CA To Uber, Lyft: Hunt For Skeletons In Drivers' Background Checks

Compliance   |    Background Checks   |   

 Ride-services like Uber and Lyft recently drove California to pass tough new background check and hiring laws that will take effect in 2017.

Sure, these new regulations apply only to transportation network companies (TNCs). But don't be fooled.

They're part of a bigger trend toward increased regulatory scrutiny of hiring processes.

New Background Check And Hiring Rules

The new law requires TNCs to dig deeper into drivers' backgrounds than they were previously allowed to do and mandates new hiring criteria.

Today, California law prohibits employment background check companies from reporting criminal convictions that occurred more than seven years ago. And California's existing Investigative Consumer Reporting Agencies Act (ICRAA) makes it illegal to report arrests that didn’t lead to conviction.

That means that TNCs (and all CA employers) that use an outside service for background screening only see convictions that happened within the last seven years along with information about any pending cases.

Drivers who want to work for a TNC today don’t have to worry about arrests or even traffic violations that didn’t lead to convictions. If they haven’t had any convictions over the past seven years, they’d likely pass a TNC’s background check.

Under AB 1289, which Governor Jerry Brown signed in late September, drivers lose a big part of the protection ICRAA provided.

The new law prohibits TNCs from employing or contracting with anyone who:

  • Is registered on the US Department Of Justice's National Sex Offender Public Website
  • Has been convicted of a terrorism-related felony or other violent felonies specified in the new law
  • Has been convicted within the past seven years of misdemeanor assault or battery, a domestic violence offense, driving under the influence of alcohol or drugs, or other felonies specified in the new law.

The bill also amends the ICRAA to allow background screening firms to report not only convictions older than seven years but also any arrest regardless of whether it resulted in a conviction. TNCs that don’t comply with the new California law will face penalties of up to $5000 per violation.

Some provisions of the law are slightly at odds with EEOC guidance released in 2012 that instructs employers to avoid blanket policies requiring that a certain kind of conviction or arrest always lead to rejection.

Also in conflict with EEOC guidance, California’s new law doesn't provide for individualized assessment for candidates who have criminal history. Where the EEOC has stated that employers should make case-by-case determinations and consider a number of different factors when reviewing criminal records in the hiring context, California now requires TNCs to automatically reject applicants with certain kinds of convictions without getting “the other side of the story” or considering evidence of rehabilitation.

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It's quite possible this new law will lead to a disproportionate number of rejections and suspensions for people of color, as these populations are arrested at disproportionately higher rates than the rest of the population.

While the new California law is intended to better protect the public, it might end up creating more problems than it solves. Rider safety is, of course, an important consideration. When compared to the law's potential discriminatory impact, whether we'll see more harm than benefit is an open question.

Today The Sharing Economy, Tomorrow … ?

The new law in California is a prime example of how on-demand companies are affecting local laws and the background screening space in general. Driven in part by headlines about assaults and other crimes committed by ride-service drivers (some of whom had no criminal record) and in part by pressure from the taxi and limousine industry (where less regulated fingerprint background checks are the norm), legislators stepped in.

Apparently, there's only so much disruption states and cities will allow prior to intervening.

Case in point: New York City, which just passed a new regulation prohibiting Airbnb users from listing or booking short term apartment rentals of less than 30 days.

Which sector of the on-demand economy will be next on regulators' lists? Peer-to-peer service platforms like Handy or TaskRabbit? Or another sector of the on-demand economy? The jury's still out.

Why Traditional Employers Should Care

The trend of increased regulation isn't unique to the sharing economy. Employment screening for certain categories of workers in California, such as first responders and those working with vulnerable populations, has been regulated for some time. Now we’re seeing social initiatives evolve into more widespread regulation.

Consider the ban-the-box movement, which regulates employment applications and parts of the hiring process not only in the public sector but in the private sector, too.

The Equal Employment Opportunity Commission is also scrutinizing employment screening processes, issuing guidance to employers on how to use criminal conviction records in a way that complies with Title VII of the Civil Rights Act. And it's not shy about taking action against employers whose screening policies adversely affect minority populations.

As regulation continues to increase in the background screening space, both traditional employers and sharing-economy companies should make sure to partner with background screening firms that have a good handle on the changing compliance landscape.

And it never hurts to consult an attorney experienced in background screening issues.

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Elizabeth McLean

Elizabeth McLean

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At GoodHire, Elizabeth McLean monitors all things FCRA and EEOC. That means she follows new legislation and court decisions and advises the company on processes that follow compliance best practices. Elizabeth earned an advanced FCRA certification from NAPBS in 2015.

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