STORES Magazine - July 2015 - 63


THE LEGAL LANDSCAPE
With varying legal options, there's a good deal of gray
area in how retailers use background information in
theory and practice.
Most of the use of background checks is covered under
the Fair Credit Reporting Act of 1970. Retailers must be
concise in how they obtain background information,
how they disclose it to candidates and how they use it to
make employment decisions. Even in an at-will state, they
must ask for authorization in a manner that is clear and
conspicuous.
The penalties can be stiff. Dollar General agreed
in October 2014 to pay $4 million to settle claims the
company didn't properly notify 200,000 job applicants
about their background checks. Publix, Whole Foods
Market, Dollar Tree and Michaels have also been named in
recent suits. Nearly 100 cities and 17 states have adopted
the "ban the box" law which prohibits employers from
asking about criminal history on the application.
Federal law does not prohibit employers from asking
about criminal history, though it does prohibit them
from discriminating when they use criminal history
information. Federal law has also established that an
arrest is not proof that the individual engaged in criminal
conduct. While an arrest record alone may not be used by
an employer to take negative employment action, it can
trigger an inquiry into whether the conduct underlying

40,000 transactions each month using
"private eye" techniques to review
files. That information is relayed to
clients for further investigation or decision-making. Dyer says the company
helps employers engage in background
screening in compliance with the Fair
Credit Reporting Act.
Retailers also have to worry about
protecting customer information.
Fraudsters have been known to approach retail employees to take part in
card skimming schemes. Mark Silver,
senior vice president and chief security
officer of First Advantage, says that
with regular access to credit cards,
debit cards and sensitive information,
employees can be a big hole in the security chain and raise the potential for
liability claims.
CONTRACTOR EMPLOYEES
Retailers frequently vet vendors and
NRF.COM/STORES

the arrest justifies such action.
Chris Dyer, CEO of employment screening company
PeopleG2, says retailers need to have appropriate counsel
to ensure they're abiding by all federal and local laws.
"It's really important to make sure you're getting accurate
and complete information and that the applicants are
getting served correctly," he says.
The use of credit report requests have been on the
decline - some states now bar employers from using
them altogether. A 2012 survey on the use of credit
checks from the Society for Human Resources found that
47 percent of employers surveyed used credit checks in
hiring decisions. However, 80 percent of those who used
credit checks said they still hired candidates with negative
information in their credit reports.
Federal guidelines allow retailers to access credit
reports only if they have a compelling business reason.
So while accessing a credit report may not be warranted
for a stock clerk, it may be warranted for a position in
finance.
"I would not be comfortable as an HR director
under current legislation pulling someone's financial
information," says Jennifer Farrelly, human resource
manager for women's apparel retailer Lorna Jane. "We
don't know why someone may have filed bankruptcy or
be late [on bills]."

service providers, but the companies
they hire are only as good as their
employees. Dyer says retailers need
to ensure contractors are taking due
diligence with their own background
checks. Third-party vendors should
have a clearly established and written
background check policy.
"I would encourage retailers to look
for contractors that do ongoing, periodic screening of their employees,"
Silver says. "You should also ensure
they have the appropriate security
systems."
Target's massive data breach that
put the personal data of up to 40
million shoppers at risk was found
to have been caused by hackers that
broke into the retailer's network with
credentials stolen from a third-party
refrigeration and HVAC systems
maker. The Home Depot was also hit
via a third-party vendor's name and

password that provided access to the
company's network - along with 53
million customer email addresses and
56 million credit card accounts.
The vendors had no complicit
involvement in either case, but the
circumstances have served to raise
awareness of retailers' potential vulnerabilities outside their own operations.
CHARACTER AND BEHAVIORAL
INSIGHT
Silver says retailers should have a
stated policy on the level or degree of
financial or criminal background that
is "acceptable" in a potential hire. He
says there needs to be a solid framework for decision making on hiring,
or as events unfold.
While a DUI conviction on a record
is certainly an issue for a retail employee that drives on the job, it may
be acceptable for a backroom clerk.
STORES July 2015 63


http://www.law360.com/articles/587451/dollar-general-coughs-up-4m-to-end-background-check-suit http://www.shrm.org/research/surveyfindings/articles/pages/creditbackgroundchecks.aspx http://www.law360.com/articles/587451/dollar-general-coughs-up-4m-to-end-background-check-suit http://www.shrm.org/research/surveyfindings/articles/pages/creditbackgroundchecks.aspx http://www.law360.com/articles/587451/dollar-general-coughs-up-4m-to-end-background-check-suit http://www.nelp.org/publication/ban-the-box-fair-chance-hiring-state-and-local-guide/ http://www.nelp.org/publication/ban-the-box-fair-chance-hiring-state-and-local-guide/ https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-credit-reporting-act https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-credit-reporting-act http://www.krebsonsecurity.com/2014/02/target-hackers-broke-in-via-hvac-company/ http://www.krebsonsecurity.com/2014/02/target-hackers-broke-in-via-hvac-company/ http://www.krebsonsecurity.com/2014/02/target-hackers-broke-in-via-hvac-company/ http://www.krebsonsecurity.com/2014/02/target-hackers-broke-in-via-hvac-company/ http://www.krebsonsecurity.com/2014/02/target-hackers-broke-in-via-hvac-company/ http://www.NRF.COM/STORES

Table of Contents for the Digital Edition of STORES Magazine - July 2015

Top 100 Retailers
Retail People
No Flash in the Pan
Lost and Found
C2W
Editor's Page
President's Page
Retail Politics
NRF News
POV
NRF Communities Update
End Cap
Trends
Online
Technology
Human Resources
Social Media
Merchandising
Software
Finance
Marketing
Personnel
Operations
STORES Magazine - July 2015 - Cover1
STORES Magazine - July 2015 - Cover2
STORES Magazine - July 2015 - 3
STORES Magazine - July 2015 - 4
STORES Magazine - July 2015 - 5
STORES Magazine - July 2015 - Editor's Page
STORES Magazine - July 2015 - 7
STORES Magazine - July 2015 - President's Page
STORES Magazine - July 2015 - 9
STORES Magazine - July 2015 - Retail Politics
STORES Magazine - July 2015 - 11
STORES Magazine - July 2015 - NRF News
STORES Magazine - July 2015 - Trends
STORES Magazine - July 2015 - 14
STORES Magazine - July 2015 - 15
STORES Magazine - July 2015 - 16
STORES Magazine - July 2015 - 17
STORES Magazine - July 2015 - 18
STORES Magazine - July 2015 - Top 100 Retailers
STORES Magazine - July 2015 - S2
STORES Magazine - July 2015 - S3
STORES Magazine - July 2015 - S4
STORES Magazine - July 2015 - S5
STORES Magazine - July 2015 - S6
STORES Magazine - July 2015 - S7
STORES Magazine - July 2015 - S8
STORES Magazine - July 2015 - S9
STORES Magazine - July 2015 - S10
STORES Magazine - July 2015 - S11
STORES Magazine - July 2015 - S12
STORES Magazine - July 2015 - S13
STORES Magazine - July 2015 - S14
STORES Magazine - July 2015 - S15
STORES Magazine - July 2015 - S16
STORES Magazine - July 2015 - Retail People
STORES Magazine - July 2015 - 36
STORES Magazine - July 2015 - 37
STORES Magazine - July 2015 - No Flash in the Pan
STORES Magazine - July 2015 - 39
STORES Magazine - July 2015 - 40
STORES Magazine - July 2015 - Lost and Found
STORES Magazine - July 2015 - 42
STORES Magazine - July 2015 - 43
STORES Magazine - July 2015 - C2W
STORES Magazine - July 2015 - Online
STORES Magazine - July 2015 - 46
STORES Magazine - July 2015 - 47
STORES Magazine - July 2015 - Technology
STORES Magazine - July 2015 - 49
STORES Magazine - July 2015 - Human Resources
STORES Magazine - July 2015 - 51
STORES Magazine - July 2015 - Social Media
STORES Magazine - July 2015 - 53
STORES Magazine - July 2015 - Merchandising
STORES Magazine - July 2015 - 55
STORES Magazine - July 2015 - Software
STORES Magazine - July 2015 - 57
STORES Magazine - July 2015 - Finance
STORES Magazine - July 2015 - 59
STORES Magazine - July 2015 - Marketing
STORES Magazine - July 2015 - 61
STORES Magazine - July 2015 - Personnel
STORES Magazine - July 2015 - 63
STORES Magazine - July 2015 - 64
STORES Magazine - July 2015 - 65
STORES Magazine - July 2015 - Operations
STORES Magazine - July 2015 - 67
STORES Magazine - July 2015 - 68
STORES Magazine - July 2015 - 69
STORES Magazine - July 2015 - 70
STORES Magazine - July 2015 - 71
STORES Magazine - July 2015 - POV
STORES Magazine - July 2015 - NRF Communities Update
STORES Magazine - July 2015 - End Cap
STORES Magazine - July 2015 - Cover3
STORES Magazine - July 2015 - Cover4
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