Chief Justice Roberts and Justice Alito, the court considered whether authority existed to overturn a constitutional amendment adopted by a state’s ballot initiative. In order to do so, and based on the appellate court’s strong reliance on Washington v. Seattle School Dist. No. 1, 458 U.S. 457 (1982) the court would be able to overturn a ballot initiative that made it “more difficult for certain racial minorities than for other groups” to “achieve legislation that is in their interest.” This expansive reading, Justice Kennedy reasoned, could not conform to principles of equal protection because courts should not be required to declare which political policies serve the interests of a group defined in racial terms. Justice Kennedy cautioned: “…in a society in which those [racial] lines are becoming more blurred, the attempt to define race-based categories also raises serious questions of its own. Government action that classifies individuals on the basis of race is inherently suspect and carries the danger of perpetuating the very racial divisions the polity seeks to transcend.”

This significant decision upholds states’ rights to enact constitutional amendments by voter ballot initiatives. The broader implications of the Schuette decision are unclear. However, the outcome confirms public universities and government employers have a vested and ongoing interest in the changing shape of affirmative action policies.

Article By:

Kenneth J. Yerkes
John T.L. Koenig
David B. Ritter
William A. Nolan
Eric H. J. Stahlhut
Mark S. Kittaka
Of:
Barnes & Thornburg LLP

EEOC Sues Wal-Mart for Age and Disability Discrimination – Equal Employment Opportunity Commission

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Keller Store Manager Harassed and Then Fired Because of His Age; Also Denied a Reasonable Accommodation for His Diabetes, Federal Agency Charges

Wal-Mart Stores of Texas, LLC discriminated against a store manager by subjecting him to harassment, unequal treatment and discharge because of his age, the U.S. Equal Employment Opportunity Commission (EEOC) charged in a lawsuit filed in federal court today. The EEOC’s suit also alleges that Wal-Mart violated federal anti-discrimination law when it refused the manager’s request for a reasonable accommodation for his disability.

The EEOC charges in its suit that David Moorman, the manager of a Keller, Texas Walmart store, who was 54 at the time, was ridiculed with frequent taunts from his direct supervisor including “old man” and the “old food guy.” The supervisor also derided Moorman with ageist comments such as, “You can’t teach an old dog new tricks.” The EEOC further alleges that, after enduring the abusive behavior for several months, Moorman reported the harassment to Wal-Mart’s human resources department. The EEOC contends that not only did Wal-Mart fail to take any corrective action, but the harassment, in fact, increased, and the store ultimately fired Moorman because of his age.

The suit also alleges that Wal-Mart unlawfully refused Moorman’s request for a reasonable accommodation for his disability. Following his diagnosis and on the advice of his doctor, Moorman, a diabetic, requested reassignment to a store co-manager or assistant manager position. Wal-Mart refused to consider his request for reassignment, eventually rejecting his request without any dialogue or consideration.

Such alleged conduct violates the Age Discrimination in Employment Act (ADEA) which prohibits discrimination on the basis of age 40 or older, including age-based harassment. It also violates the Americans with Disabilities Act (ADA), which protects employees from discrimination based on their disabilities and requires employers to provide disabled employees with reasonable accommodations. The EEOC filed suit, Case No. 3:14-CV-00908-M, in U.S. District Court for the Northern District of Texas after first attempting to reach a pre-litigation settlement through its conciliation process.

The EEOC seeks injunctive relief, including the formulation of policies to prevent and correct age and disability discrimination. The suit also seeks damages for Moorman, including lost wages and an equal amount of liquidated damages for Wal-Mart’s willful conduct. The EEOC will also seek damages for harms suffered as a result of the non-accommodation.

“Employers should be diligent about preventing and correcting conduct that can amount to bullying at the workplace,” said EEOC Senior Trial Attorney Joel Clark. “They have an obligation to stop ageist harassment after it is reported. The company’s failure to take remedial action to stop the harassment, as well as the denial of a reasonable accommodation for a disability, and the ultimate termination of the discrimination victim demonstrate a disregard for equal opportunity laws. The EEOC is here to fight for the rights of people like Mr. Moorman.”

Robert A. Canino, regional attorney for the EEOC’s Dallas District Office, added, “The open mockery and insulting of experienced employees who have committed themselves to work for a company are totally unacceptable. It’s unfortunate when supervisors and managers lose sight of the importance of valuing employees. But we are hopeful that a constructive resolution which promotes the common goal of achieving a respectful work environment will emerge from this process.”

Article by:

U.S. Equal Employment Opportunity Commission

Of:

U.S. Equal Employment Opportunity Commission

Illinois Federal Court Issues Reminder That "100% Healed" Requirements Violate ADA (Americans with Disabilities Act)

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On February 11, 2014, an Illinois Federal District Court issued a decision reminding employers that “100% healed” return-to-work requirements violate the Americans with Disabilities Act (“ADA”). In EEOC v. United Parcel Service, Inc., the U.S. Equal Opportunity Commission (“EEOC”) filed a lawsuit alleging that United Parcel Service’s (“UPS”) “100% healed” requirement violated the ADA. UPS moved to dismiss the complaint, claiming that the EEOC could not state a claim that there was a violation of the ADA. The Court denied UPS’s motion and permitted the EEOC lawsuit to proceed.

UPS maintained a leave policy requiring employees to be “administratively separated from employment” after 12 months of leave. In 2007, an employee returned from a 12-month medical leave. After returning, the employee requested certain accommodations, including a hand cart. UPS refused to provide any accommodation. Shortly thereafter, the employee injured herself and needed additional medical leave. Instead of granting leave, UPS terminated the employee under its 12-month leave policy.

The EEOC alleged that UPS’s 12-month leave policy acted as a “100% healed” requirement because it functioned as a “qualification standard” under the ADA. UPS argued that the ability to regularly attend work was an essential job function and not an impermissible “qualification standard” and, therefore, not in violation of the ADA.

Although the Court conceded that regular job attendance is an essential job requirement, the court found that the lawsuit was not based on attendance requirements, but rather on the “100% healed” requirement that an employee must satisfy before returning to work. As a prerequisite to returning to work, the 12-month policy was a “qualification standard” and not an essential job function subject to accommodation. A “qualification standard” is “the personal and professional attributes, including the skill, experience, educational, physical, medical, safety and other requirements established by a covered entity as requirements an individual must meet in order to be eligible for the position held or desired.”

The court relied on the Seventh Circuit’s previous determination that a “100% healed” policy is per se impermissible because it “prevents individualized assessments” and “necessarily operates to exclude disabled people that are qualified to work.” A “100% healed” requirement limits the ability of qualified individuals with a disability to return to work. Thus, a “100% healed” acts as a prohibited “qualification standard” because it removes the opportunity for the employee to pursue reasonable accommodation, in violation of the ADA. Accordingly, the court denied UPS’s motion to dismiss and permitted the EEOC’s lawsuit to proceed.

Although this case does not provide a definitive answer to the EEOC’s lawsuit, it does provide a strong reminder to employers that “100% healed” policies violate the ADA. Employers should review their return to work policies to ensure that they do not contain “100% healed” requirements. When dealing with leave issues, employers also should remember to enter into the interactive process when necessary and balance obligations under federal, state and local disability and leave requirements, in addition to those created by contract or agreement.

Article by:

Geoffrey S. Trotier

Of:

von Briesen & Roper, S.C.

Are Union-Free Strikes Protected? The NLRB (National Labor Relations Board) Thinks So.

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In June 2013, we issued a client alert discussing the efforts of unions and the National Labor Relations Board (NLRB) to target the primarily union-free big box retailer and fast food industries. After describing how Target had come under scrutiny from the NLRB, the client alert detailed how the United Food & Commercial Workers Union (UFCW) and the UFCW-backed group “OUR Walmart” had been coordinating strikes and filing charges with the NLRB against Walmart. The client alert then foreshadowed: “[g]iven the Board’s recent penchant for union activism, do not be surprised if it takes a close look at Walmart’s policies and practices in the coming months.”

As predicted, the Board filed a consolidated complaint against Walmart on January 14, 2014 alleging the union-free retailer violated workers’ rights in response to coordinated strikes across 13 states. The complaint alleges dozens of Walmart supervisors and one corporate executive threatened, disciplined, surveilled, and/or terminated more than 60 workers in response to the union-free strikes.

The complaint is significant for two reasons: (1) the Board is taking the position that union-free workers have a protectable right to strike; and (2) the Board is testing its position against the nation’s largest employer. The Board views the union-free strikes as a form of protected concerted activity, and its press release states that the National Labor Relations Act (NLRA) guarantees employees the right to “act together to try to improve their wages and working conditions with or without a union.” The complaint alleges Walmart violated the NLRA by maintaining a policy that treats absences for participation in strikes as unexcused. The complaint also details alleged retaliatory disciplinary actions taken by Walmart supervisors at particular store locations, though many of the listed locations involved only a single worker being absent.

From an employer perspective, the Board’s position raises many questions. For example, how is a supervisor to know whether a non-union worker is participating in a “strike” or just absent? Can a single worker go on strike, or is there a minimum number of strikers for the activity to be “concerted”? Can strikers be permanently replaced? Are “intermittent” strikes prohibited? It is easy to see why union-free strikes create tough questions for union-free employers.

The Board’s actions against Walmart are worth watching as they come amidst a larger backdrop of worker protests and political debates over minimum wage and working conditions that are likely to remain in the spotlight for the foreseeable future. How courts ultimately grapple with the Board’s position and the resulting questions could have far-reaching effects on the labor market in 2014 and beyond.

Article by:

Of:

Michael Best & Friedrich LLP

4th Cir. First to Apply "Disability" Definition Under ADAAA – ADA Amendments Act of 2008

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On January 23rd, in a ground-breaking decision under the ADA Amendments Act of 2008 (“ADAAA”), the United States Court of Appeals for the Fourth Circuit held that an injury that left the plaintiff unable to walk for seven months and that, without surgery, pain medication, and physical therapy, likely would have rendered the plaintiff unable to walk for far longer can constitute a disability under the Americans with Disabilities Act.  The Fourth Circuit in Summers v. Altarum Institute, Corp. indicated that it is the first appellate court to apply the ADAAA’s expanded definition of “disability.”

The Court reversed a District Court’s dismissal of the plaintiff’s case pursuant to a Rule 12(b)(6) motion.  The U.S. District Court for the Eastern District of Virginia based its dismissal of the plaintiff’s disability-based discharge claim on its view that the plaintiff’s impairment was temporary and therefore not covered by the Americans With Disabilities Act. In its reversal, the Fourth Circuit held that the plaintiff “has unquestionably alleged a ‘disability’ under the ADAAA sufficiently plausible to survive a Rule 12(b)(6) motion.”

Article by:

Timothy M. McConville

Of:

Odin, Feldman & Pittleman, P.C.

The EEOC (Equal Employment Opportunity Commission) Made Employers Pay in 2013

Godfrey Kahn

After several years of record charge filings, the Equal Employment Opportunity Commission (EEOC) finally saw a decrease in the number of charges filed by employees during the fiscal year beginning on October 1, 2012 and ending September 30, 2013 (FY2013).  During FY2013, the EEOC received 93,727 charges of discrimination.  Although charge filings decreased by approximately 6,000 charges from the previous year, the EEOC still managed to obtain record monetary recoveries for charging parties.

The EEOC recently announced that, during FY2013, it obtained over $372 million in monetary awards for employees alleging unlawful workplace discrimination.  This record amount of recoveries includes awards obtained though litigation, mediation, voluntary settlements and conciliations.  The EEOC recovered the bulk of this money through its voluntary mediation program.  Specifically, the EEOC obtained over $160 million for employees through this method.  In comparison, the EEOC only recovered $39 million through its litigation efforts

money till

Employers, however, should not let these numbers lead them to believe that they can get a more favorable resolution through litigation than through mediation or informal settlements.  The $39 million recovered through litigation is based on the resolution of 209 lawsuits (not all of these lawsuits resulted in verdicts in favor of the EEOC).  The $160 million recovered through mediation, on the other hand, represents the successful resolution of 8,890 charges (another 2,623 mediations did not result in resolutions).

Further, litigating an employment discrimination claim is a costly proposition, whereas a successful mediation helps to avoid most of the costs of litigating such claims, especially if the parties agree to mediate early on in the process.  More importantly, a successful mediation leads to the dismissal of the charge, which is an added benefit that is not guaranteed with informal settlements reached by the parties outside of mediation.

For these (372 million) reasons, employers should carefully consider all resolution options the next time they receive a charge of discrimination filed with the EEOC.

Article by:

Rufino Gaytán

Of:

Godfrey & Kahn S.C.

January 6, 2014 Deadline For Employers To Comply With New Jersey Gender Equity Notice And Posting Requirements

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Beginning Monday, January 6, 2014, employers with fifty (50) or more employees are required to comply with the New Jersey Gender Equity posting and notice requirements.  The New Jersey law, passed in September of 2012, requires that all covered employers (1) post a notice regarding gender equity in a conspicuous place accessible by all employees, (2) provide a copy of the notice to all employees annually, and (3) receive a signed acknowledgment from the employees each year.

Posting

The New Jersey Department of Labor has issued a poster which is now available here in English and here in Spanish.  Employers must post this notice in a conspicuous place at each New Jersey work location by January 6, 2014. In the event that a covered employer has an internet site or intranet site for exclusive use by its employees, and all employees have access to the site, the employer may post the notice on the website to satisfy the posting requirement.

Notice

The law requires that every employee receive a copy of the notice annually.  For existing employees, the notice must be received by February 5, 2014.  For all employees hired after January 6, 2014, the notice must be provided to the employee at the time of hire.  Each year thereafter, all new hires must be provided with a notice at the time of hire and all other employees must receive the notice by December 31. Employees must also be provided a copy upon request.  The employer may provide the notice in print, through email, or on the company internet/intranet if (1) the site is for the exclusive use of the employees, (2) can be accessed by all employees, and (3) the employer notifies the employees that the notice has been posted on the internet/intranet.

Acknowledgment

Within thirty (30) days of issuing the annual notice, the employee must acknowledge receipt and understanding of the notice.  The acknowledgment can be in writing or by electronic verification. Employers must ensure that they follow-up with employees to confirm that the employee has received and understands the requirements each time the notice is issued.

Failure to comply with these requirements can result in monetary fines and other penalties.

Article by:

Saranne E. Weimer

Of:

Giordano, Halleran & Ciesla, P.C.

Will New Jersey Go “Ban the Box” and Beyond? New Jersey Takes Step to Prohibit Employers From Asking About a Job Applicant’s Criminal History

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Recently, in a 6-3 vote, New Jersey’s Assembly Labor Committee advanced a bill (A-3837), known as the Opportunity to Compete Act, that would prohibit New Jersey employers with 15 or more employees from asking candidates about their criminal history on employment applications, and from conducting criminal background checks on applicants prior to a conditional job offer. If passed, this legislation would become one of the toughest “ban the box” measures in the nation (derived from the ubiquitous check box on employment applications inquiring whether an applicant has a criminal record), and would place several new administrative burdens on employers. New Jersey would join the 64 states, counties and cities (including Newark, New Jersey) that have already enacted laws aimed at benefiting job seekers with a criminal history. And many states (including New York) prohibit employers from disqualifying an applicant based on a conviction absent a clear nexus between the nature of the conviction and the job sought.

Under the proposed legislation, only after the employer determines the candidate is qualified and provides a conditional job offer, may it inquire about and consider the individual’s criminal history. Then, before the employer may look into the candidate’s criminal history, it must first provide the candidate with a written notice of the inquiry (along with a “Notice of Rights) and obtain the candidate’s consent.

The bill authorizes employers to consider in their employment decision making process convictions for certain serious crimes regardless of when the crime occurred. These crimes include murder or attempted murder, arson, a sex offense for which the offender served time in State prison and is required to register as a sex offender, robbery, kidnapping, human trafficking, possession of weapons, burglary, aggravated assault and terrorism. Separately, employers may only consider other crimes of the 1st through 4th degree if the crime was committed within the previous 10 years. Employers may also consider convictions for disorderly persons offenses that occurred within the last 5 years and pending criminal charges until the case is dismissed. The bill further provides that if any of the candidate’s criminal history is subject to consideration by employers due to the fact that it occurred within 10 years for crimes of the 1st through 4th degree, or 5 years for disorderly persons offenses, then the employer may also consider any prior criminal history, regardless of when it occurred.

Under the bill, when making an employment decision, employers may not consider or require a candidate to disclose or reveal any arrest or criminal accusation made against the candidate which is not then pending or which did not result in a conviction. Records which have been erased or expunged, records of an executive pardon or legally nullified records may not be considered by employers, nor may the employer consider an adjudication of delinquency of a juvenile, any violation of a municipal ordinance or any record which has been sealed.

The proposed legislation requires employers to make a good faith effort to discuss with the candidate any questions or concerns related to the candidate’s criminal history and provide the candidate with an opportunity to explain and contextualize any crime or offense, provide evidence of rehabilitation, and rebut any inaccuracies in the criminal history.

In deciding whether to hire a candidate, employers must consider the results of any criminal history inquiry in combination with factors such as: (1) information provided about the degree of the candidate’s rehabilitation and good conduct; (2) information provided about the accuracy of the criminal record; (3) the amount of time that has elapsed since the conviction or release from custody; (4) the nature and circumstances surrounding the crime(s); and (5) the duties and settings of the job. This last factor—job-relatedness—is critical, as employers may not disqualify a candidate if the nature of his or her conviction bears no relationship to the job sought. The reasonable consideration of these factors must be documented by employers on a “Criminal Record Consideration Form.”

If an employer makes an adverse employment decision, including rescinding a job offer, after a discussion of a candidate’s criminal history, the employer must provide the candidate in one package by registered mail: (1) written notification of the adverse employment decision; (2) a copy of the results of the criminal history inquiry; and (3) a completed copy of the Criminal Record Consideration Form.

A candidate who received an adverse employment decision has 10 business days after receipt of this written information to provide evidence to the employer related to the accuracy and relevance of the results of the criminal history inquiry. Employers may, but are not required to, hold the position open for the candidate. Employers who uphold an adverse employment decision after considering any additional information provided by the candidate are required to provide to the candidate a written notice of the final decision within 45 days of receipt of the additional information.

There is good news for employers here: the bill does not provide applicants with the ability to sue them in court for a violation of the law. Instead, the applicant would have to file a complaint with the New Jersey’s Division on Civil Rights (“DCR”) in the Department of Law and Public Safety, and the DCR may impose civil fines ranging from $500 to $7,500 depending on the number of employees the employer has and whether the employer has committed previous violations. Additionally, as noted above, the bill does not apply to smaller employers with under 15 employees. Moreover, employers can take solace in that the bill would give employers the highest protection against negligent hiring/retention suits of any state in the nation in the form of a “grossly negligent” standard, meaning that there must be a finding that the employer consciously acted with a reckless disregard for the safety of others in its hiring decision.

There is no certainty that the proposed Opportunity to Compete Act will be passed into law in its current form or any other form for that matter. Governor Chris Christie, who could very well exercise his veto power, has not indicated whether or not he supports the bill. Needless to say, we will closely monitor this legislation.

Article by:

David M. Katz

Of:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.