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Varnum LLP

Employment Background Checks
Background checks provide relevant and helpful information regarding a person's qualifications for employment. Because of the time and expense associated with employee turnover, recruiting, hiring, and training, verifying background information about potential employees just makes sense. Studies have shown that approximately 75% of all job applicants make one or more minor misrepresentations on their resumes or applications, and 30% make significant misrepresentations, such as phony credentials or falsified work experience. A person who must lie to obtain a job likely does not possess values such as integrity and truthfulness that most companies expect from their employees. Conducting background checks assist employers in weeding out undesirable candidates and avoiding the costs and difficulties associated with employee turnover.

Background checks also play a key role in loss prevention strategies by helping employers avoid placing employees in positions where they may be tempted to harm the Company's interests. For example, employers should investigate whether persons employed in financial positions involving access to or responsibility for money have a good credit history or have been convicted of financial crimes. Someone who has bad credit or is otherwise experiencing financial hardship may be more inclined to steal money from the Company or not have the necessary skills to manage the Company's resources properly. Likewise, someone with a criminal conviction for a crime involving money (embezzlement, theft, bad checks, etc.) should probably not have access to or responsibility for finances.

Another important aspect of a Company's loss prevention strategy is avoiding potential legal liability arising from the persons it hires. For example, if a Company hires a person with a bad driving record for a position requiring her to drive, the employer has opened itself to a lawsuit if that person causes an accident while driving for the Company. If a Company hires a person with a violent criminal history and allows that employee to enter persons' homes as part of his job, the Company is exposed to liability if that employee should harm someone during the course of his employment with the Company. If a Company hires a registered sex offender who thereafter sexually harasses or assaults a co-worker, the employer will almost certainly face liability for that hiring decision. Background checks can help avoid potential litigation regarding the Company's hiring decisions.

While there are many reasons to conduct background checks, they do have some disadvantages, most of which can be managed. One primary disadvantage is potential adverse implications for employee relations. Some people feel that background checks are an invasion of their personal liberty. This could be particularly true for current employees, who may be offended at having a background check done after they have been employed for several years. A Company can manage this disadvantage, however, through effective communication with current employees about why background checks are necessary.

A second disadvantage of background checks is that they may have the unintended consequence of losing good employees. If a Company has a policy and practice of not hiring an applicant or terminating an employee for falsification of an employment application, the Company should follow that policy and practice consistently. A background check done on a current employee may disclose that he falsified his employment application or resume in some respects. Depending on the circumstances, the Company might be required to terminate that employee to maintain the fairness and consistency of its policy and practice regarding application falsification, even though that employee might otherwise be a great performer. The old adage, "Be careful what you ask for, because you might get it," applies with background checks.

A third potential disadvantage relates to the second. A background check may reveal negative information about an applicant or current employee, but the Company may decide to hire/retain that person notwithstanding the negative information discovered in the background check. If that employee thereafter engages in conduct that is arguably related to the negative information the Company learned during the background check, the Company may be liable for failing to take corrective action after discovering the negative information. For example, if a background check discloses that a person was convicted of drunk driving five years ago, but the Company allows this person to remain employed, the Company could face significant liability if that employee injures someone while driving for the Company under the influence of alcohol. As another example, a Company's background check disclosed that an employee is a registered sex offender. He adequately explained the circumstances of his conviction to his supervisor, and the Company allowed him to retain his job. Now, however, a female co-worker has sued the Company, claiming that the employee with the criminal conviction sexually assaulted and harassed her at work. The Company faces considerable liability and significant damages if a jury believes the former employee's allegations that she was assaulted and harassed.

If a Company decides to adopt background checks for its current and future employees, there are several important considerations in implementing background checks.

First, compliance with the Fair Credit Reporting Act ("FCRA") is critical. The FCRA contains broad requirements for employers who seek and use background information for employment purposes. The FCRA covers those employers who obtain background information from third parties (referred to as "consumer reporting agencies") for a fee. For an employer covered by the FCRA, it must (1) provide separate written disclosure to the applicant/employee that the background report may be obtained; (2) receive the applicant/employee's written consent to the employer's receipt of the report; (3) provide a copy of the person's report and the Federal Trade Commission's Summary of Consumer's Rights to the applicant/employee before taking any adverse action against that person; and (4) provide an adverse action notice containing certain required information if the employer takes adverse action based, at least in part, on information obtained from the background check.
Second, an employer must maintain information it obtains from a background check in a confidential manner. Much of the information disclosed by a background check is personal and confidential. Background information such as credit histories and criminal convictions is not the type of information that most people care to have disseminated in the workplace. Therefore, employers should take care to ensure that any background information they receive from background checks is maintained confidentiality, and further that the background information is shared only with those persons who have a particular reason to know it.
Third, a background check may reveal information that an employer may not legally consider when making employment decisions. For example, employers in Michigan may not make employment decisions based on arrests which did not result in convictions. Nonetheless, some types of background checks may disclose arrest records. Likewise, background checks often disclose birthdates, country of birth, and other protected information which an employer may not consider when making employment decisions. If a background check contains information which an employer may not legally consider, the employer should take steps to confirm (with documentation) that any adverse action taken against that person is not based on an impermissible criterion.
Fourth, if a Company implements background checks, they must be done on a fair and consistent basis. The Company need not adopt the same background checks for all employees, regardless of position or duties. Instead, the Company may decide to conduct certain checks for certain positions. For example, a driving record may be obtained only for those positions which involve driving for the Company. A credit check may be implemented only for those positions involving the Company's finances. However, the same background checks should be conducted for each person who holds the same position. If the Company only selectively requires background checks for certain people, as opposed to requiring the same types of checks for people who hold the same positions, the Company could face a discrimination claim from someone who was subjected to a background check.

Background checks can be a valuable tool for employers. As a result, most employers use background checks for at least some positions. Before deciding to use background checks, however, an employer should consider the positive and negatives and carefully analyze each position to determine whether a background check is appropriate for that position and, if so, what information to check. Finally, an employer should have strategies in place to address the background information it receives.

12-14-2006

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Varnum LLP

California Issues Final Proposed Sexual Harassment Training Regulations
California law requires all employers with 50 or more employees to provide at least two hours of sexual harassment training to all of their California supervisors every two years through classroom training or other “effective interactive” means. There is no requirement that the 50 employees or contractors work at the same location or all work or reside in California. On November 14, 2006, the Fair Employment and Housing Commission issued final proposed regulations clarifying that only "supervisory employees" or "supervisors" that are "located in California" are required to receive the sexual harassment training.

12-14-2006

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Morris, Manning & Martin, LLP

Technology General Counsel Roundtable Established in Atlanta
The General Counsel of many of Atlanta’s top technology businesses have become the founding members of a new legal organization, the Technology General Counsel Roundtable. Membership in the group is open to General Counsel, in-house attorneys and senior executives responsible for legal matters. The members represent Southeastern technology and business services companies of all sizes. The organization was founded with the goal of providing its members with a forum for education, networking and sharing ideas on common issues, challenges and opportunities.

Each meeting will include a presentation on a topic of interest to legal executives, followed by a moderated roundtable discussion. Topics are expected to focus on recent case law and regulations that impact technology companies, as well as ways to improve the operations of in-house legal departments. The organization will also present a forum for senior in-house counsel, from both technology and non-technology companies, to share lessons learned.

The organization already has more than 30 members, including some of the top names in Atlanta’s legal business community. Atlanta-based law firm Morris, Manning & Martin, LLP is a founding sponsor.

12-14-2006

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Sheehan, Phinney, Bass & Green, P.A.

ATTORNEYS REIDY, VENTOLA INVITED TO WHITE HOUSE
Sheehan Phinney attorneys Jim Reidy and Mark Ventola attended a special briefing session at the White House on Thursday, December 7. The session featured White House counsel Harriet Miers, who discussed Presidential appointments to the federal judiciary and other developments over the last few years.

Reidy practices in the areas of labor, employment and employment-based immigration law with an emphasis on assisting employers in effectively avoiding or defending against employment disputes. He represents management in organizations ranging from multi-national corporations, to closely-held, family-owned businesses, to not-for-profit entities and public sector employers. Since joining the Sheehan firm in 1989, Jim has expanded an already significant employment law practice for the firm.

Ventola works in the field of employment and labor law, advising clients about the many aspects of the relationship between employer and employee. He provides advice and drafts agreements, policies, and protocols concerning hiring, trade secret, termination and separation, wage and hour, family and medical leave, employment discrimination, non-competition, and other compliance issues. He also serves as general counsel to a number of privately owned businesses in a variety of industries, providing advice on corporate governance and general business issues.

12-14-2006

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Preti, Flaherty, Beliveau, Pachios & Haley, L.L.P.

The neverending story: Setting strategy effectiveness
That's the mantra preached to startups by successful entrepreneurs, angel investors, VCs and business gurus. It usually translates into advice to build a single product that solves a painful problem for a specific and large vertical market, with a product feature set designed to drive demand by making the technology easy to use by the most active and numerous end users. The best focus-driven products often involve a delicate balance between market requirements (features and performance criteria), design (look and feel), componentry (technical specifications) and technology (engineering specs).

12-14-2006

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Kirkpatrick & Lockhart Preston Gates Ellis LLP

Partners Vote to Create "K&L Gates"
Kirkpatrick & Lockhart Nicholson Graham LLP (K&LNG) and Preston Gates & Ellis LLP (PG&E) today announced that their partners have voted overwhelmingly in favor of a proposed combination of the two firms effective January 1, 2007. The name of the combined firm will be Kirkpatrick & Lockhart Preston Gates Ellis LLP, and the firm will be branded as "K&L Gates." K&L Gates will comprise approximately 1,400 lawyers and 21 offices located in North America, Europe and Asia. The combination will rank as one of the most substantial in the history of the legal profession, and it will create one of the world’s largest law firms. The firm will be expected to have revenue exceeding US$750 Million in 2007, its first full year of existence.

Peter Kalis, K&LNG’s Chairman and Managing Partner, and Karen Glover, PG&E’s Managing Partner, said "When voting in favor of this combination, our partners were asked by their firm leaderships to endorse a specific vision of a law firm, and they have enthusiastically done so. As stated in the combination agreement,

"The goal of the Combination is to achieve a focused alignment of the Combined Firm’s business with the business of clients and potential clients in an era characterized by intense consolidation and globalization and to create a Combined Firm that is committed to exemplary client service, to ethical probity, to best practices in all aspects of the enterprise, to reasonable and appropriate opportunities for work-balanced careers, to professional excellence, to workplace diversity, to the health and well-being of all of its stakeholders, to reasoned discourse and articulate communications, to professional development, to financial soundness, to community service and representations pro bono publico, and to effective management including practice group management as a key means to accomplishing its objectives."

K&L Gates will be governed by a firmwide Management Committee whose seven-person Executive Committee is believed to be one of the most diverse such governance bodies in the profession, as it will include two women, one Asian American man, and one African American man. Kalis will serve as Chairman and Global Managing Partner, and Glover will serve as Global Integration Partner.

K&L Gates will have offices in Anchorage, Beijing, Boston, Coeur d’Alene, Dallas, Harrisburg, Hong Kong, London, Los Angeles, Miami, Newark, New York, Orange County, Palo Alto, Pittsburgh, Portland, San Francisco, Seattle, Spokane, Taipei and Washington, D.C.

K&L Gates counts among its strategic advantages:

* Global Reach and Critical Mass. With 1,400 lawyers spread among 21 offices on three continents, K&L Gates will be aligned with the businesses of leading clients and potential clients and will be among the largest law firms in the world.
* Global Financial and Commercial Centers. With New York, London, China and California acknowledged as strategic intersections in the global economy, K&L Gates will be positioned in each market to serve clients at the highest levels of legal sophistication.
* U.S. National Coverage. K&L Gates will provide national coverage in the U.S. with 17 U.S. offices and leading practices from coast to coast.
* European Presence. With 150 lawyers in Europe’s largest legal market, London, K&L Gates will be able to meet clients’ legal challenges arising under the U.K. and E.U. legal regimes and will be poised for further growth in London and on the European Continent.
* Asian Presence. With 50 lawyers spread among Beijing, Hong Kong, and Taipei, and with a license application pending in Shanghai, K&L Gates will be able to advise clients in this increasingly strategic part of the world.
* World Capitals. With the growing importance of governmental interventions in the markets, K&L Gates will be able to address clients’ concerns in Washington, London (including the E.U.) and Beijing as well as various state capitals in the U.S.
* Substantial Offices in Leading Business Centers. K&L Gates will have from 100 to 250 lawyers in each of a number of leading commercial and financial centers, including Boston, London, New York, Pittsburgh, Seattle, and Washington, DC; 20 to 100 lawyers in Dallas, Harrisburg, Hong Kong, Los Angeles, Miami, Newark, Portland, San Francisco, and Taipei; and smaller offices in Anchorage, Beijing, Orange County, Palo Alto, and Spokane/Coeur d’Alene.
* Strong Commitment to Regional Practices and Local Communities. K&L Gates will continue to build upon its deep commitment to its regional practices and to the local communities in which it resides.
* Dynamic Practices. K&L Gates’ practice will have the depth and breadth required by clients with the most sophisticated legal challenges, including the full range of practices in corporate and transactional, regulatory and policy, litigation and dispute resolution, intellectual property and financial services, and all supporting practices.
* Industry Identifications. K&L Gates will be strongly identified with a multiplicity of industries central to the global economy, including technology, financial services, manufacturing, energy, transportation, and life sciences, among others.
* An Unsurpassed Assemblage of Professional Leaders. Among the many distinguished members of the firm, K&L Gates will count a former Attorney General of the United States, a former United States Senator, one former President of the American Bar Association and one President-Elect of the American Bar Association, former Supreme Court Law Clerks, the Chairman of the Federal Reserve Bank of San Francisco, three recipients of The American Lawyer’s Lifetime Achievement Award, present and former Editors-in-Chief of leading legal publications, former Rhodes Scholars and White House Fellows, prominent community leaders, authors of leading treatises, acclaimed trial lawyers and transactional lawyers, and two recipients of the SEC’s award for most distinguished alumni.

Kirkpatrick & Lockhart Nicholson Graham (K&LNG) has approximately 1000 lawyers and represents entrepreneurs, growth and middle market companies, capital markets participants, and leading FORTUNE 100 and FTSE 100 global corporations nationally and internationally.

12-14-2006

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Pierce & Atwood, L.L.P.

Employment Breakfast Series - When the Government Comes to Call - Responding to Investigations and Audits Sponsored by Pierce Atwood LLP
It could be your worst nightmare: a government inspector comes to call at your workplace and demands immediate entry to inspect your premises, interviews with your employees and managers, and access to your records. The inspector could be from OSHA, Wage-Hour, Maine Department of Labor, the Office of Federal Contract Compliance Programs (OFCCP) or any number of state or federal agencies. If it follows a serious accident or fatality, the inspection may include criminal investigators, including the Maine State Police and a prosecutor from the district attorney’s or attorney general’s office. What to do you do?

The government may also come to call by letter. For example, an official notice from the Maine Human Rights Commission or the EEOC may demand your response to a complaint and the production of numerous documents. Or the notice may be from the OFCCP for a desk audit of your affirmative action plan and employment data. Or it may be a Glass Ceiling audit from the USDOL. Again, what do you do?

Please join Mason Pratt and Joanne Pearson for an overview of the critical guidance you will need to respond, both at the outset and at the various stages of a government inspection or audit. They will discuss a variety of government audits and inspections you may face, and review your rights along with the rights of the government inspectors.

This month's breakfast will be held from 8:00 a.m. to 9:30 a.m. To register, use the link below, or contact Nancy Giachinta at 207-791-1310 or . While we prefer to see you in person, we understand that travel and scheduling issues sometimes make attendance difficult. Therefore, if you wish to participate by teleconference, simply dial 800-544-4579 (USA Participants) or 888-633-2102 (Canadian Participants) and use the following pass code: 59801642. We are pleased to offer web conference capability as well. To view the presentation simultaneously with your conference call, simply open your browser and go to www.ReadyShow.com/Express. When prompted, simply enter the same pass code as above. Please indicate when registering how you will attend, so we can be sure we have enough capacity for the teleconference and/or web cast.

12-14-2006

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