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January 24, 2011

Supreme Court Upholds Contractor Background Checks

On January 19, the Supreme Court rejected a challenge to the federal government's standard background check (called the National Agency Check with Inquiries, or NACI). The majority opinion assumed -- without deciding -- that there is a right to informational privacy, but found that this right wasn't violated by the background checks. (You can read the case here.) 

In the case, a group of employees at the Jet Propulsion Laboratory, a research lab jointly run by Cal Tech and NASA, claimed that two aspects of the NACI violated their rights to privacy: a question about rehabilitation and treatment for illegal drug use, and a requirement that they authorize the government to ask open-ended questions of former landlords, employers, and other references, in which the references are asked broadly about the applicants' financial integrity, "mental and emotional stability," and "general behavior and conduct," among other things. 

The employees who challenged the NACI were government contractors; their official employer was Cal Tech. They were already working at the JPL when they were asked to submit to the screening. (Although federal government employees were already subject to the NACI screening procedures when applying for jobs, contractors were not, until the 9/11 Commission recommended that they also be screened.)

The Supreme Court's opinion began by assuming -- without deciding -- that there is a Constitutional right to informational privacy. This assumption has been seen as a victory by employee advocates, some of whom believed the Court might use this case as an opportunity to decide otherwise. As Justice Scalia wishes it had: His concurring opinion indicates that he sees the Court's failure to decide this issue as a dereliction of duty. He believes the Court should have simply decided that there is no right to informational privacy; his opinion begins with the observation, "Like many other desirable things not included in the Constitution, 'informational privacy' seems like a good idea . . . " (He also believes that the majority's opinion, which weighs the government's need and use for the information against the employees' assumed privacy rights, is "a generous gift to the plaintiff's bar.")

The majority's opinion discusses a number of factors that, in its view, weigh in the government's favor, such as the existence of protections against unnecessary disclosure of the information once it is gathered; the government's role in this case as a manager of its employees (rather than a sovereign of its citizens); the important -- and taxpayer funded -- work done by the employees who brought the case; the common practice in private industry of asking open-ended reference questions such as those on the NACI; and, in the case of the question about drug rehab and treatment, the government's stated intention of using that information for good rather than evil, by considering an employee's efforts to turn things around as a favorable quality. 

These considerations, however compelling, seem to skirt an important issue, which the Court didn't spend much time on: Why does the government need this information in the first place? If there is a privacy right, then the government must have a strong interest in the information it seeks, and the way it goes about getting that information may not be unnecessarily intrusive. It isn't enough to say that everyone else gathers this type of information too, and we'll keep it confidential once we get it. To me, it looks like the Court's assumption of a privacy right was fairly half-hearted. The opinion doesn't read as if the Court thought this information was protected by a privacy right but the government's need for it outweighed the employees' interests. Instead, it seems the Court didn't much believe in the right it assumed, and accorded it relatively little weight in the balance. 

Because this case involves public employment and a (possibly) Constitutional right, it does not apply directly to the private sector. And, despite the Court's claims to the contrary, many private employers don't go this deep in their background checks, at least not for employees who won't hold the highest ranks on the company ladder. The main takeaway from this case may be simply that privacy continues to be a divisive, tentatively handled issue on the Supreme Court -- with this timely reminder arriving only a few days before the anniversary of the Court's ultimate privacy case, Roe v. Wade. 
July 22, 2010

Checking Credit Reports? Check Your State Law First

If you review applicant or employee credit reports, you're undoubtedly already familiar with the Fair Credit Reporting Act (FCRA). Among other things, this federal law requires employers to get the consent of the employee or applicant before pulling credit and other consumer reports, to give notice if the information in the report might lead you to take adverse action (such as denying the applicant a job or denying the employee a promotion), and to give notice -- again -- if you do ultimately take the adverse action.

As long as you follow the rules above, the FCRA allows you to use credit reports for employment purposes, including to decide whether to hire, promote, or even fire. That's the federal law, however; some states see things differently. The economic downturn of the last few years -- and the resulting damage to credit reports and scores -- have led many politicians to reconsider whether it's really appropriate for employers to use credit reports in making job decisions. At least three states (Hawaii, Oregon, and Washington) have passed laws prohibiting employers from considering credit reports in most circumstances. According to the National Conference of State Legislatures, about 20 states are currently considering similar legislation. (See their detailed chart here.)  

March 16, 2010

Supreme Court Takes Case on Background Checks

The Supreme Court has agreed to hear a case challenging the federal government's background check process. (The case is called National Aeronautics and Space Administration v. Nelson; you can find links to the petition and other documents here, on SCOTUSblog.)

The underlying challenge was raised by a group of scientists, engineers, and administrative support employees who worked at the Jet Propulsion Laboratory (JPL), a research lab run by NASA and the California Institute of Technology. The employees were officially employed by CalTech. Following a policy change in 2007, all JPL employees whom the government categorized as "low risk" (they didn't have access to classified material) had to submit to the background check procedures routinely applied to federal civil service employees in order to maintain their access to the JPL. The employees filed a lawsuit and sought a preliminary injunction to stop the new policy from going into effect until the court had a chance to decide whether it was constitutional. 

The background check -- called the Nationwide Agency Check with Inquiries (NACI) -- requires employees to provide information on their residential, education, employment, and military histories; give references; and disclose any use of illegal drugs in the past year, along with any treatment or counseling received. Employees must also sign a release form allowing the government to collect information from landlords, employers, and references on a wide variety of topics, including "financial integrity," "mental or emotional stability," and "general behavior or conduct."

The Ninth Circuit Court of Appeals ruled in favor of the government on several issues. However, the Court found that the employees were entitled to a preliminary injunction because they had raised serious questions as to whether their constitutional right to informational privacy was violated by the question asking about drug treatment or counseling and by the release form (and subsequent inquiries it authorized). NASA petitioned the Supreme Court to hear the case, and the Court agreed to do so earlier this month.

This case challenges background checks applicable to government employees and contractors. The U.S. Constitution protects only against action by the government (in this case, NASA's decision that JPL employees had to pass a background check), not actions by private companies and employers. So, while the outcome of the case could be hugely significant to federal sector employees, who have been subject to these same background check requirements for decades, it won't be directly applicable to those who work in the private sector. However, state courts often follow the Supreme Court's lead and guidelines in deciding cases alleging violations of privacy, even though the right to privacy applicable in those cases generally comes from a state constitution, statute, or case law, not the U.S. Constitution.

Private sector employees could be more directly affected by some of the background check developments reported on this week by SHRM, here (you may need to be a SHRM member to view the article). SHRM reports that the EEOC is considering issuing new enforcement guidance explaining when employers may consider an applicant's credit history and arrest and conviction record in the hiring process. The EEOC has long stated that using credit reports and criminal records to disqualify applicants could have a disparate impact based on race; if so, the employer would have to show that the practice is job-related and consistent with business necessity. SHRM offers some tips that will help employers avoid legal trouble when performing background checks, including that employers should be selective in deciding which positions require a background check and should allow applicants to explain negative information that turns up.   

February 10, 2010

Victorious Supreme Court Plaintiff Wins $1.5 Million Verdict

About a year ago, the Supreme Court found in favor of an employee, Vicky Crawford, who was fired after she participated in an investigation of workplace sexual harassment. (The case was Crawford v. Metropolitan Government of Nashville and Davidson County, Tennessee; you can read my previous post about it here.) The Court held that Crawford could sue for retaliation; Crawford's employer had argued that, because Crawford was only a witness in the investigation and not the person who had originally complained of harassment, she was not protected from retaliation. After the Supreme Court's decision kept Crawford's claim alive, the case went back to the federal district court for a trial on the facts.

A couple of weeks ago, the jury reached a verdict: Crawford was awarded $1.5 million in damages. After losing its legal argument that Crawford couldn't bring a retaliation claim, the employer tried a different tack: It argued that Crawford wasn't fired for participating in the harassment case, but for performance problems. The employer said Crawford was once a good employee, but her performance had been slipping; when an audit revealed problems in the payroll department, including checks that were never deposited, she was ultimately fired.

Of course, we can only know the facts that were recounted in news articles or court decisions about the case. Based on the information I've seen, I think there are a few lessons employers can take from what happened in this case:

  • Timing is everything. Retaliation cases are all about timing, more specifically how much time passed between the employee's protected activity and the employer's alleged retaliation. The shorter the time period, the more it looks like retaliation. Here, the HR person who conducted the harassment investigation reported possible problems in the payroll department on the same day she filed her report in the harassment case. Same day plus same person involved in both issues equals huge mountain for the employer to climb to refute a retaliation claim.
  • Can I get a witness? You don't necessarily need one to decide that harassment took place. It looks like another big problem for the employer in this case was that it fired three employees who participated in the investigation -- in which pretty bad behavior was alleged. Crawford said that the harasser pulled her head into his crotch, asked to see her breasts, and grabbed his own crotch, saying "you know what's up." Two other employees also said that they were harassed, and were also fired. Yet, the employer argued that it couldn't discipline the harasser because there were no witnesses to the behavior. Again, I've got no inside line on what "really" happened, but if three employees all allege that they were harassed, that's ample reason to take action. Often, there are no witnesses to harassment other than the harasser and the harassee. That doesn't relieve employers of their obligation to take action to stop harassment.
  • The work environment affects performance. Here, the employer said Crawford was once a good employee, but her performance declined. We don't know the source of Crawford's performance problems, but in a situation like this, employers should consider whether poor performance might be explained, at least in part, by the harassment. Employees who have been harassed might have higher absentee rates, problems concentrating, and other performance issues. If the problems are attributable to the harassment, the employer should deal with the underlying issue, then work with the employee to help her get back on track.  
December 19, 2009

Supreme Court to Hear Text Message Privacy Case

Last week, the Supreme Court announced that it would hear a case on the privacy of employee text messages, Quon v. Arch Wireless Operating Co. Although the Quon case involves a government employer, it raises a question that comes up all the time in both private and public workplaces: Are there limits to how far employers may go in monitoring their employees' electronic communications? The Quon case got a lot of press when it was initially decided by the Ninth Circuit, mostly because it's one of the very few cases in which a court said the employer had gone too far.

Jeff Quon was a segeant on the Ontario, California SWAT team. He was given a pager with wireless text-messaging capability for work, and was told that the department's email policy -- which gave the city the right to monitor, prohibited personal use, and told employees their messages were not private -- applied to the pagers. However, the lieutenant in charge of administering employee use of the pagers said something different: He told employees that each pager was allotted 25,000 characters per month, and that employee use of the pagers would not be audited as long as employees paid any overage charges for their accounts.

For eight months, the department did not audit anyone's pager messages. During this time, Quon exceeded the overage limit several times, and paid for his extra usage. When Quon and another officer again went over the limit, the chief decided to audit the use of certain pagers (including Quon's) to figure out whether the city should increase its 25,000 character allotment and whether the officers were using their pagers for personal reasons. The city asked its carrier (the Arch Wireless of the case title) to provide transcripts of the messages on the selected pagers, and found that many of Quon's messages were personal and some were sexually explicit. Quon, his wife, and two others with whom he exchanged text messages than sued for violation of their privacy rights.

The Ninth Circuit found against the city. Despite the written policy, the court found that the lieutenant's statement that he would not read their messages, combined with his practice of actually not reading messages for months, gave Quon and the others a reasonable expectation of privacy in their messages. The court also found that, even though the city's rationale for reading the messages was reasonable, it could have achieved that goal without reading the messages by, for example, warning Quon in advance that his pager would be audited, asking Quon to delete his personal messages, or asking Quon to count the work-related characters himself. Because there were less intrusive ways to find out what was going on with the pager accounts, the city's decision to read the messages was a privacy violation.

Because Quon involves a government employer, the Fourth Amendment (which prohibits unreasonable searches and seizures) applies. The Fourth Amendment doesn't protect private employees, so the court's decision in Quon won't explicitly extend to the private sector. But it will be highly influential: Courts have generally followed similar standards in analyzing privacy claims against private employers. The case will also have wide resonance because it will be the Court's first foray (as far as I can tell) into modern workplace monitoring -- the kind that involves electronic and digital communication, not phone calls and locker searches.

It's not surprising that the Ninth Circuit is one of the few courts to find in favor of an employee's privacy claim. The Ninth Circuit is still known as one of the more liberal -- and protective of civil liberties -- in the nation. And, the judges of the Ninth Circuit, themselves federal employees, have not taken kindly to the monitoring of their own communications: Almost a decade ago, the judges disabled the monitoring software on their own computer systems to protest an announced policy stating that court employees had no right to privacy in their email messages and Internet activities. That part of the policy was later withdrawn, in part because of the attention drawn to it by the Ninth Circuit protest.

If you need to create a policy for texting, email, instant messaging, or other employee communications, check out my book Smart Policies for Workplace Technologies (Nolo).

August 11, 2009

Workplace Camera Doesn't Violate Employee Privacy Rights

Last week, the California Supreme Court decided a big workplace privacy case, Hernandez v. Hillsides, Inc. The case involved a camera hidden in an office shared by two clerical employees of a private residential facility for abused and neglected children. The director of the facility set up the camera after learning that someone was using a computer in that office to view pornography after hours, a violation of the facility's rules and mission to provide a safe place for abused children. After the two women who shared the office discovered the hidden camera equipment -- "small, blinking, and hot to the touch," in the court's oddly breathless description -- they sued for invasion of their privacy.

In reaching its decision in favor of the facility, the Court looked at two issues: (1) whether the hidden camera intruded on the employees' reasonable expectations of privacy, and (2) if so, whether that intrusion was offensive or serious, given the facility's justification for using the camera and other relevant facts.

On the first point, the Court found in favor of the employees. Although the facility had a policy warning employees that their use of company computers could be monitored, employees had no reason to believe that this monitoring might include video recording. The employees had a private office and were not warned about the camera surveillance. Also, the camera was hidden. Weighing all of these facts, the Court found that the employees had a reasonable expectation that they would not be subjected to secret video recording in their office.

On the second point, however, the employees lost. First off, the employees were never actually filmed: The director of the facility activated the recording equipment only a few times, and only after the employees had left for the day. The Court found that the facility limited its intrusion in other ways, such as by directing the camera only at the computer workstation which had been used to access pornography, leaving the system in place only for a few weeks, and limiting the number of people who knew about the surveillance. The Court also found that the facility's reason for setting up the camera -- catching the person who was viewing pornography -- was a legitimate business concern.

Unlike many states, California has an explicit constitutional right to privacy, and is widely viewed as protective of privacy rights. Still, this decision doesn't seem that surprising, mostly because the women were never actually filmed. It's not hard to see why they were upset by the mere existence of the camera (apparently, one of the women often changed into her gym clothes in the office), but it was never actually used to record them. If there were any evidence that the women were taped, it might have undercut the facility's justification for recording and led to a different outcome.


February 17, 2009

Supreme Court Issues Another Retaliation Decision

In the employment law field, the Roberts Supreme Court has been something of a surprise. Although commentators have pointed out that the Court is markedly pro-business, that doesn't hold true for cases involving workplace retaliation. The Court has agreed to hear a handful of these cases in the last few years, and has consistently ruled in favor of the employee.

The latest example is Crawford v. Metropolitan Government of Nashville and Davidson County, Tennessee. Vicky Crawford, an employee of the Metro School District, was interviewed during an investigation into allegations of sexual harassment by Gene Hughes, the District's employee relations director. In response to questions from a District human resources officer, Crawford described several incidents in which Hughes had acted inappropriately, including grabbing her head and pulling it toward his crotch. Two other witnesses also described inappropriate behavior by Hughes. When the investigation was complete, the District took no action against Hughes, but fired Crawford and the other two witnesses.

Crawford sued the District for illegal retaliation in violation of Title VII. The District Court and Court of Appeals both ruled against Crawford, finding that she wasn't protected from retaliation because she had not instigated or initiated the original complaint. The courts determined that the "opposition" clause of Title VII's anti-retaliation provision, which protects those who oppose illegal discrimination, extends only to those who make a complaint themselves, not those who participate in an internal investigation of a complaint. 

In a unanimous opinion, the Supreme Court rejected this reasoning as creating a "freakish rule" that would protect someone who reports harassment on her own initiative, but not someone who reports harassment in response to a question from her boss. The Court found that Crawford's statements to the investigator were sufficient to show that she was opposed to Hughes's behavior, and that she was therefore protected from retaliation.

As the Court pointed out, firing employees for participating in an internal investigation will result in fewer internal complaints and fewer witnesses coming forward. This means employers won't have an opportunity to resolve harassment and discrimination problems internally, but will instead have to deal with them in the courtroom. And, once employers get to that courtroom, they will have deprived themselves of an important defense: Employers that take reasonable steps to prevent and correct harassment -- including having an effective process for taking and investigating complaints -- can avoid liability for certain types of harassment. Clearly, this defense won't be available to an employer that fires employees for participating in its own investigation.

If you need help conducting an internal investigation, pick up a copy of my book, The Essential Guide to Workplace Investigations (Nolo).
April 16, 2008

Signing an Arbitration Agreement Can't Be a Prerequisite to Investigation, California Court Says

In a recent case, a California trial court denied an employer's motion to compel a former employee to arbitrate his racial discrimination and harassment claims, even though he'd signed a form agreeing to arbitrate. The denial was affirmed by an appellate court.

The plaintiff, Sam Metters, complained of the discrimination and harassment to his employer, Ralphs Grocery Company. On two occasions, Ralphs sent Metters a letter and "Notice of Dispute & Request for Resolution" form. The form included a voluntary mediation and mandatory arbitration clause, and left a blank for the employee to sign.

According to Metters, the employee relations manager at Ralphs instructed him to sign and return the form. He understood that he had to do so to have his claims investigated, and he signed. When he later sued the company, Ralphs tried to enforce the agreement.

But the court wasn't buying it. Even though the employee had signed, the document didn't look like a contract, so he hadn't really consented. The appellate court noted other problems with the process too -- the employee said he wasn't given a copy of the company's "Mediation & Binding Arbitration Policy," which was referred to in the arbitration clause.

Perhaps most importantly, the employer's actions suggested that the employee had to fill out the form to have his complaint investigated. The employee said he'd tried to contact the company on several occasions, and it hadn't produced results. Between this inaction, the letters he received, and the conversation he had with the employee relations manager, the plaintiff believed he didn't have another choice.

To find out more about arbitration agreements (and the types of provisions that might render them illegal), see Nolo's article Signing an Arbitration Agreement With Your Employer.

Alayna Schroeder

January 22, 2008

Employment Cases Before the Supreme Court: Part IV

Last week, the Supreme Court agreed to hear a really interesting investigation case, making this one of the busiest dockets for employment cases in recent years. The case is called Crawford v. Metropolitan Government of Nashville and Davidson County, Tennessee, and it raises this question: Is an employee who answers questions as a witness in an internal investigation of sexual harassment protected from retaliation? It amazed me to learn that the Sixth Circuit Court of Appeals said no. The court found that an employer can fire an employee because she participated in an internal investigation. (Click here for links to the briefs and other information about the case, from the excellent resource SCOTUSblog.)

Crawford was a long-term employee who was fired after she was questioned as a witness in an internal investigation of a sexual harassment complaint. After several employees voiced concerns about inappropriate behavior by Dr. Gene Hughes, the employee relations director for the Metro School District, the District investigated. The investigator contacted employees who worked with Hughes, including Crawford, and asked them to answer questions. Crawford told the investigator that Hughes had sexually harassed her and other employees by, among other things, grabbing his crotch, asking to see her breasts, and pulling her head to his crotch.

When the investigation was complete, Hughes was not disciplined. However, three employees who told the investigator that Hughes had acted inappropriately were fired, as was Crawford several months later. (All of these facts are based on Crawford's version of events. Because Metro won on summary judgment, the Court is obligated to view the facts in Crawford's favor.) Crawford filed an EEOC charge and a lawsuit accusing Metro of retaliation.

Crawford lost in federal district court and again at the Court of Appeals.  Both courts found that Crawford couldn't prove illegal retaliation, even if she really was fired for being a witness in the investigation. The reason? Title VII prohibits retaliation only against employees who "oppose" discrimination or harassment, or who "participate" in an investigation, proceeding, or hearing regarding discrimination or harassment. Because Crawford didn't file the original harassment complaint, the courts found that she hadn't opposed sexual harassment. The courts also found that Crawford's statements during the internal investigation didn't count as "participation" because no EEOC charge or lawsuit had been filed at the time.

The federal courts of appeal have reached different conclusions on this last issue: Some have held that the "participation" clause doesn't apply unless there is a pending EEOC charge or lawsuit - in other words, unless the official machinery of Title VII is in play. Others have held otherwise, and have protected witnesses in internal investigations from retaliation.

I am, of course, interested to see how the Supreme Court will resolve this dispute, should it take the case. But to me, there's a more compelling issue at play, and it involves the Farragher/Ellerth affirmative defense to harassment claims. Under those cases, an employer can avoid liability or limit damages in certain harassment cases if it can show that it had an effective complaint policy in place, that it promptly investigated claims and took appropriate disciplinary action, and that the employee failed to use this complaint procedure. Arguably, an employer that fires employees for participating in such an investigation would utterly undermine the effectiveness of its complaint procedures by discouraging witnesses from coming forward - and would have to wave goodbye to that affirmative defense.

But wait - there's more. The Farragher/Ellerth cases essentially make filing an internal complaint of harassment a necessary first step in the process of bringing a lawsuit. An employee who doesn't use the employer's internal procedures to complain may never have her day in court. So arguably, an internal investigation has become part of the official machinery of Title VII, much like filing an EEOC charge or a lawsuit. Under this logic, participating in an internal investigation should be protected just as much as participating in an official investigation.

No matter what the Supreme Court decides, smart employers won't fire or discipline employees for participating in an internal investigation. What purpose would it serve? An employer that retaliates against witnesses ties its own hands: If employees fear for their jobs, they won't volunteer information and might not answer questions honestly. The employer then might not know what's actually going on in the workplace and won't have an opportunity to stop it. Even if witnesses can't sue for retaliation, the employee whose complaint started the investigation in the first place can still sue - and the employer's actions in intimidating witnesses could well be Exhibit 1 in a claim for big dollar damages.

If you need to conduct an internal investigation, pick up a copy of my book, The Essential Guide to Workplace Investigations, which includes all of the information, forms, and guidance you need to get to the bottom of workplace problems -- without ending up in court.

September 17, 2007

Sexual Harassment, Retaliation Trial Against Isiah Thomas

There's trouble in the garden -- Madison Square Garden, that is. The coach of the New York Knicks, former Detroit Pistons star Isiah Thomas, is accused of sexually harassing Anucha Browne Sanders, a former team vice president. Browne Sanders claims that Thomas called her crude names and made unwanted sexual advances towards her. And that's not all: Browne Sanders also claims that she was fired in retaliation for complaining about the harassment. (For a nice summary of the details of the complaint, see the New York Times article, "Sexual Harassment Case Against Thomas Is Set to Open," by Richard Sandomir.")

Retaliation claims can be especially dangerous - and expensive - for employers. An employee can win a retaliation case even if she can't ultimately convince a jury that she was sexually harassed. If the employee can prove that she was fired or otherwise faced negative consequences for complaining of harassment, that's a separate violation of the antidiscrimination laws.

One of the interesting things about this case (aside from a witness list that includes the team's star point guard, Stephon Marbury) is that the Chairman of the Garden admitted (in a deposition) that Browne Sanders could have kept her job had she not asked other employees to remember incidents that would have supported her claims during the Garden's investigation of her sexual harassment complaint. (The defendants also claim that Browne Sanders had performance problems.) Browne Sanders claims that this was protected activity under the antidiscrimination laws; the defendants claim that she was tampering with the investigation. Ultimately, a jury will decide whose interpretation is correct.

The lesson here for employers? Tread very carefully when you're considering discipline against an employee who has made a complaint -- especially a complaint that alleges sordid details against a well-known figure and is sure to make the newspapers. Particularly if your reason for discipline has anything to do with the complaint or the underlying incidents, you can expect a plaintiff's lawyer to be very interested.

Lisa Guerin

Update: On October 2, 2007, the jury awarded $11.6 million in punitive damages to Browne Sanders. The breakdown: $6 million for the hostile environment sexual harassment claim and $5.6 million for the retaliation claim (the jury has yet to decide how much Browne Sanders should receive for lost wages and other economic damages). These damages are to be paid by Madison Square Garden and James Dolan, chairman of the parent company to the Knicks and the Garden. The jury couldn't reach a decision on whether Thomas should also pay punitive damages. The defendants have vowed to appeal.

Also, for managers who want to learn more about investigating complaints about employees, check out my book The Essential Guide to Workplace Investigations: How to Handle Employee Complaints & Problems (Nolo).