Some employers might wish to know whether a job applicant or current employee previously filed worker’s compensation claims. At first glance, such information might seem relevant and even useful to employers. For example, an employer in an accident-prone industry might want to know if the job applicant has a history of repeatedly filing worker’s compensation claims shortly after beginning his or her employment. However, it is important that employers understand the liability that could result from using an applicant/employee’s previous worker’s compensation claims as a basis for making employment decisions.

Using an applicant/employee’s worker’s compensation claim to make adverse employment decisions could result in criminal liability for the employer. Under Florida law, it is a first degree misdemeanor to knowingly fire an employee or refuse to hire an applicant because the applicant/employee filed a worker’s compensation claim.

Employers could also face civil liability if they fire, threaten to fire, intimidate, or coerce an employee because the employee filed a worker’s compensation claim. Additionally, employers could face civil liability if they fire an employee after learning that the employee filed a worker’s compensation claim against a previous employer.

However, Florida law does not seem to impose civil liability on an employer who refuses to hire a job applicant after learning that the applicant filed worker’s compensation claims against previous employers. Bruner v. GC-GW, Inc., 880 So. 2d 1244, 1252 (Fla. 1st DCA 2004) (Kahn, J., dissenting) (“Florida apparently does not recognize a civil cause of action against a subsequent employer who refuses to hire a job applicant for having filed a workers’ compensation claim against a previous employer”). Employers should note, however, that while employers might not be subject to civil liability for refusing to hire an applicant based on previous worker’s compensation claims, Florida law does impose criminal liability for such refusals to hire.

An employer who takes any adverse employment action based on an applicant/employee’s previous worker’s compensation claims might also be liable under the federal Americans with Disabilities Act (“ADA”). Under the federal ADA, an employer cannot make inquiries regarding an applicant/employee’s disability or the nature or severity of such disability. The employer, however, is allowed to make pre-employment inquiries about the applicant’s ability to perform job-related functions. The ADA further allows employers under certain circumstances to make medical examinations after making a conditional offer of employment to the applicant.

While some employers might consider information regarding past worker’s compensation claims relevant to their employment decisions, it is important to note that inquiries into past worker’s compensation claims could result in both civil and criminal liability. Before implementing a background check policy that includes inquiries into job applicants’ past worker’s compensation claims, employers should consult an attorney in their respective state to ensure compliance with the applicable laws.

Peter T. Mavrick has successfully represented many employers in labor and employment matters. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; Email: peter@mavricklaw.com.

Under Title VII of the federal Civil Rights Act of 1964 (“Title VII”), employers are prohibited from discriminating on the basis of race, color, religion, gender, or national origin. Title VII prohibits not only “disparate treatment” (i.e., refusing to hire an African American applicant based on his criminal record and instead hiring a white applicant with a comparable criminal record), but also “disparate impact.” Disparate impact occurs when the employer implements a facially-neutral policy that, in practice, has the effect of disproportionately screening out a protected group (i.e., a particular race, color, religion, gender, or national origin). For example, a policy that screens out all applicants that have ever been convicted of a felony does not, on its face, discriminate on the basis of race or color. However, in practice, the policy might have the result of disproportionately screening out African American or Hispanic applicants. Such a policy could form the basis for “disparate impact” claim of discrimination.

In April 25, 2012, the Equal Employment Opportunity Commissions (“EEOC”) issued federal guidelines based on Title VII. According to the federal guidelines, African Americans and Hispanics are incarcerated at rates disproportionate to their number in the general population. For that reason, the federal guidelines state that facially neutral policies that screen out applicants based on criminal convictions might violate Title VII if the policies are not job-related and consistent with business necessity.

According to the guidelines, policies that screen out job applicants based on criminal records should be implemented in two steps: first, the screening policy should take into account the nature of the crime, the time elapsed since the conviction, and the nature of the job; and second, the employer should provide an opportunity for individualized assessments of those applicants that were screened out (i.e., employers should ask the applicant to show why he or she should not be excluded and assess that information in light of the job).

Because the federal guidelines are based on arrest and incarceration rates of the general population, some courts have rejected the federal guidelines and found that screening policies based on criminal records do not alone support a disparate impact claim. Recently, a federal court in Maryland held that “[t]o use general population statistics to create an inference of disparate impact, the general populace must be representative of the relevant applicant pool. … The general population pool ‘cannot be used as a surrogate for the class of qualified job applicants, because it contains many persons who have not (and would not) be’ applying for a job with Defendant.” EEOC v. Freeman, 961 F. Supp. 2d 783, 798 (D. Md. 2013).

While federal guidelines seem to limit an employer’s ability to make employment decisions based on criminal convictions, Florida tort law could impose liability on employers who fail to conduct adequate background checks on job applicants and current employees. Under Florida law, employers generally owe their customers a duty to exercise reasonable care in hiring and retaining employees. A customer who is harmed by an employee’s actions can recover damages from the employer if the customer can show the following: (1) the employer was required to make an appropriate investigation of the employee and failed to do so; (2) an appropriate investigation would have revealed the unsuitability of the employee for the job; and (3) it was unreasonable for the employer to hire or retain the employee in light of the information the employer knew or should have known.

Whether an employer is required to perform an extensive background investigation under Florida law depends on the type of work the applicant/employee will perform. If, for example, the applicant’s job duties will require only incidental contact with others, then obtaining past employment information and personal data during the initial interview may be sufficient. If, however, the employee is to have constant contact with the public, the employer might be required to conduct a more thorough background check, including a criminal background check, to avoid liability.

To avoid liability under Florida law, employers should conduct an appropriate pre-employment investigation of job applicants. The nature and duties of the job will determine the comprehensiveness of the investigation. If the employer believes that a criminal background check is required, the best practice would be to ensure that any neutral screening policy takes into account (1) the nature and gravity of the convictions; (2) the time that has elapsed since the conviction; and (3) the nature of the job. Furthermore, the employer should provide an individualized assessment for each screened out applicant to ensure the policy, as applied to each applicant, is job-related and consistent with business necessity.

Peter T. Mavrick has successfully represented many employers in labor and employment matters. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; Email: peter@mavricklaw.com.

An employer who wishes to know a job applicant’s credit history could request a consumer report from a consumer reporting agency under the FCRA. However, to lawfully obtain and make an employment decision based on a consumer report, employers must follow certain procedures under the FCRA.

Before requesting a consumer report for a job applicant or employee, the employer must (1) certify to the consumer reporting agency that the employer will comply with the FCRA and applicable state law; (2) disclose in writing to the job applicant/employee that the employer will seek a consumer report; and (3) secure the applicant/employee’s authorization in writing. The employer’s written disclosure to the applicant must be in a document that consists of only the disclosure and the applicant’s written authorization.

A consumer report could contain information including the employee/applicant’s credit worthiness or criminal record. Information in the consumer report might dissuade the employer from hiring an applicant or might encourage the employer to fire or not promote a current employee. Any employment decision that adversely affects an applicant/employee is considered “adverse action” under the FCRA. Before taking adverse action based in whole or in part on consumer reports, the FCRA requires that employers take certain steps.

Before taking any adverse action, the employer must provide the applicant/employee with a copy of the report and a written description of the applicant/employee’s rights under the FCRA. After the employer gives the applicant/employee a copy of the consumer report and the summary of rights, the employer should give the applicant/employee some time to dispute the accuracy of the report before taking any adverse action. Failure to do so could result in liability. Beverly v. Wal-Mart Stores, Inc., 2008 U.S. Dist. LEXIS 2266, at *11-12 (E.D. Va. Jan. 11, 2008) (“Simultaneous provision of a consumer report with a notice of adverse action fails to satisfy the §1681b(b)(3)(A) requirement”).

When the employer takes adverse action, the employer must also provide to the applicant/employee oral, written, or electronic (1) notice of the adverse action; (2) notice of the name, address, and telephone number of the consumer reporting agency; (3) statement that the consumer reporting agency did not make the decision to take adverse action and is unable to provide the specific reason why the adverse action was taken; (4) notice of the applicant/employee’s right to obtain a free copy of a consumer report; and (5) notice of the applicant/employee’s right to dispute the accuracy or completeness of the consumer report. Additionally, the employer must provide to the applicant/employee written or electronic disclosure of the applicant/employee’s credit score, the range of possible credit scores, all the key factors that adversely affected the credit score, the date on which the credit score was created, and the name of the person or entity that provided the credit score. Failure to abide by the FCRA’s requirement could expose the employer to liability for the applicant/employee’s actual damages, punitive damages, and attorney’s fees.

The above requirements generally apply only when an employer is seeking a consumer report for “employment purposes.” In other words, the FCRA’s notice requirements apply only when the employer is seeking a current or prospective employee’s consumer report and not an independent contractor’s consumer report. Lamson v. EMS Energy Mktg. Serv., 868 F. Supp. 2d 804, 810 (E.D. Wis. 2012) (finding that the FCRA’s notice requirements do not apply to independent contractors). However, as many employers have found through litigation, it is not always clear whether a hired individual is an employee or an independent contractor. For that reason, the best practice for employers can sometimes be to abide by the FCRA’s notice requirement every time a consumer report is requested, whether in connection with an employee or independent contractor. Furthermore, cautious employers also may wish to abide by the FCRA’s notice requirements every time they take adverse action following a request for a consumer report, even when the adverse action was not based on information contained within the consumer report.

Peter T. Mavrick has successfully represented many employers in labor and employment matters. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; Email: peter@mavricklaw.com.

Some federal courts have held that a successor corporation could, as a matter of federal law, acquire the FLSA liabilities of its predecessor despite state law to the contrary. Under federal law, courts consider the following factors, or slight variants thereof, to determine whether a successor corporation acquired its predecessor’s FLSA liabilities: (1) whether the successor corporation had notice of the predecessor’s liabilities; (2) whether there is continuity in operations and work force of the successor and processor; and (3) whether the predecessor has the ability to directly provide adequate relief.

In March 2013, the Seventh Circuit applied those factors, among others, in Teed v. Thomas & Betts Power Solutions, L.L.C., 711 F.3d 763 (7th Cir. 2013), and found the successor corporation liable for its predecessor’s FLSA violations. The successor corporation in Teed purchased the assets of its predecessor through an auction. The asset transfer agreement contained a specific condition that the transfer be “free and clear of all Liabilities” including any liabilities stemming from the predecessor’s pending FLSA litigation. The federal appellate court noted that if “state law governed the issue of successor liability, [the successor corporation] would be off the hook.” Teed, 711 F.3d at 765. However, the court held that federal law, not state law, governed. Consequently the court found that the successor corporation acquired its predecessor’s FLSA liabilities despite the exclusion in the the asset transfer agreement. The court in Teed found that “[i]n the absence of successor liability, a violator of the [FLSA] could escape liability … by selling its assets without an assumption of liabilities by the buyer … and then dissolving.” Teed, 711 F.3d at 766.

On April 3, 2014, the Third Circuit also applied those factors to find that the successor corporation could have acquired its predecessor’s FLSA liabilities. Thompson v. Real Estate Mortg. Network, 2014 U.S. App. LEXIS 6150 (3d Cir. Apr. 3, 2014). The court based its decision on the fact that the successor corporation might have “had knowledge of [the predecessor]’s allegedly improper overtime practices prior to the transfer”; that “all facets of the [predecessor’s] business … including operations, staffing, office space, email addresses, employment conditions, and work in progress, remained the same”; and that the predecessor was defunct, which meant that “it is likely incapable of satisfying any award of damages.” Thompson, 2014 U.S. App. LEXIS 6150, at *22-24.

As the above cases demonstrate, a corporation’s liability under the FLSA should be a factor to consider when determining the purchase price in any asset purchase agreement. Judging from the Seventh Circuit’s decision in Teed, even if the asset purchase agreement expressly states that the successor corporation does not assume any liabilities, and even if state law imposes a contrary rule, federal law could impose such liabilities on the successor corporation. Although neither the Sixth Circuit nor the Third Circuit incorporates Florida, some federal courts in Florida have found that if the Eleventh Circuit—i.e., the circuit court of appeals incorporating Florida—were “faced with the issue, the Eleventh Circuit Court of Appeals would find that successor liability exists under the FLSA.” Cuervo v. Airport Servs., 2013 U.S. Dist. LEXIS 163239, at *5-6 (S.D. Fla. Nov. 15, 2013).

Peter T. Mavrick has successfully represented many employers in labor and employment matters. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; Email: peter@mavricklaw.com.

Under Title VII of the federal Civil Rights Act of 1964 (“Title VII”), the federal equivalent of the FCRA, it took a congressional act to make pregnancy discrimination unlawful. In 1976, the U.S. Supreme Court held that Title VII does not prohibit pregnancy discrimination. Two years later, in response to the U.S. Supreme Court, Congress passed the Pregnancy Discrimination Act (“PDA”), which amended Title VII to clarify that discrimination on the basis of pregnancy is sex discrimination and therefore unlawful.

The FCRA was patterned after Title VII. Consequently, Florida courts have held that the FCRA shall be given the same meaning as Title VII. The Florida legislature, however, has not amended the FCRA to include pregnancy discrimination. Because Florida did not amend the FCRA, a conflict developed among Florida courts regarding whether the FCRA prohibits pregnancy-based discrimination.

In Carsillo v. City of Lake Worth, 995 So. 2d 1118, 1121 (Fla. 4th DCA 2008), the Fourth District Court of Appeals (the “4th DCA”) held that the FCRA prohibited pregnancy-based discrimination. Because the PDA explained that Congress intended to prohibit pregnancy discrimination when it first enacted Title VII, the 4th DCA found that the FCRA should likewise be read as originally intending to prohibit pregnancy-based discrimination.

Four years later, the Third District Court of Appeals (the “3d DCA”) addressed the same question and disagreed with the 4th DCA. Because Florida did not amend the FCRA to include pregnancy-based discrimination, the 3d DCA found that the FCRA did not prohibit pregnancy-based discrimination. The 3d DCA consequently certified conflict with the 4th DCA. The Florida Supreme Court recently resolved that conflict in Delva v. The Continental Group, Inc., Case No. SC12-2315, 2014 Fla. LEXIS 1316 (Fla. Apr. 17, 2014).

According to the Florida Supreme Court, the Florida legislature does not have to amend or clarify the FCRA to prohibit pregnancy-based discrimination. Relying on the FCRA’s provision that the FCRA “shall be liberally construed” in favor of victims of employment discrimination, the Florida Supreme Court held in a 6 to 1 decision that discrimination on the basis of pregnancy is sex discrimination. Chief Justice Ricky Polston was the sole dissenter arguing that because the plain meaning of the term “sex” does not encompass pregnancy, the FCRA does not prohibit pregnancy-based discrimination.

It seems, however, that the ultimate outcome might have turned out the same regardless of how the Florida Supreme Court ruled. Less than one month before the Florida Supreme Court’s decision in Delva, the Florida Senate unanimously approved a bill (SB 0220) that would amend the FCRA to expressly include pregnancy-based discrimination as unlawful under the FCRA. Also, just five days before the Florida Supreme Court’s decisions, the judicial committee of the Florida House approved the House version of the bill amending the FCRA (HB 0105).

Peter T. Mavrick has successfully represented many employers in labor and employment matters. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; Email: peter@mavricklaw.com.