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Preemployment Screening and Testing: Federal

Preemployment Screening and Testing requirements by state

Authors: Anthony J. Oncidi, Natalie A. Rainforth and Adam W.G. Freed, Proskauer Rose LLP

Summary

  • To protect against negligent hiring lawsuits, an employer should conduct background checks and employment verifications with the utmost care. At times, however, this process can be at odds with employee privacy laws. Additionally, "Ban the Box" laws make it difficult in some jurisdictions to obtain criminal background information about prospective employees early in the hiring process. See Background Checks.
  • Federal and state law restrict the use of credit information for employment purposes. Good credit requirements may be challenged under Title VII of the Civil Rights Act as having a disparate impact on minority applicants if there are no legitimate business reasons for maintaining them. See Credit Checks.
  • The Fair Credit Reporting Act limits the information employers can obtain about employees and applicants through outside consumer reporting agencies. See Fair Credit Reporting Act.
  • Federal law prohibits employers from hiring individuals who are not authorized to work in the United States. Electronic verification systems can help employers determine whether a new hire is authorized to work in the country. See E-Verify.
  • Employers may not discriminate against job applicants in the preemployment screening and interviewing process. Employers should follow Equal Employment Opportunity Commission (EEOC) guidance and their state agency's own anti-discrimination regulations regarding permissible questions to ask candidates. See EEOC Guidelines.
  • Preemployment testing for illegal drugs, even medical marijuana, generally is permitted so long as it is nondiscriminatory and adheres to certain standards. However, alcohol testing may only take place after an employment offer is made, and must be job-related and consistent with business necessity. See Drug and Alcohol Testing Programs.
  • Prior to extending a job offer, an employer may ask questions concerning whether the applicant is currently using, or has previously used, alcohol or drugs illegally. But the employer cannot ask how frequently or in what quantities the applicant used drugs or alcohol, or any question likely to elicit information about a past addiction. See Drug and Alcohol Inquiries.
  • An employer may not conduct medical examinations prior to an offer of employment, but it may do so after an offer has been made if the examinations are done for all applicants entering into a particular job category, so as not to unlawfully discriminate against individuals who have, or are perceived to have, disabilities. The examinations also must be job-related and consistent with business necessity. Genetic testing is not permitted of job applicants. See Medical Testing.
  • Physical fitness examinations are permitted prior to an offer of employment if they do not amount to a medical examination. Fitness examinations that do amount to medical examinations may be conducted after the offer is made, so long as they are job-related and consistent with business necessity. Employers should be wary, though, of fitness tests that create a disparate impact without serving a legitimate business purpose. See Physical Fitness Testing.
  • Intelligence testing is permitted so long as it does not discriminate against a protected class without having a legitimate business purpose. An employer may not throw out tests that favor majority groups unless they have a strong basis in evidence that using the test would lead to disparate impact liability. See Intelligence Testing.

Background Checks

Avoiding Negligent Hiring Liability

If an employer hires an employee without reasonably researching his or her background and the employee later harms a co-worker or third party, the employer may be held liable for negligent hiring. There are several steps employers can take during the preemployment process to minimize the risk of a lawsuit:

  • Request contact information for professional references. These are preferable to personal references because they are less likely to cultivate information associating an individual with a protected category.
  • Secure authorization to contact references. Include a release in job applications for the prospective employee to sign, authorizing the employer to contact the references provided. While many employers have adopted policies of limiting their references to basic information, such as the former employee's name, dates of employment and job title, conducting reference checks that are as thorough and complete as possible can dilute the strength of a negligent hiring claim.
  • Require applicants to undergo psychological tests. Psychological testing measures an applicant's personality traits, propensity for drug use, attitude, regular response to stress, and tendency toward violence, as well as other indicators of disposition. Such tests should not, however, amount to pre-offer medical tests which implicate privacy rights and potentially violate the Americans with Disabilities Act (ADA). For information on what constitutes a medical test, see Medical Testing.
  • Conduct thorough background checks. Employers can be held liable in many jurisdictions for injuries sustained by an employee or other party at the hands of an employee that the employer either knew or should have known had violent propensities.

For more information on avoiding negligent hiring claims, see How to Exercise Reasonable Care in the Hiring Process.

Practical Example

Acme Star Safe, a company providing "security services to the stars," hires front-line security guards with extensive criminal convictions on their records to guard an up-and-coming singer as she tours the country. The guards' physically aggressive response to routine security matters results in injuries to the singer's fans and employees.

Acme Star Safe faces liability because a competent background check would have revealed the guards' convictions for violent crimes in recent years. A background search would have been job related and justifiable in court.

Employer liability in a negligent hiring case often turns on two primary issues:

  1. The employee must have been unfit to be hired. This occurs if the circumstances of the job place the employee in a position to commit the wrongful act, and the conduct was reasonably foreseeable (which depends on the nature of the job and the likelihood of harm it presents to others).
  2. The employer either knew or should have known that the employee was unfit. An employer may be absolved of liability if it can show that:
    • A thorough background check was conducted and did not reveal damaging information; or
    • Even if the employer did not conduct a background check, had it done so prior to hiring, the search would not have revealed information sufficient to put the employer on notice of the employee's lack of fitness.

Accordingly, to limit liability for negligent hiring, an employer should carefully scrutinize employment applications and question applicants about any inconsistencies. An employer should consult all references provided by the applicant and to document all efforts to do so. Although applicants should be uniformly screened, jobs involving sensitive matters or contact with the public should be documented with extra care.

"Ban the Box" Laws

"Ban the Box" laws increasingly prohibit prospective employers from requiring applicants to disclose or check a box on an application indicating that they have a criminal record.

Several states and municipalities have passed "Ban the Box" laws, citing the fact that those with criminal histories are often categorically rejected by employers. Some of these laws ban employers from conducting criminal background checks until after a conditional offer of employment has been extended. While an employer can withdraw a conditional job offer if an applicant's criminal job history is incompatible with the position, the employer must supply the applicant with his or her criminal background report, an explanation of why the position was incompatible with his or her history, and a notice stating that he or she has the right to appeal the decision.

Although civil suits, judgments, paid tax liens and arrest records appear on consumer reports for a maximum of seven years, records of criminal convictions can remain indefinitely. This is little consolation to employers in jurisdictions where "Ban the Box" laws limit the number of years that background checks can span.

Practical Example

Acme Data-Com, a company with 40 employees located in the heart of Technologica, stores and manipulates customer data for use by department stores in seasonal and targeted mailings. Marco applies for a job at Acme Data-Com and, under Technologica's new "Ban the Box" law, is not asked to check a box indicating that he was previously convicted of a felony. This is great news to Marco because he has had a hard time finding jobs since being released from prison six years ago after serving a 10-year sentence for fraud and identity theft.

After a thorough review of Marco's admittedly sparse application and satisfactory calls to his references, Acme Data-Com's HR director extends a conditional offer of employment. A pre-hire criminal background check - which went back only five years, per the "Ban the Box" law - reveals only a traffic ticket and Marco begins work.

A longer-spanning criminal history report would have revealed Marco's multiple convictions for stealing the very type of information stored on Acme Data-Com's servers. Two weeks into his employment, Marco misappropriates the personal and financial data of thousands of customers, who later sue the department stores and Acme Data-Com. In addition to potential liability for negligent hiring, Acme Data-Com stands to lose a number of its department store clients.

Many "Ban the Box" laws apply only to public employers, but there is a trend toward extending them to the private sector.

Arrest and Conviction Records

Several state laws limit the use of arrest and conviction records by prospective employers. These laws range from prohibiting the use of arrest data to make employment decisions, to strict limitations on the use of conviction records.

While no federal law expressly prohibits preemployment inquiries regarding arrest and conviction records, the Equal Employment Opportunity Commission (EEOC) takes the position that disqualifying applicants strictly on the basis of their criminal records may have a disparate impact on certain racial and ethnic groups. Disparate impact refers to a neutral employment practice that may have an unintended, negative impact on individuals in protected classes. Accordingly, employers should perform thorough investigations - including, if possible, an interview of the applicant - before basing any adverse employment decision solely on a criminal record.

The EEOC's 2012 Enforcement Guidance regarding the use of arrest and conviction records in employment decisions provides that employers should engage in an individualized assessment before rejecting job applicants based on their criminal history. According to the EEOC, rejecting an applicant based on a criminal conviction is improper unless the conviction is relevant to the job, or there is another legitimate business reason. The EEOC further cautions employers that because an arrest does not indicate an applicant was found guilty of a crime, removing an applicant from consideration because of a past arrest is not job-related or consistent with the employer's business necessity.

The following factors should be considered before making any decision based on criminal history:

  • The nature of the job sought;
  • The nature and seriousness of the offense; and
  • The temporal proximity between the offense and the job application.

Limitations on the Right to Informational Privacy

In National Aeronautics & Space Administration (NASA) v. Nelson, the Supreme Court unanimously upheld as constitutional a standard background check used by NASA for prospective contract employees, holding that it did not violate the employees' right to informational privacy. +131 S. Ct. 746 (2011), The background check included a questionnaire asking whether the applicant "used, possessed, supplied, or manufactured illegal drugs" during the past year and, if so, whether and what type of "treatment or counseling [was] received."

The applicant also had to sign a release authorizing the government to ask his or her references whether they were aware of "any reason to question" the individual's "honesty or trustworthiness," and whether they had any "adverse information" concerning the applicant's "violations of the law," "financial integrity," "abuse of alcohol and/or drugs," "mental or emotional stability," or "other matters."

Although the contract employees were not federal employees, they worked as scientists and engineers at NASA's Jet Propulsion Laboratory, which made the background checks reasonable. The Supreme Court further observed that unwarranted disclosures of employee information are protected by the Privacy Act of 1974, +5 U.S.C. 552a which requires written consent before such information is released.

While the federal constitutional protections at issue in NASA v. Nelson generally apply only to federal employees, and employees working under a federal government contract, the Court suggested that its assessment would be no different for the private sector.

Keep Background Checks Private

Both public and private employers are required to keep information gleaned from background checks secure and confidential under federal privacy laws. These laws include the Health Insurance Portability and Accountability Act (HIPAA), which protects health information collected by employers, and the Americans with Disabilities Act (ADA), which prohibits employers from asking questions regarding drug addiction and treatment before a conditional offer is made. Some states have employee privacy protection laws as well.

Credit Checks

The use of credit information for employment purposes is restricted under both federal and state laws. Good credit requirements have been challenged under Title VII as having a disparate impact on minority job applicants. However, if the position sought is finance-related, courts will find legitimate business reasons for checking an applicant's credit history. The problems in this area arise primarily from the tension between an applicant's privacy rights and an employer's need to engage in a diligent selection process.

Employee Bankruptcy

The Bankruptcy Reform Act of 1978 (the Act) prohibits discrimination against employees because they have filed for bankruptcy or have bad debts. +11 U.S.C. 525(b). A private employer may not terminate the employment of, or discriminate with respect to employment against, an individual who:

  • Is or has been a debtor;
  • Is otherwise associated with a debtor;
  • Has been insolvent before or during a bankruptcy; or
  • Has failed to pay a debt that was discharged or could be discharged in bankruptcy.

Bankruptcy filings are matters of public record, however, and the Act does not cover discrimination by private employers against applicants. Courts generally find that the language prohibiting discrimination "with respect to employment" does not cover an employer's decision not to hire an individual based on his or her financial history, including bankruptcies.

An employer must be cautious, though, when using financial information to make hiring decisions. For instance, the Equal Employment Opportunity Commission (EEOC) maintains that inquiries into an applicant's current assets, past assets, liabilities or credit rating (including bankruptcy or garnishment) should be avoided because they tend to have a disparate impact on minorities and females, who statistically experience higher levels of bankruptcies and damaging credit reports.

Exceptions to this policy are made only if an employer can show that the questions are job related and justified by business necessity. Thus, hiring managers should limit the use of credit histories to jobs that include access to money or sensitive data. They also should distinguish between debts incurred due to a medical issue, period of unemployment or divorce, from other debts such as gambling.

For more information, see How to Conduct a Credit Check for Employment Purposes.

Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act (FCRA) governs the access and use of credit information in making employment decisions. +15 U.S.C. 1681. It sets forth the national standards for employment screening performed by outside companies - consumer reporting agencies - and does not apply when an employer conducts a background check itself.

If information from an outside credit report is used for employment purposes, the FCRA requires employers to do all of the following things:

  • Make a clear and conspicuous written disclosure (in a document consisting solely of the disclosure) to the applicant or employee before the report is obtained;
  • Obtain prior written authorization from the applicant or employee;
  • Certify to the consumer reporting agency that the employer obtained authorization to review the report and represented to the individual that the information in the report would not be used in violation of any federal or state equal opportunity law or regulation; and
  • Notify the individual prior to taking any adverse action based on the report, as well as provide the name, address and telephone number of the consumer reporting agency making the report; and copies of, among other things, the credit report and a summary of FCRA rights with information on how to dispute the contents of the report.

Before taking any adverse action against an applicant or employee under FCRA, based on a consumer credit report obtained from a consumer reporting agency, an employer must first provide the individual with a Summary of Consumer Rights Under FCRA. An employer must also provide the summary of rights within three days of requesting an investigative consumer report from a consumer reporting agency. The consumer, in turn, has the right to request and receive a statement setting forth the nature and scope of the investigation being performed.

Effective September 21, 2018, the Consumer Financial Protection Bureau (CFPB) has an interim final rule updating the Summary of Consumer Rights Under FCRA form and its Summary of Consumer Identity Theft Rights form.

The updated disclosure forms stem from the Economic Growth, Regulatory Relief and Consumer Protection Act, which requires consumer reporting agencies to provide national security freezes to consumers at no cost. As a result, a new security freeze form must be provided to consumers informing them of their rights to obtain a security freeze on their credit report, which will prohibit a consumer reporting agency from releasing information in the credit report without the consumer's express authorization. +15 USCS § 1681c-1.

The Act mandates that when FCRA requires an individual to receive the "Summary of Consumer Rights Under FCRA form," the notice regarding the individual's security freeze right must also be included. An employer may use earlier versions of the form (the model forms published by the CFPB on November 14, 2012) provided that a separate page containing the required security freeze rights notice is included in the same transmittal.

State Law Restrictions

State laws governing the use of consumer credit reports often mirror the federal FCRA. However, some state statutes in the area of credit reporting provide greater protections than federal law and, to that extent, are not preempted.

Consumer Credit Reports

From the standpoint of an HR professional, a consumer credit report is any written, oral or other communication of any information by a consumer reporting agency bearing on a current or prospective employee's creditworthiness, credit standing or capacity, character, general reputation, personal characteristics or mode of living, which is used to evaluate the individual's eligibility for employment, promotion, reassignment or retention.

Standard credit reports typically reflect basic identifying information, such as the individual's name, address, Social Security Number, marital status, familial status and prior employer(s). They may also contain:

  • Financial information, including approximate income, bank account data and the value of certain assets;
  • Public filings, such as civil suits, judgments, tax liens, bankruptcies and records of conviction or arrest;
  • Credit status and payment habits, as well as whether the debtor has any unpaid bills or assets in collections;
  • Current and past employment information;
  • Select medical information;
  • The number of requests for the individual's credit report and the name of each requestor; and
  • Statements by the applicant and/or the applicant's creditors regarding disputed items on the credit report.

Investigative Consumer Reports (ICRs)

Investigative Consumer Reports (ICRs) contain additional information regarding the character, general reputation, personal characteristics and mode of living of the applicant or employee. The information in these reports can be harvested through personal interviews of neighbors, friends, colleagues and other associates of the individual. The FCRA provides greater protections for Investigative Consumer Reports because of the sensitive nature of their content.

Unauthorized Access and Use of Consumer Reports

As noted above, before acquiring a consumer report, an employer must obtain prior written authorization from an applicant or employee and certify to the consumer reporting agency that it will abide by the FCRA. The FCRA also limits the use of consumer reports to certain other purposes, including:

  • In connection with credit, insurance or rental applications;
  • Employment, including hiring, promotion, reassignment or retention;
  • In response to court orders or subpoenas;
  • In connection with business transactions initiated by the consumer and where a "legitimate business need" exists for the information;
  • In connection with a valuation or assessment of an existing credit obligation by potential investors or servicers;
  • To determine whether an individual continues to meet the terms of his or her account and whether the financial institution wishes to retain the individual as a customer;
  • In evaluating an individual's eligibility for certain professional licensing;
  • To establish an individual's capacity to make child support payments; and
  • For use in law enforcement and counterintelligence investigations.

Some uses of consumer reports are strictly banned, including for targeted marketing. The FCRA also prohibits the production of reports containing medical information for employment purposes, absent notice to the employee and the employee's explicit affirmative consent for release.

Disposing of Consumer Reports

The FCRA imposes certain obligations on employers and others seeking to destroy or dispose of background check information obtained through outside services. Employers must take reasonable measures to protect against unauthorized access and use. This impacts not only the disposal of papers, but also plays a role in the sale, donation, transfer or disposal of computer equipment on which protected information is stored.

Reasonable measures include burning, pulverizing, or shredding documents or data either internally or through an outside service. Hard drives and similar data storage devices must be wiped clean or destroyed. Employers that regularly maintain custody of sensitive background check information must maintain internal policies and procedures regarding the process for disposal.

The Fair and Accurate Credit Transactions Act (FACTA) amended FCRA to address growing concerns about identity theft. Under FACTA, employers must take certain measures to properly dispose of confidential employee information. Employers should burn or shred paper documents; electronic data storage devices should be destroyed or erased. A standardized employee policy will help ensure compliance.

Verifying Education and Employment Information

Generally, FCRA restrictions apply when an employer conducts background checks through an outside entity. However, FCRA is inapplicable when an employer obtains information directly from a source, for example by calling a former employer or university to verify an applicant's prior employment or graduation. Many schools require written permission from former students wishing to have their enrollment or academic data released to a prospective employer.

E-Verify

The Immigration Reform and Control Act (IRCA) makes it unlawful to knowingly hire or recruit an unauthorized alien for employment in the United States. IRCA requires employers to take steps to verify an employee's work eligibility and authorization, including filling out Form I-9, Employment Eligibility Verification, for each new hire.

E-Verify is a voluntary, web-based system employers can use to determine the employment eligibility of new hires. Employers electronically submit information from new hires' Forms I-9. E-Verify compares this information to data in various federal government databases. Through this process, employers are advised whether the information they submitted matches government records and whether the new hire is authorized to work in the U.S.

IRCA imposes federal civil and criminal sanctions against employers that violate the law, and expressly preempts state and local laws imposing sanctions on those who employ or recruit unauthorized aliens.

In Chamber of Commerce v. Whiting, the Supreme Court held that the Legal Arizona Workers Act, which provides for the suspension and/or revocation of the business licenses of Arizona employers that knowingly or intentionally employ unauthorized aliens and mandates the use of E-Verify, was not preempted by IRCA. +131 S. Ct. 1968 (2011),

With respect to the E-Verify provision, the Court noted that although Congress made E-Verify voluntary on a national scale, states were not prohibited from mandating participation by their businesses.

EEOC Guidelines

The EEOC has issued an Employment Tests and Selection Procedures Fact Sheet regarding the application of federal antidiscrimination laws to employment screening and selection procedures. The Fact Sheet addresses common issues encountered in this area including cognitive tests, personality tests, medical examinations, credit checks and criminal background checks.

Third-Party Applicant Screening

Some employers use employment agencies to help recruit qualified job applicants. Employment agencies are hired to advertise positions and perform the screening, testing and initial interviewing phases of the hiring process. Depending on the size of an organization and the depth of its HR staff, third-party screening may prove more cost-efficient than in-house recruitment. The use of an employment agency does not relieve an employer from its duties to comply with federal equal opportunity laws and EEOC guidelines regarding selection procedures.

Hiring Subcontractors and Temporary Workers

Subcontractors and temporary workers are generally hired to perform specific jobs or to work on discrete projects for a temporary period of time. These types of workers fill in the gaps when a company lacks the knowledge and/or resources to complete a job. They also may be used in businesses and industries where work flow is unpredictable and permanent hiring is impractical.

Many of the laws that apply to employees, including antidiscrimination laws and minimum wage requirements, do not apply to subcontractors. The analysis of whether a worker is a contractor or an employee is highly fact-intensive and should be undertaken at the beginning of the relationship.

Although contractors should not be treated as employees, the screening process should function much as it would when an employer screens potential employees. Employers should obtain copies of the contractor's résumé and portfolio, and request professional references. When hiring a subcontractor or a temporary worker, an employer should require obtain a completed Form W-9 from the individual (including his or her Social Security Number and Employer Identification Number), so that the individual or entity is treated properly for tax purposes. Employers also should verify that all subcontractors are properly insured.

Drug and Alcohol Testing Programs

Many employers seek to test job applicants for substance abuse as drug and alcohol abuse may impair job performance, create safety hazards, and increase absenteeism, insurance premiums and workers compensation claims. Employers also may be held vicariously liable for acts committed by substance abusing employees.

As a matter of law, preemployment drug testing generally is permitted. Courts have recognized that employers are entitled to define conditions for employment, and this includes requiring their employees to be drug free. In addition, courts have noted that preemployment drug testing fits into the public policy of ridding workplaces of the influence of drugs. As such, public and private employers may implement drug testing programs of job applicants without raising constitutional issues.

An employer that decides to drug test job applicants must adhere to the following standards: Follow any applicable state drug testing laws;

  • Administer tests in a nondiscriminatory manner to avoid being sued under state and federal antidiscrimination laws;
  • Confirm the accuracy of the drug-testing program, including chain-of-custody procedures and tampering safeguards, as drug tests are not always accurate;
  • Do not assume it is appropriate to test current employees the same way as applicants - current employees may have heightened privacy expectations and rights.

For more information, see How to Conduct a Drug Test.

Practical Example

Acme Publishing adopts a policy providing for preemployment physical examinations, including a drug and alcohol test for all of its job applicants. Applicants must complete an application, take a written test and participate in a preliminary and a final interview before a conditional offer of employment is made. Successful applicants who receive a conditional job offer are informed that the offer is contingent upon their taking and passing a medical examination, which includes an unobserved urinalysis conducted by an outside medical clinic.

Three applicants - Bill, Claire, and Dan - refuse to take the drug test, and Acme rescinds their job offers as a result. They sue the company on the grounds that the test violates their privacy rights, and is an unfair business practice.

Bill, Claire, and Dan are not likely to prevail because job applicants should reasonably expect that they will have to undergo a preemployment medical examination and, if they object to such a test, they may simply decide not to apply for employment with Acme. Subjecting applicants to a urinalysis that tests for drugs and alcohol is not unreasonably intrusive, especially when the applicants have notice of the procedure, the test is conducted after a conditional job offer has been extended, and the samples are collected in a medical environment where the applicants are not directly observed.

Employers should note that the ADA treats testing for alcohol use differently from testing for illegal drugs. For instance, drug tests are not considered medical examinations under the ADA so they may be administered before a conditional job offer is extended. However, some authorities advise that alcohol testing ought to take place only after the extension of an employment offer that is conditioned on passing a medical examination that includes an alcohol test. An employer that disqualifies an applicant because of alcohol test results must show that the test is job-related and consistent with its business needs. For more information on pre-employment medical exams, see Medical Testing.

Just as employers are entitled to drug test job applicants, the candidates are free to walk away from the application process at any time. No individual is compelled to seek a job, and anyone who wishes to avoid a drug test because he or she finds the process degrading, intrusive or humiliating is free to apply to organizations that do not require drug tests as a condition of employment.

In unionized workplaces, the National Labor Relations Board has taken the view that employers need not bargain with labor unions before implementing preemployment testing because there is no economic relationship between the employer and an applicant, and applicants are not restricted from pursuing alternative employment.

Drug and Alcohol Inquiries

Prior to making a job offer, an employer may ask whether an applicant is currently using, or has in the past used, alcohol or drugs illegally, so long as the questions are not likely to elicit information about a past drug addiction, which is a disability covered by the ADA (and employers are generally prohibited from inquiring about an applicant's disability before an offer has been made).

Practical Example

At the pre-offer stage, Acme Pharmaceuticals may ask, "Have you ever used illegal drugs?" "When is the last time you used illegal drugs?" or "Have you used illegal drugs in the last six months?" because these questions are not likely to indicate to Acme whether the applicant was addicted to drugs.

However, prior to making an offer, an employer may not ask about the frequency or amount of alcohol or drugs an applicant has used in the past, or whether the applicant has participated in a drug or alcohol rehabilitation program, because this information tends to reveal whether the applicant had a past drug addiction.

Practical Example

At the pre-offer stage, Acme Pharmaceuticals may not ask an applicant questions such as, "How often did you use illegal drugs in the past?" "Have you ever been addicted to drugs?" "Have you ever been treated for drug addiction?" or "Have you ever been treated for drug abuse?"

After making a job offer, an employer may then ask about the extent of an applicant's past drug and alcohol use as long as the inquiry is job related and consistent with business necessity, and would affect the applicant's ability to perform the essential functions of the job.

Medical Marijuana Testing

States vary widely regarding the extent to which they restrict an employer's right to test applicants for drug and alcohol use and the extent to which they impose obligations on employers when test results are positive. However, one issue that has put states on the forefront of developing drug-testing law is the testing for medical marijuana.

Though many states have legalized medical marijuana, states generally have not extended job protections to employees who use it. In states that have legalized marijuana for medicinal purposes, courts have held that despite such laws, employers can fire or refuse to hire individuals who fail drug tests regardless of medical marijuana registry status. Thus, employers generally may refuse to hire a job applicant who tests positive for medical marijuana.

Nevertheless, it is a recommended practice for employers adopting medical marijuana testing policies to notify applicants of the policy in writing at the time of application and include clear information about the employer's position on medical marijuana in its drug and alcohol testing policy. Further, because this is an area of law that varies by state, employers should consult local counsel on this issue.

Recreational Marijuana Use

A few states have legalized the use of recreational marijuana in limited amounts. But these laws neither permit on-duty marijuana use nor justify a failed drug test. For a relevant Colorado Supreme Court ruling, see Marijuana Use for Recreational Purposes.

Along similar lines, other laws legalizing recreational marijuana use generally do not impose any new limits on employers and do not prevent them from continuing to maintain a drug-free workplace policy.

For a discussion of Oregon's legalization law and what it means for employers, see Recreational Marijuana

Medical Testing

ADA Restrictions

The ADA splits the hiring process into two stages: before a conditional offer of employment is extended, and after a conditional offer is extended.

Before a conditional job offer. Before a job offer has been made, an employer may not legally require an applicant to undergo a medical examination or ask medically-related questions. However, not all examinations are considered medical examinations under the ADA. For more information, see How to Conduct a Legal Preemployment Medical Exam.

An employer can only conduct certain types of pre-offer tests:

  • Psychological tests. An employer may conduct psychological tests that are designed to measure a candidate's tastes and habits.
  • Vision tests. An employer may test an applicant's ability to read labels or distinguish objects. An employer may not, however, require an applicant to read an eye chart or be examined by an optometrist or ophthalmologist at the pre-offer stage.
  • Physical fitness tests. Pre-offer physical agility and physical fitness tests are permitted as long as they do not measure physiological or biological responses.

After a conditional offer has been made, an employer may require medical examinations if they are conducted for all applicants entering into a particular job category, so as not to unlawfully discriminate against individuals who have or are perceived to have disabilities. Before conducting the examination, an employer must ensure that the conditional offer is bona fide, meaning that the job applicant has satisfied all other job prerequisites, including all nonmedical conditions such as polygraph tests, personal interviews and background checks.

Then, the offer may only be withdrawn because of a medical examination if the reason for the withdrawal is job related and consistent with business necessity. Once the employer has obtained basic medical information from all individuals who have been given conditional offers in a job category, it may follow up with specific individuals for more medical information, as long as the request is related to the previously obtained medical information.

In addition, all medical information obtained (including voluntarily disclosed information) must be kept confidential. An employer should collect such information on separate forms and maintain those forms in separate medical files that are secured away from general personnel files, even if the individual is no longer an applicant or employee.

Genetic Testing

An employer may not conduct genetic testing of job applicants or obtain their family medical history. Title II of the Genetic Information Nondiscrimination Act (GINA) prohibits using genetic information in making employment decisions and restricts the acquisition and disclosure of genetic information by employers. According to the EEOC, genetic information includes:

  • An individual's genetic tests;
  • The genetic tests of a family member;
  • Family medical history;
  • Requests for, and receipt of, genetic services by an individual or a family member; and
  • Genetic information about a fetus carried by an individual or family member, or about an embryo legally held by the individual or family member using assisted reproductive technology.

Under the following limited exceptions, an employer may obtain genetic information about an employee or the employee's family members if the information:

  • Is not specifically sought, but is inadvertently acquired in casual conversations;
  • Is obtained through participation in employee wellness programs, which provide general information to the employer; or
  • Is obtained via requests for leave under the Family and Medical Leave Act or similar laws, which require the employee to provide medical histories.

As with other medical records, genetic information acquired under these exceptions must be kept separate from other employee information and strictly confidential.

Physical Fitness Testing

Whether an employer may subject a job applicant to a physical fitness test depends on whether the test constitutes a medical examination under the ADA. Courts consider the following factors set forth by the EEOC in deciding whether a procedure or test amounts to a medical examination:

  • Is it administered by a health care professional or someone trained by a health care professional?
  • Are the results interpreted by a health care professional or someone trained by a health care professional?
  • Is it designed to reveal an impairment or physical or mental health?
  • Is the employer trying to determine the applicant's physical or mental health or impairments?
  • Is it invasive (e.g., does it require the drawing of blood, urine or breath)?
  • Does it measure an applicant's performance of a task, or does it measure the applicant's physiological responses to performing the task?
  • Is it normally given in a medical setting (e.g., a health care professional's office)?
  • Is medical equipment used?

If the physical fitness test is not a medical examination under these factors, an employer may test job applicants pre- or post-offer.

If, on the other hand, the physical fitness test is a medical examination, it may only be conducted after a conditional job offer has been extended. The test must be job-related and consistent with a business necessity of the employer.

Practical Example

Great Plains Railroad Company (GP) conditions offers of employment upon the successful completion of a physical examination. The test is conducted by a state-licensed occupational therapist and takes two days to complete. The test measures each applicant's range of motion, muscle strength and heart rate. The occupational therapist also records observations about the applicants' breathing after conducting a treadmill test.

One applicant who is rejected on the basis of the examination results sues on the grounds that the test is actually a medical examination that is not job-related and consistent with a business necessity.

The applicant has a potential claim because the test meets a number of the EEOC factors for a medical examination. Thus, the employer will have to demonstrate that the examination was job-related and consistent with a business necessity.

Even if a physical fitness test is not deemed a medical examination, an employer should also beware of conducting any test that could have a disparate impact on a protected class of individuals (in other words, based on age, race, color, national origin, sexual orientation, religion, sex, disability, marital status, veteran status, family relationship and citizenship) under Title VII.

Practical Example

A state Department of Corrections (DOC) requires that all job candidates participate in a physical fitness test that includes a 1.5-mile run. The percentage of female applicants who pass the test is 25 percent lower than the percentage of male applicants who pass the test. A female candidate is denied employment as a corrections officer based on the results of this test and sues the DOC on behalf of a class of female applicants, alleging that the test has a disparate impact on women.

The candidate has a viable claim since the test resulted in a statistically significant difference between the number of men and women who passed the physical portion of the application process. As a result, the DOC must show that the 1.5-mile run is consistent with the employer's business necessity and job related. However, the DOC failed to do so because the ability to complete a 1.5 mile run is unrelated to the ability to perform the job of a corrections officer.

To summarize, before conducting any physical fitness test of job applicants, an employer must answer the following questions:

  • Is this test likely to be deemed a pre-offer medical examination?
  • Is this test a post-offer medical examination that has a disparate impact on a protected class of employees and is not job related or consistent with the employer's business needs?

If the answer to either of these questions is "yes," the test should not be conducted.

Intelligence Testing

While employers often test job applicants based on intelligence and aptitude as a means to acquire more objective information, an employer must be sure to follow proper procedures and not violate state and federal antidiscrimination laws in the process.

The bottom line is that an employer using intelligence tests must be equally careful to ensure both that the tests are job-related and do not lead to statistical disparities, and that they do not discard such tests without careful consideration.

Disparate Impact

Federal and state antidiscrimination laws protect certain classes of individuals (such as those of a certain age, race, color, national origin, sexual orientation, religion, sex, disability, marital status, veteran status, family relationship and citizenship) from discrimination in employment, including during the hiring and application process. Intelligence tests that are facially neutral but have a disproportionately negative effect on members of a protected class may result in disparate impact discrimination.

According to EEOC guidelines, a practice generally has an adverse impact on a particular group if the selection rate for the group in question is less than four-fifths of the selection rate of the group with the highest rate. While this is not a rigid metric, in many states it serves as a benchmark for determining whether a practice creates a disparate impact on a protected group.

However, just because an intelligence test has an adverse impact on a protected class does not necessarily make it illegal. An employer may still use the test if it can demonstrate that it has a legitimate business reason for the test.

Practical Example

A city gives a written examination to 26,000 people who applied for jobs in the city's fire department. The success of a candidate on the exam primarily depends on the candidate's ability to take notes quickly while watching a video on which he or she will later be tested. Those who score an 89 out of 100 and above are rated "well qualified"; those who score between 65 and 88 are rated as "qualified"; and those who score below 65 fail the exam. There is a significant difference between the proportion of black and white applicants that score in the 89 and above range.

The city advances all of the "well qualified" applicants to the next stage, but only some of the "qualified" applicants, who are selected by lottery. Crawford, a black applicant who scored in the "qualified" range but is not selected for advancement in the process, sues the city on behalf of 6,000 similarly-situated black applicants alleging disparate impact discrimination on the basis of race.

The applicants have made out a claim against the city because there is a disparate impact against black applicants and taking notes quickly is not a legitimate business requirement for firefighters. See Lewis v. City of Chicago, +130 S. Ct 2191 (2010).

In order to avoid disparate impact lawsuits, the best practice for employers is to "validate" intelligence tests by showing that:

  • The test accurately measures what it purports to assess;
  • The test results are accurate predictors of the applicants' abilities for the position for which they are being considered; and
  • The test is an equally good predictor for minority group members and both males and females.

Additionally, employers should insure that the test questions account for cultural differences by consulting psychologists to verify that it avoids cultural biases.

Reverse Discrimination

In light of the Supreme Court's decision in Ricci v. DeStefano, +129 S. Ct. 2658 (2009), employers that conduct intelligence tests walk a fine line between avoiding disparate impact claims while simultaneously steering clear of reverse discrimination claims. In Ricci, the City of New Haven administered objective examinations to firefighters to determine who was best qualified for promotion. When the results of the exam showed that white candidates outperformed minority candidates, the City threw out the results.

White and Hispanic firefighters, who had performed better on the test than black firefighters, sued the City for reverse discrimination. The Court held that the City violated the law by discarding the tests, finding no strong evidence to show that the examination was deficient and that discarding the examination was needed to avoid a disparate impact.

According to the Court in Ricci, a purely statistical disparity - even a large one - is not by itself sufficient to justify race-based remedial action. However, if upon further investigation the employer finds a strong basis in evidence that the cause of the disparity is not job-related and consistent with the employer's business needs, then a race-based solution may be appropriate.

Future Developments

There are no developments to report at this time. Continue to check XpertHR regularly for the latest information on this and other topics.