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Former Felons Seeking Jobs Fight for Right to Explain Their Past

April 22, 2022, 9:00 AM

Welcome back to Opening Argument, a reported column where I dig into tricky legal questions and unpack issues dividing appellate courts. On tap today: Background checks and whether job applicants have a legal right to not only see, but explain them.

A week before Ria Schumacher was supposed to start a new online job with SC Data Center Inc., the company rescinded its offer.

A criminal background check came back showing she had been convicted of two felonies—murder and armed robbery—19 years prior. After reviewing the report, the company called and told her it was withdrawing its offer and that a confirmation letter would follow. Because she wasn’t given a copy of her background report before then, she sued. Her main complaint in her proposed class action was that she didn’t get a chance to explain or refute her record.

But do job applicants have a legal right to provide context when damning information is uncovered in a criminal background check? And can they sue employers if they’re not given that opportunity? The questions are dividing appeals courts at a time when states and municipalities are passing ban the box laws to bar employers from asking about criminal pasts on job applications.

The Fair Credit Reporting Act (FCRA), which governs how employers handle and respond to consumer reports like background checks, doesn’t explicitly say whether applicants are owed an opportunity for further explanation or a day in court. Ariel Nelson, a staff attorney at the National Consumer Law Center, however, said the federal law isn’t necessarily cut and dry.

“I would certainly argue if there is something inaccurate in your report, that should definitely be a basis for standing,” she said.

The U.S. Court of Appeals for the Eighth Circuit ruled Schumacher hadn’t suffered a concrete injury to sue SC Data Center. Though the FCRA requires employers provide a copy of the report to applicants before they rescind an offer, the appeals court said prospective employees don’t have a right to explain negative but accurate information.

“Schumacher may have demonstrated an injury in law, but not an injury in fact,” the court said.

Amy Bruchs, a partner at Michael Best who represented SC Data Center, said Schumacher was given an opportunity to explain away her criminal background both at the front and back end of the hiring process. She answered “no” when asked on the application if she had ever been convicted of a felony and the letter the company sent gave her seven days to respond to her report. Bruchs said she never disputed its accuracy.

Spokeo made clear that to have standing a plaintiff has to show actual harm and mere technical violations of law do not mean there’s a harm, so there’s no standing,” she said, referring to the Supreme Court’s decision in 2016.

Appeals courts, however, seem to have competing interpretations of that ruling. Like the Eighth Circuit, the Ninth Circuit in 2018 said there’s no right to sue if there’s no harm. It reasoned that none of the inaccuracies or explanations the applicant could provide would’ve changed the employer’s hiring decision. The Third and Seventh Circuits have both found there’s harm in not providing the report and giving the applicant a chance to respond. The Seventh Circuit said “providing context may be more valuable than contesting accuracy.”

Clearly lying on a job application is bad and should be disqualifying, but what if the background check is wrong? Errors do happen.

The Consumer Financial Protection Bureau in November said regulators are concerned about the effects of people being falsely matched with someone else’s records during housing and employment screenings. The agency even put out an advisory opinion to warn these background check companies that they’re violating the law if they have shoddy name-matching procedures.

Mark Mailman, managing shareholder of the consumer law firm Francis Mailman Soumilas P.C., said he sees inaccuracies on criminal background reports all the time. Usually, he said, applicants are mixed up with someone else or their record includes outdated information. He noted that most states and counties have adjudication programs, which allow drug and non-violent crimes to be sealed, expunged, or dismissed.

Background reports are not always black and white, said Mailman, whose firm represented the job applicant in the case before the Third Circuit.

One of the primary goals of the FCRA, as the Eighth Circuit noted, is to protect consumers and employees from the dissemination of inaccurate information. So how do you correct inaccurate information if you haven’t even had a chance to see it?

Ann Knuckles Mahoney, an associate at Epstein Becker & Green P.C. who counsels employers, recommends clients consider what the prospective employee may have to say about what’s in their background report. She noted that some states like New York have laws in place to protect job applicants from being discriminated against because of their record and employers could be at risk of violating those laws for disqualifying an applicant without first taking into account how old they were when the crime occurred, the seriousness of the offense, and whether it’s directly related to the position they’ve applied for.

Even if the information in the report is accurate, applicants with criminal records should still get a chance to explain themselves. It seems pretty clear they’re harmed if they don’t.

As Nelson put it, “it’s definitely possible, depending on what the job is and what the record says, that someone can be a good employee anyway.”

Schumacher has asked for a rehearing with the Eighth Circuit’s full panel of judges. Her attorney didn’t respond to a request for comment.

If you know of a case or interesting legal dispute that’s worth writing about, email me at lwheeler@bloombergindustry.com. Want to read more Opening Argument? Sign up for our newsletter The Brief. You’ll get Bloomberg Law’s top stories delivered free to your Inbox every weekday afternoon and you’ll catch this column every time it runs.

To contact the reporter on this story: Lydia Wheeler in Washington at lwheeler@bloomberglaw.com

To contact the editor responsible for this story: Andrew Childers at achilders@bloomberglaw.com; Jo-el J. Meyer at jmeyer@bloombergindustry.com

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