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Hiring and the law: Employee Screenings

As the jewelry industry looks ahead to the busy holiday season, many are already considering their employment needs. Deciding on a new employee is not easy for any business. Jewelry Companies face an added challenge–security risks connected with the presence of precious metals and stones in the workplace. For this reason, most prospective employers exercise caution before extending an offer. While reference checks are a must, some former bosses are reluctant to disclose anything other than dates of employment, leaving many questions unanswered. Before engaging in further screening, however, employers must know that their right to investigate an applicant’s background is actually quite limited.

Stay focused to avoid improper inquiries

Generally speaking, employment is “at will,” which means that employers may hire as they choose. In practice, though, this concept is greatly restricted by state and federal laws that prohibit discrimination in the workplace, including at the hiring stage. These laws aim to prevent discrimination on the basis of race, religion, gender, national origin, age and any other protected characteristic. While the federal anti-discrimination laws only apply to companies that employ fifteen or more, state laws vary. In New York, for example, the anti-discrimination laws apply to any company with four or more employees. On the federal level, the discrimination laws are enforced by the Equal Employment Opportunity Commission.


Knowing the law that applies to your company is critical. A well-intentioned employer without this knowledge might inadvertently ask an inappropriate question during an interview, or seek background information about an applicant that is illegal to consider. Before starting the hiring process, the most important rule to remember is this: all pre-employment inquiries should focus on the applicant’s ability to do the job. If, during the hiring process, an employer asks questions, or seeks background information, that is not job related, and then decides against hiring the applicant, a court might later find a discriminatory intent. This is particularly the case if applicants for the same position are treated differently in terms of pre-employment screening. Several specific legal issues regarding screenings are summarized here.

Consumer reports

These are reports that contain details about a prospective employee’s credit-worthiness and may also include information about character and reputation. Under the federal Fair Credit Reporting Act (FCRA), employers must obtain an applicant’s written consent before seeking a consumer report. Additionally, among other requirements in the FCRA, if the employer decides not to hire an individual based on information in the report, the employer must provide a copy of the report to the applicant. The employer must also provide the applicant with information regarding his or her rights under the FCRA, including the right to challenge the report. Some states, such as New York and California, impose more stringent requirements. On the federal level, the FCRA is enforced by the Federal Trade Commission.

Equally important, several state legislatures have concluded that employer credit checks have a disparate impact on some protected groups. This is particularly the case in a down economy, when a single health setback might wreak havoc on an uninsured’s credit rating. Specifically, women and minorities typically have poorer credit histories than their white male counterparts.  Illinois, Washington, Hawaii and Oregon have enacted laws that generally prohibit the use of an applicant’s credit history for hiring purposes. Similar legislation is currently pending in the U.S. Congress. Employers who use credit checks should consider whether the information is relevant for the position being filled, and should also explore whether they can achieve their purpose without risking a disparate impact.

Criminal records


The extent to which a prospective employer may consider an applicant’s criminal history varies from state to state. It is very important to know the law in your state before probing in this area.  Generally speaking, in many states an employer may inquire about convictions as long as the employer explains that a prior conviction is not an automatic bar to employment. The employer may not inquire about arrests. Additionally, even though an employer may learn of a criminal conviction, many states prohibit discrimination based on that conviction. Depending on the law in a particular state, if an employer learns that an applicant has been convicted, the employer should consider several factors before deciding whether or not to reject the application. These factors include the relationship of the crime to the job duties, and the length of time between the conviction and the application. Convictions should bar employment only if they have a direct relationship to the requirements of the position.

Lie detector tests


The federal Employee Polygraph Protection Act provides that individuals have a right to employment opportunities without being subjected to lie detector tests. The Act thus prohibits most private employers, with narrow exceptions for security service firms and pharmaceutical companies, from using lie detector tests to screen employees. The Act is administered and enforced by the Wage and Hour Division of the U.S. Department of Labor.



While bankruptcies are a matter of public record, and may appear on an applicant’s consumer report, the Federal Bankruptcy Act prohibits employers from discriminating against applicants because of a bankruptcy filing. The idea behind this provision is to provide a “fresh start,” consistent with the bankruptcy law itself, intended to provide a new opportunity for those who have experienced a bankruptcy.

Staying within these guidelines, and knowing the law that applies in your state, will help your company avoid liability in the hiring process. By learning to recognize these legal red flags, managers can minimize the risk of litigation on the part of a disgruntled applicant. For additional information about legal compliance in this area, or others visit www.jvclegal.org.

SOURCE- Flamm, Suzan. “Hiring and the Law: Employee Screenings.” Jewelry News. National Jeweler. 16 Aug. 2011. Web. 23 Aug. 2011. <https://www.nationaljeweler.com/nj/majors/public-policy-and-issues/article_detail?id=27049>

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