The contract workforce has grown steadily over past years, as has the number of organizations and companies eager to engage with it. While the growing talent pool of contract labor represents an invaluable resource for small and large organizations alike, it brings with it a special set of compliance requirements that must be carefully navigated.
Employers conducting background checks may encounter additional challenges this year, as regulators have updated requirements in the following key areas:
Both the Consumer Financial Protection Bureau (CFPB) and Equal Employment Opportunity Commission (EEOC) have expressed concern over AI automation for evaluating prospective employees, each for their own reasons.
Regarding the use of AI automated screening tools, the overall sentiment from the CFPB is that of skepticism. The CFPB has publicly expressed concern over the possibility of erroneous identity matching, thereby rejecting job candidates after being mistaken for another person. The EEOC cites the possibility of discrimination as their primary concern, which could be a distinct possibility for candidates with criminal records.
Regulators are taking the issue very seriously and are expected to bring a handful of enforcement actions against employers this year. This, in addition to the precedent set by New York City and their laws requiring bias audits of automated employment decision tools (which even drew comment from the White House), are likely indicators of how future tools and solutions will be managed and possibly regulated for years to come.
Ultimately, as long as companies use a reasonable procedure based on legally obtained information, do not make arbitrary employment decisions, and make a good-faith attempt to be consistent, they will have a defensible position against audits.
Over the past decade or so numerous city, county, and state legislatures have passed hiring laws that limit employers’ use and consideration of a job applicant’s criminal history in making hiring decisions. This includes the “clean slate” laws in California and Connecticut which went into effect in January this year, in which criminal records are either expunged or sealed after a certain amount of time has passed.
It’s worth considering that other state and local governments are likely to follow suit in at least some capacity (Michigan, for instance, is enacting its own clean slate laws as early as this July), as future iterations of clean slate laws will limit the amount of information employers can access and consider during the hiring process.
New privacy requirements signed into law this year will also present challenges during the employee screening process1. With no comprehensive privacy laws at the federal level, many states are creating their own policies around what information should remain accessible to employers. Small examples of this can be found in both California and Michigan, where date of birth has been removed as an accessible identifier in public records. This has the unintended consequence of employers having to spend even more time verifying someone’s identity, which creates additional challenges conducting background checks for job candidates.
Reconciling various state laws with employment policies and procedures is becoming increasingly complex for employers, especially in regard to marijuana. It’s important for employers to have a clear understanding of compliance, as state and local mandates will ultimately shape key workflow processes, such as recruiting, screening, safety plans, drug testing policies, and even internal policies.
Currently, marijuana possession remains illegal under federal law, despite the fact that most states have legalized the substance for either medical or recreational purposes. This disparity between state and federal regulators puts pressure on employers who must keep up with a complicated and ever-changing legal landscape. The following2 are just some examples of how laws may vary from state to state.
A good rule of thumb for employers is to have a clear understanding of applicable laws, put an explicit plan in place, and communicate that plan clearly to employees. It would be wise to go one step further and either consult with local employment council or partner with a trusted compliance expert, as policies at the state and local levels are likely to continue changing as time goes on and require ongoing monitoring.
HireArt is standing by to help your organization get the most out of its contract workforce experience while providing important indemnification for compliance-related issues.
HireArt is a contract workforce operating system that lets companies source, employ, and manage top-performing contract workforces. We provide our clients with the tools and visibility needed to easily manage their contract workforce and staffing vendors in a single seamless, instantly-deployable platform.
