Compliant employment screening policies protect the organization from liability exposure in the hiring and retention of employees.

In changing regulatory environments, new rules and practices require employers to prioritize due diligence in keeping employment screening practices up-to-date including types of data that can be collected, the limitations and restrictions on data usage, and safeguarding employee rights of privacy.

However, compliant employment screenings are only as effective as the organization’s commitment to actively engage in research and monitoring of proposed, pending, and in-place legislation and taking the requisite steps to incorporate those legal requirements into compliant practices.

With more states and municipalities enacting legislation for various issues in employment hiring practices, the screening process has become more complicated in sorting out the governing level of authority and the interpretation of rules and restrictions. The differences in federal, state, and local regulations add to the complexity in understanding and implementing employment screening processes.

The overall legislative climate has been referred to as a patchwork of laws that, while designed to protect applicant/employee rights, has been applied differently in different states, cities and municipalities. In some cases state or municipality rules and regulations are in conflict with federal rules and regulations. Interpretation of rules may vary by locality.

To add to the complexity of employment screening regulations, the growing number of non-traditional, non-employee, on-demand workers, i.e., a contingent workforce, point to the need to screen all individuals that produce a work product for or interface with the organization’s customer or client base, direct employees or the general public. All workers, whether directly employed or contracted labor, should be screened to the same standards to reduce potential liability risks to the organization.

Due diligence in screening practices is a priority task for the employer’s duty of care obligations to evaluate applicants and employees in light of known risks and foreseeable risks that may pose a threat to third parties. Employers cannot afford liabilities of negligent hiring, workplace violence, employee theft, fraud, harassment, injury or other cause for action that could arise from the employer’s failure to adequately screen workers.

The employer’s due diligence extends to the requirements of federal, state, and local laws applicable to employment, consumer protections, and anti-discrimination protections. Some employment laws apply to all employers while some employment laws apply only to employers with a certain number of employees or for certain industries.

The following discussion covers some of the important federal, state, and local regulations that impact employment screening policies and practices.

Federal Laws

Employers have obligations under federal laws such as:

Fair Credit Reporting Act (FCRA)

The FCRA governs the procurement, preparation and use of consumer reports for employment purposes. When employers utilize credit reporting agencies to obtain a consumer report for employment decisions, the employer and the partner reporting agency are bound by the requirements of the FCRA. An employment decision is an action for hiring, retention, promotion, reassignment, or termination. A consumer reporting agency must provide a Summary of Consumer Rights whenever it makes a written disclosure of information from a consumer’s file or a credit score to the consumer.

To ensure compliance with the FCRA, an employer must take specific actions before and after obtaining a consumer report. The employer must disclose in a stand-alone document that a consumer report will be used for employment purposes. It is important to note that the disclosure must be a separate document and not included as part of an employment application. The employer must obtain the consent of the applicant or employee to the background check by written authorization of the applicant or employee.

The background report contains consumer information obtained from various reporting sources. Information in the report could potentially qualify or disqualify an applicant or employee from a proposed employment action. The process of dealing with potentially disqualifying information in a background report as part of an employment decision is referred to as adverse action under the FCRA.

If potentially disqualifying information in the background report could be a factor in the employment decision, the FCRA requires the employer to follow the Adverse Action process prior to making a final employment decision. This is an important consumer protection. The intent of the adverse action process is to protect candidates and employees from unfair employment-related decisions.

The adverse action process requires three steps: a pre-adverse action notification, a reasonable period of time for consumer review and response to the consumer report, and a final adverse action decision notification.

Americans with Disabilities Act Amendments Act of 2008 (ADAAA)

The ADAAA prohibits employers from discriminating against qualified individuals with disabilities in all employment practices, such as recruitment, compensation, hiring and firing, job assignments, training, leave and benefits. An employer is required to provide a reasonable accommodation to a qualified applicant or employee with a disability unless the employer can show that the accommodation would be an undue hardship that requires significant difficulty or expense.

Age Discrimination in Employment Act (ADEA) 

The ADEA prohibits arbitrary age discrimination against applicants or employees age forty or older due to their age.

Title VII of the Civil Rights Act of 1964

Title VII of the Civil Rights Act of 1964 protects employees against discrimination based on certain specified characteristics: race, color, national origin, sex, and religion. Under Title VII, an employer may not discriminate with regard to any term, condition, or privilege of employment, such as recruiting, hiring, promoting, transferring, training, disciplining, discharging, assigning work, measuring performance, or providing benefits.

Equal Pay Act (EPA)

The EPA provides that employers may not pay unequal wages to men and women who perform jobs that require substantially equal skill, effort and responsibility, and that are performed under similar working conditions within the same establishment.

Equal Employment Opportunity Laws (EEO)

Equal opportunity anti-discrimination laws prohibit employers from discriminating against people in all aspects of employment process, including recruitment, screening, hiring, and employment terms and conditions.

The Equal Employment Opportunity Commission (EEOC) is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability or genetic information. It is also illegal to discriminate against a person because the person complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit.

State and Local Laws

Some states and municipalities have passed legislation that prohibit or restrict certain background screenings used for employment purposes. State laws may differ from state to state and by jurisdiction within a state. An employer will need to determine the appropriate level of compliance since many times state and local laws are more stringent than federal regulations. Some examples of state and municipality laws are:

Ban the Box Laws

Many states and local jurisdictions have enacted prohibitions or restrictions on the use of criminal background checks for employment purposes. Ban the Box refers to eliminating the checkbox on job applications regarding criminal record history. Ban the Box requirements further restrict inquiries about criminal history until a later time in the hiring process such as after a conditional offer of employment. A criminal record alone may not be sufficient to deny employment to an applicant. Some states and local jurisdictions have laws that require an employer to conduct an individualized assessment before making an employment decision based on the applicant’s criminal record reports. This will allow the applicant the opportunity to discuss his history with the employer. In the process of individualized assessment, employers are required to consider the nature and gravity of the offense; the time that has elapsed since the offense and/or completion of the sentence; and the nature of the job being sought.

Fair Chance Laws

State and local Fair Chance policies go a step further than Ban the Box laws. Fair Chance laws place restrictions on an employer’s consideration and use of criminal convictions during the employment process. Background checks or records related inquiries are delayed until after a conditional offer for employment is made.

Pay Equity Laws

Some states have enacted legislation that provides broader protections for pay equity using a standard of similar work rather than the federal Equal Pay Act standard.

Salary History Ban

Some local and state governments have enacted laws that prohibit employers from requesting salary information from job applicants.

Credit Reports Restriction and Prohibition

Several states and municipalities have passed laws that restrict the use of the credit reports for employment purposes.

Records Restrictions

Some states and municipalities restrict employers from the inquiry and use of certain types of juvenile or conviction records that are sealed, expunged, pardoned, or statutorily eradicated. Use of arrest records, criminal convictions more than 7 years old, and first time offender criminal records for employment purposes may be prohibited.

Background Screening Providers

Partnering with a FCRA compliant background screening vendor strengthens the employer’s due diligence efforts for compliant employment screenings. Employers should carefully review the vendor agreement to understand vendor services and responsibilities and employer duties and responsibilities. A qualified, knowledgeable background screening provider can help reduce the risk of a bad hire and the risk of potential litigation from a regulatory violation.

A tenant may want to move out early and ask his landlord to accept a substitute tenant in his place. What options does the landlord have to accept or deny the request? Most lease agreements have a clause that prohibits sub-leasing or assignment of the lease to someone new without the express written consent of the landlord.

The landlord’s options may depend upon whether state statutes address the issue of substitution of one tenant for another to fill a lease term, the language in the tenant’s lease agreement, and the willingness of the landlord to work with the tenant for a transfer of the lease by sub-lease or assignment of the lease.

Depending upon the circumstances, it may be a better business practice for the landlord to create a new tenancy with the proposed substitute tenant. The landlord would terminate the original tenant’s lease agreement conditioned on the substitute tenant’s qualification and acceptance under the landlord’s tenant screening standards. At termination of the old lease agreement, the landlord and the substituted tenant would create a new tenancy in accordance with the landlord’s established policies and procedures. Creating a new tenancy provides the landlord with a clear and direct relationship to the new tenant.

The landlord’s same screening standards used to evaluate any rental applicant must be used to evaluate a proposed substitute tenant. If the proposed new tenant fails to qualify under the landlord’s rental standards, the landlord is not obligated to offer tenancy under new leases or transfer options. To help reduce potential claims of discrimination, there should be written documentation of the screening and qualification process and the business justified reason for the rejection.

In some states a landlord may not unreasonably withhold consent to a transfer of the lease agreement through subleasing or assignment despite any lease language to the contrary.

Sublease

The original tenant becomes the sublessor when he transfers some but not all of his rights to occupy, use, and enjoy the rental premises to a subtenant, the sublessee, on a short term or temporary basis. The original tenant retains the right to retake the premises at a future date.

The subtenant is renting from the original tenant who has now become the subtenant’s landlord. A legal relationship exists between the original tenant and the subtenant. The original tenant/landlord, should document key terms in a written agreement signed by the subtenant. The document should require the subtenant to adhere to all terms of the original (master) lease agreement and also address various issues between the original tenant and subtenant including rent, length of tenancy, handling of security deposit, and subtenant move-in/move-out procedures.

The subtenant pays rent to the original tenant at the mutually agreeable amount. The original tenant is responsible to landlord for the rent amount per the master lease agreement. The original tenant remains the landlord’s tenant and is responsible to the landlord for actions of the subtenant. In general, the landlord cannot directly deal with the subtenant and must enforce the lease through the original tenant. For example, if the subtenant defaults on the lease, the landlord serves notice on the original tenant, who should serve notice on his subtenant. In the extreme, for a default that requires eviction, the landlord would theoretically have to evict the original tenant who would have to in turn evict the subtenant, although many jurisdictions will allow the landlord to proceed with evictions of both at the same time.

There may also be limitations in some states regarding the type of lawsuits that may be filed by landlords against subtenants. In some states the landlord and the subtenant may file suit against one another to correct behavior in violation of the lease but they may not sue for money damages. For example the subtenant could sue for violation of habitable issues, but the landlord could not sue the subtenant for excessive property damage not covered by the security deposit. In such a case, to recover his loss, the landlord would need to sue the original tenant.

The landlord should not accept rent from a subtenant. If the landlord treats the subtenant as if he were a tenant by taking rent or acting in some manner towards the subtenant that would indicate status as a tenant, the landlord by his actions could relieve the original tenant of his responsibility by creating a tenancy from a subtenancy.

In summary, if the landlord permits a sublease:

• Original tenant remains liable to the landlord for the rent.
• Subtenant is liable to the original tenant for rent.
• Original tenant is liable to landlord for rent and for damage caused by the subtenant.
• Lawsuits by either landlord or subtenant against the other for money damages are not allowed.
• Eviction requires evicting the original tenant who evicts the subtenant.

Assignment

An assignment transfers all remaining interests in the lease of the original tenant, the assignor, to a new tenant, the assignee. The original tenant is moving out permanently and has no further relationship with the landlord unless as otherwise specified in the assignment agreement. For example, the agreement may require that the original tenant remain financially liable on the lease, at least until the lease is renewed or extended. An adequate assignment agreement is crucial to minimizing assignment transaction and post-assignment problems.

The new tenant, the assignee, becomes the landlord’s tenant. In general the landlord and the new tenant are bound by the terms and conditions of the lease signed by the original tenant unless modified as part of the assignment.  The security deposit is still retained by the landlord, but upon vacating of the premises by the new tenant, the refund of any security deposit money will belong to the new tenant. The transfer of deposit from original tenant to new tenant should usually be covered within the assignment agreement.

A formal, written consent to assignment of lease document should be signed by all parties. In addition to other clauses in the assignment, unless the landlord agrees otherwise, the document should state that the original tenant is still responsible for the rent if the new tenant fails to pay and damages to property (other than normal wear and tear) if the new tenant refuses or cannot pay.

For several reasons, landlords usually prefer an assignment of lease to allowing a sublease. An assignment provides more landlord control over the tenant because of the direct legal relationship with the assignee.

In summary form, if the landlord permits an assignment:

• Unless agreed to the contrary, the new tenant is liable to landlord for rent; the original tenant is responsible for rent if the new tenant does not pay.
• Unless agreed to the contrary, the original tenant is not liable for damages caused by the new tenant.
• Except as agreed, the new tenant and landlord are bound by all original lease terms.
• Landlord may sue to evict the new tenant for any violation of lease terms that would have applied to the original tenant.
• A new tenant can sue the landlord or be sued by the landlord.

Adequate written documentation for risk management protections regarding all requests, agreements, and conditions regarding changes in tenancy including termination or transfer of lease agreement responsibilities should be utilized and retained.

When a new tenant takes over from an existing tenant – whether as sub-tenant or assignee – the move-out checklist/walk-thru should be completed for the original tenant to settle any unpaid rent or damages to that date before completing the transfer of the lease.

Yes, if the pool is restricted to the private use of apartment residents and their guests, then provisions regarding reasonable accommodations of the Fair Housing Act (FHA) apply. Under the FHA a person with a disability may use an assistance animal in all areas of the premises where persons are normally allowed to go. The emotional support animal (ESA) can accompany the tenant to the pool and be allowed on the pool deck. The accommodations regarding assistance animals do not override local health department regulations that likely prohibit dogs in swimming pools with or without their handler.

An emotional support animal does not qualify as a service animal under the Americans with Disabilities Act (ADA) and would not be permitted at the pool if the pool was open to the general public.

A landlord’s pet policies and pet restrictions cannot be used to deny or limit housing opportunities to persons with disabilities who require the use of an assistance animal because of their disability. The details of the specific circumstances of the tenant’s request will be the determining factor whether to accept or deny a reasonable accommodation request.

Without information to the contrary, yes, you will need to allow her request for accommodation of a pit bull as her emotional support animal.

However, if you have direct knowledge of a health and safety concern that the specific assistance animal in question poses, such as a direct threat to others, that cannot be reduced or eliminated through the use of another reasonable accommodation or if the specific assistance animal would cause significant physical damage to the property of others that cannot be reduced or eliminated by another reasonable accommodation, it is possible you could deny the request. Before making a final decision, an individualized assessment of the likelihood of an assistance animal’s direct threat to others or possible physical damage to property should be conducted and must be based on objective evidence of the specific animal’s actual behaviors, not on stereotypes, or generalizations.

The Department of Housing and Urban Development (HUD) “Notice on Service Animals and Assistance Animals for People with Disabilities in Housing and HUD-Funded Programs” may provide guidance to landlords regarding reasonable accommodations to persons with disabilities who require assistance animals.

Landlords do have certain legal obligations under the Fair Housing Act (FHA), and the Americans with Disabilities Act (ADA) in regard to animals that provide assistance to individuals with disabilities.

As stated in the HUD notice, an assistance animal is not a pet. An assistance animal is an animal that works, provides assistance, or performs tasks for the benefit of a person with a disability or provides emotional support that alleviates one or more identified symptoms or effects of a person’s disability. A housing provider must understand his responsibilities under both the FHA and the ADA definitions of an assistance animal.

Fair Housing

Under Fair Housing guidelines, a service animal and an emotional support animal are considered to be the same – an assistance animal. The FHA does not require assistance animals to be trained or certified.

A landlord’s pet policies and pet restrictions cannot be used to deny or limit housing opportunities to persons with disabilities who require the use of an assistance animal because of their disability.

After receiving a request for a reasonable accommodation for an assistance animal, a landlord must consider the following questions:

• Does the person seeking to use and live with the animal have a disability – a

physical or mental impairment that substantially limits one or more major life activities?

(2) Does the person making the request have a disability-related need for an assistance

animal?

If the answers to both questions are yes, the landlord is required to modify a no pets rule or provide an exception to pet policies that will permit a person with a disability to use an assistance animal in all areas of the premises where persons are normally allowed to go. If in allowing access to all areas would impose an undue financial and administrative burden on the landlord or would fundamentally alter the nature of the landlord’s services, the reasonable accommodation request may be denied.

If the person’s disability is readily apparent but the need for an assistance animal is not, the landlord may ask the person to provide sufficient documentation that establishes that the person has a disability and that the assistance animal will provide some type of disability-related assistance or emotional support. However, the landlord may not ask for documentation if the disability or disability-related need for an assistance animal is readily apparent.

A landlord may not unreasonably delay a reasonable accommodation request, unreasonably deny a request, nor condition the request on payment of fees, deposits, or other terms and conditions applied to applicants or tenants with pets.

ADA

Landlords do have separate and different obligations for assistance animals under the ADA than under the FHA.

ADA regulations narrowly define a service animal as any dog that is individually trained to do work or perform tasks for the benefit of an individual with a disability. The provision of emotional support by an assistance animal does not constitute work or tasks for the purposes of this definition. Accordingly, trained dogs are the only species of animal that may qualify as a service animal under the ADA.

However the ADA definition does not limit a landlord’s obligations to make reasonable accommodations for assistance animals under the FHA.

In ADA covered facilities, an animal must only meet the ADA definition of a service animal to be allowed entrance into the covered facility.

A covered entity cannot ask about the nature or extent of a person’s disability. A covered entity may make two inquiries to determine whether an animal qualifies as a service animal under ADA. Those inquiries are:

(1) Is this a service animal that is required because of a disability?

(2) What work or tasks has the animal been trained to perform?

These inquiries are the only two inquiries that an ADA-covered facility may make even when an individual’s disability and the work or tasks performed by the service animal are not readily apparent.

A covered entity may not make these two inquiries when it is readily apparent that the animal is trained to do work or perform tasks for a person with a disability.

When multiple laws apply, a housing provider should apply the ADA service animal test first to avoid possible ADA violations. If the animal qualifies under ADA requirements as a service animal, the animal must be permitted to accompany the disabled person to all areas of the facility where persons are allowed to go. If the animal does not meet the ADA service animal requirements, then the housing provider must evaluate the request according to the guidance provided by the Fair Housing Act.

Note that reasonable accommodation provisions under state statutes and local ordinances may differ from federal regulations. Pending legislation in some states may impact how landlords apply reasonable accommodation provisions at a future date. A landlord will need to conduct  due diligence to keep current with applicable laws.

Depending upon local rental market conditions, the landlord’s rental policies, and the desirability of rental units being offered, short-term leases may be good business for some independent landlords. Short-term leases, typically a term less than six months, may be particularly beneficial in markets where the supply of rental housing is limited but the demand for housing is high. With a larger renter pool and/or rising rents, some landlords are more willing to accept the perceived risks of short-term tenants. In some circumstances, such as an anticipated future sale of the rental property, a landlord may want more flexibility to negotiate contract terms with a buyer and choose to only market to short-term tenants. In a slow market and faced with unexpected vacancies, a landlord may opt to utilize short-term leases as a means to more quickly bring in rental income.

In many markets there is an underserved need for short-term rental housing. Offering viable options to renters who are actively searching for rental housing on a shorter term basis than most commonly offered longer length terms can present a landlord with an opportunity to strengthen his market position. The landlord’s challenge is to weigh market opportunity in regard to renter demographics, local market conditions, business need, and the willingness and ability to tolerate business risk.

Rental Term Length

Most commonly a short-term lease is a month-to-month rental. The term of a lease is set by the landlord and can be variable in length to accommodate business need. The lease for a specified term as agreed to by landlord and tenant is a legal contract and requires obligations and duties of each party under the contract.

Benefits of Short-term Leases

Flexibility

The most frequently mentioned advantages of a short-term lease are flexibility and control. Both landlord and tenant can enjoy the flexibility and control that such an agreement offers.

A landlord has the flexibility to set his rents at a higher than market rent to compensate for a perceived higher risk of vacancy in the near future. For a month-to-month lease, the flexibility of the lease allows a landlord to quickly adjust to market conditions, notably if rents are rising, the landlord does not have to wait until the end of a tenant’s fixed-term lease to increase his rents. In many states the landlord can notify a tenant of an upcoming rent increase with only 30 days’ notice. Terms and conditions of the lease agreement can also be changed for business necessity (subject to any restrictions of local rent control ordinances) as long as the required notice is given to the tenant.

Tenants who seek short-term leases do so for a reason and the ability of a landlord to provide rentals of this nature can often attract rental prospects to the landlord’s properties. A potential renter may want the benefit of a short-term rental for purposes such as job assignment, family considerations, being new to the area and wanting to become familiar with local housing options, actively looking to purchase a home in the near future, new home construction, completion of major renovations to existing residence, seasonal work, changes in financial situation, or for many other and varied reasons. A tenant with possible changes in his future living arrangements may feel that a month-to-month lease offers a greater benefit to him by the fact the tenant will not have to break a long fixed-term lease when his circumstances change and the tenant must move on.

Control

A landlord has more immediate control of his property if a short-term lease tenant fails to comply with rental terms and conditions. A landlord can initiate termination of a month-to-month tenancy by giving the required legal notice to end an unsatisfactory landlord-tenant relationship before it becomes a more costly legal action for eviction. The eviction process through the court system for a material violation of a fixed-term lease condition can take months. Control of the situation and the return of possession of the rental unit can usually be accomplished within a shorter time if the tenant has a month-to-month lease agreement.

A tenant with the flexibility of a short-term lease has more immediate control of his housing needs and, as needed, can make a change in his housing status in a relatively short period of time.

Drawbacks to Short-term Leases

Increased Tenant Turnover

Obviously with short-term leases, there are more frequent tenant turnovers, resulting in more costs for cleaning and otherwise restoring units to move-in condition.

Many times, a landlord will hesitate to offer a month-to-month lease because of continual tenant turnover. However a landlord has no guarantee against tenant turnover even with a longer fixed term lease. While a landlord can terminate a short-term lease on fairly short notice according to statute requirements and lease terms and conditions, the tenant is also free to terminate his tenancy with proper notice. The rental unit could be turned over several times a year. A landlord will need to be prepared to handle vacancies quickly and efficiently once notice by either party is given to terminate the tenancy. The amount of preparation needed to restore the unit to good condition will of course be dependent upon the circumstances.

Potential Risk of Property Damage

Some landlords believe that a tenant with a fixed-term lease agreement will take better care of a rental unit than would a tenant with a short-term lease. However, if the landlord always conducts adequate tenant screenings, selects a qualified tenant each time to fill a vacancy, and utilizes adequate check-in/check-out documentation – no matter what the period of the lease term – the landlord will be better prepared to help protect his property from damage and his current tenants from risks.

With more frequent tenant turnover, there may be more wear and tear on the rental unit. Normal wear and tear on the property will still need to be attended to through repair or replacement. However, this is usually more determined by the quality of tenants selected by the landlord, whether staying for a month or multiple years.

Potential Negative Impact of Frequent Moves by a Tenant

A short-term rental offers a tenant flexibility and freedom in choosing his rental housing. If the tenant is a serial mover, changing rental addresses frequently in relatively short periods of time, the frequent moves may have a negative impact on the tenant’s rental history when a new landlord conducts due diligence screening. Most landlords will screen applicants for stable and long-term tenancy. The tenant, in choosing to move frequently, may appear to be a risk to the new landlord.

Lease Terms and Conditions

Whether the rental contract is called a lease agreement or a rental agreement matters not. What matters is whether the contract adequately protects the landlord’s investment and doesn’t violate the tenant’s legal rights. The rental agreement or lease agreement between landlord and tenant is a legal contract setting out landlord and tenant responsibilities and obligations in the same manner lease agreement for a fixed-term. The landlord is obligated to offer and maintain housing in a safe and sanitary condition under the implied warranty of habitability and to protect the tenant’s rights to quiet enjoyment of the rental premises. The tenant is responsible to keep the rental unit in good condition and to pay rent as set out in the agreement terms and conditions. The tenant is obligated to the landlord for only the period of time as specified and mutually agreed to in the lease.

Considerations for Short-term Lease Offerings

An important issue for landlord is to make sure they understand the state’s landlord-tenant statutes regarding leases, particularly notice requirements to change or terminate a month-to-month tenancy. While some states do not have a state statute on the amount of notice required to change rent or other terms, in general the amount of notice that a landlord must give to increase rent or change another term of the lease in a month-to-month tenancy is the same as that required to terminate a month-to-month tenancy. If the rental unit is governed by state or local rent control laws, there may be different notice requirements.

The amount of notice may also depend upon which party, landlord or tenant, gives notice to end the tenancy. There may be different notice requirements if the tenant has violated terms of the rental agreement; e.g., fail to pay rent. All such matters must be covered by the lease or rental contract.