• Employment Law
• Technology
• Health Care
• Drug Testing in Schools
• Legal Protection for Volunteers
• Credit Card Fraud

Fair Credit Reporting Act 

Employers conducting credit checks on job applicants or current employees should be aware that they are subject to new requirements under the Fair Credit Reporting Act. The new requirements provide that: 

1. A consumer reporting agency may furnish a consumer report for employment purposes only if the employer certifies compliance with the new requirements and that the report will not be used in violation of federal or state equal employment opportunity laws or regulations; 

2. A consumer report may not be procured for employment purposes unless a clear and conspicuous disclosure first has been made to the applicant or employee that a consumer report may be obtained for employment purposes. A technical requirement that could trip up the unwary requires that this disclosure be in a document that consists solely of the disclosure, not part of another document such as an employment application; 

3. An applicant or employee must have given prior written authorization to an employer for the procurement of a consumer report; and 

4. Before an employer can take any adverse action based in whole or in part on a consumer report, the employer must give the applicant or employee a copy of the report and a written description of his or her rights under the Act. 

Top of page

EEOC Guidance for Temps 

The explosive growth of temporary workers, coupled with the need for clarification on the application of federal employment discrimination laws to temporary workers, staffing firms, and the contracting client, prompted the Equal Employment Opportunity Commission (EEOC) to issue an enforcement guidance on temporary workers. 

Even more so than the typical employer-employee relationship, the three-sided arrangement involving a temporary worker, a staffing firm, and the firm's client has caused confusion about the parties' rights and responsibilities. The EEOC's general pronouncement is that if both the staffing firm and its client have the right to control the worker, and if each has the statutory minimum number of employees, then they both have the responsibilities of an "employer" under federal employment discrimination laws. 

For example, both of these "employers" may be responsible for ensuring that temporary workers are paid wages on a nondiscriminatory basis. Of course, even before there can be an employer, there must be a finding that the temporary worker is an "employee," as distinguished from an independent contractor. This determination requires consideration of all aspects of the worker's relationship with the staffing firm and its client. 

With some joint responsibilities for the staffing firm and its client comes shared exposure to the full range of remedies available for violations of the antidiscrimination statutes. Back pay, front pay, compensatory damages, and punitive damages are available against the staffing firm, its client, or against both. 

The basic function of a firm that provides temporary workers creates special obligations not encountered by a typical employer. According to the EEOC, if a staffing firm learns that a client has discriminated against a temporary employee, it must take measures to ensure that the discrimination will not recur before assigning more workers to the same job site. Such measures may include insisting that the client investigate an allegation of discrimination and take prompt and appropriate corrective action. If it fails to do this, the firm will share in the liability if another worker whom it assigns to that client experiences similar discrimination. 

If a worker is denied a job assignment by a staffing firm because its client refused to accept the worker for discriminatory reasons, the staffing firm can be found liable. The claim that a discriminatory assignment practice is based on a client's requirements or preferences is no defense. In short, the staffing firm may not honor a client's discriminatory request, refuse to assign individuals because it knows a client in the past has rejected individuals in the same protected class, or administer discriminatory tests or other selection requirements on behalf of a client. 

Following a trend in federal regulations on employment discrimination matters, the EEOC enforcement guidance on temporary workers is in a user-friendly, question-and-answer format that also discusses specific examples. The full text of the guidance is available by writing to the EEOC's Office of Communications & Legislative Affairs, 1801 L Street N.W., Washington, D.C. 20507.

Top of page

Medical Privacy 

Requiring medical exams for prospective employees is not unusual, but some employers are going to new lengths as they delve into the personal history and health status of applicants. A federal appellate court has ruled that a public university took this practice too far when, without the applicants' knowledge or consent, it tested blood and urine samples for highly private and sensitive medical and genetic information such as syphilis, sickle cell trait, and pregnancy. 

Although the prospective clerical and administrative employees answered written questions about whether they ever had any of the medical conditions, that was no substitute for their informed consent to the tests. The fact that the applicants voluntarily submitted to preplacement medical exams and provided samples did not mean that they were on notice that the particular tests would follow. The plaintiffs' civil rights were violated even though the employer did not take any employment-related action on the basis of the test results and did not disclose the results to third parties. 

Most cases on the disclosure of medical information obtained by employers have been about divulging that information to third parties. In the view of the federal court here, this case involved an even more basic privacy violation -- "the non-consensual retrieval of previously unrevealed medical information that may be unknown even to plaintiffs." While an employer may be able to invade an individual's right to privacy for a valid governmental purpose, in this case the court was skeptical about whether the secret tests were really necessary. 

The right-to-privacy violations asserted by the plaintiffs are restricted to public employees affected by governmental actions. However, their claim of employment discrimination could be used by both public and private employees. That claim was based on the plaintiffs' allegation that black and female employees were singled out for the additional nonconsensual testing for sickle cell trait and pregnancy, respectively. Imposing such intrusive tests on black and female individuals, while sparing white and/or male employees any such comparable invasion of privacy, would constitute race and sex discrimination. 

Top of page

Immunity for Internet Service Providers

Providers of Internet service may be able to breathe a little easier following a federal appeals court ruling that they are immune from liability for information that is posted on computer bulletin boards by third parties. 

Although most of the Communications Decency Act was held invalid by the Supreme Court in 1997, one portion that survived states that no provider or user of an interactive computer service will be treated as the publisher or speaker of any information that comes from another information provider. The effect of this law, said the appeals court, is to bar lawsuits that try to hold a service provider liable for its exercise of, or failure to exercise, a publisher's traditional editorial functions, such as decisions on whether to publish, withdraw, postpone, or alter the content of messages. 

Relying on the immunity statute, the appellate court upheld the dismissal of an action brought against a computer service provider by Ken, the victim of an anonymous third party's hoax. The hoax consisted of posting messages on a bulletin board containing defamatory material about Ken and suggesting that calls be placed to his actual home telephone number. 

The victim was swamped with hostile and abusive telephone calls, some of which included death threats. When Ken notified the Internet service provider of his dilemma, it removed the original posting from its bulletin board, but it declined to post a retraction or to give assurances that it would screen future defamatory material. 

Congress, when it passed the immunity statute, declined to construct a system of government regulation of speech over the Internet in the form of imposing tort liability on companies that serve as intermediaries for other parties' potentially harmful messages. As the court put it, "the specter of tort liability in an area of such prolific speech would have an obvious chilling effect." This is to be distinguished from the treatment of the culpable party who actually posts the defamatory messages. Should his identity be learned, the originator of the messages in Ken's case would be fully accountable.

Top of page

HMO Liability for Bad Faith

Thirteen-year-old Angela was diagnosed with a potentially fatal eating disorder. As her mother's dependent, Angela received care from a health maintenance organization (HMO). When her HMO doctor determined that her HMO could not provide the treatment Angela needed, he referred her to an "out-of-network" program. Under the applicable policy, the HMO would pay for this care up to the policy's limits if the HMO's medical director gave his approval. That approval was initially obtained, but it was withdrawn after six weeks of treatment even though the policy limits had not been reached. 

Angela's treating physician and psychiatrist opposed cutting off coverage because she had not reached the goals of the treatment program. When she left the program, Angela weighed 95 pounds. Two months later, she was down to 75 pounds, at which point she was readmitted to the out-of-network program. She soon exhausted the policy limits of coverage and thereafter continued treatment at her own expense. 

On Angela's behalf, her mother sued the HMO for failing to provide treatment. Reasoning that HMOs are part health-care provider and part insurer, Angela's attorneys used the theory of bad-faith denial of coverage. This type of claim is commonly used against insurance companies, but up until now it has not often been raised against HMOs. 

The state supreme court that considered Angela's use of the bad-faith theory was deciding the issue for the first time, and it commented that few other courts in other states had discussed the question. That may change soon, because the court in Angela's case ruled that she could take her bad-faith claim against the HMO to a jury. 

In Angela's case, the court explained that, as in the relationship between an insurer and the insured, an HMO possesses substantially more power than its subscribers. Prepackaged policy terms offer little real opportunity for negotiating but plenty of built-in rules and regulations. Whether they do it intentionally or not, HMOs also can effectively diminish the subscriber's right to covered treatment with bureaucratic or procedural hurdles. Given this imbalance of power, the court concluded that a cause of action for bad faith needs to be available against HMOs to encourage fair treatment of the insured and to penalize unfair or corrupt practices in connection with decisions about out-of-network benefits. 

Top of page

Responding to mounting evidence that "no good deed goes unpunished," Congress has passed legislation giving broad immunity to individuals who volunteer for nonprofit organizations or governmental entities. 

The Volunteer Protection Act immunizes a volunteer from liability for harm caused by ordinary negligence, but not gross negligence, recklessness, and willful or criminal misconduct. No recovery of punitive damages is permitted unless the volunteer's conduct was willful, criminal, or flagrantly indifferent to the rights or safety of the plaintiff. Any liability for noneconomic damages, such as for emotional pain and suffering or for injury to reputation, is confined to the proportion of harm for which a particular volunteer is found liable. 

The protection for volunteers has some restrictions, however. The volunteer must have been acting within the scope of the volunteer's responsibilities, and must have obtained all necessary licenses, certifications, or authorizations from appropriate authorities. 

The Act affords no protection for harm caused by operation of a vehicle, vessel, or aircraft for which an operator's license or insurance is required. Congress also specifically excluded crimes of violence, hate crimes, sexual offenses, conduct violating civil rights laws, and actions taken under the influence of alcohol or drugs. The immunity afforded by the Act does not shield a volunteer organization or entity from liability, nor does it prevent such an organization or entity from suing one of its volunteers. 

Notwithstanding its various exceptions and limitations, the Volunteer Protection Act still provides a significant new measure of protection that will apply to many commonplace cases in which someone is harmed because of a volunteer's honest mistake or simple negligence. 

Top of page

A few years ago, the United States Supreme Court gave its approval for random drug testing for student athletes. Now, a federal appellate court has extended that ruling to other after-school activities. Like athletics, these extracurricular activities require healthy students and are a privilege, not a legal right. The court found it reasonable to couple such a benefit with the obligation to undergo testing for drugs, including alcohol and nicotine. 

In the case before the court, students at a public high school could not drive to and from school or take part in any extracurricular activities unless the student and parent or guardian had given written consent for the student to submit to random, unannounced urinalysis exams. When four students and their parents refused to sign the consent form, the students were barred from such activities as the Library Club, Future Farmers of America, and videotaping the football team. 

The court found that it was significant that the school's random drug testing policy focused more on prevention than punishment. If a test came back positive and the student had no satisfactory explanation, such as a prescribed medication affecting the result, he was barred from extracurricular activities until he passed another test. The school also would give the student and his parents the names of agencies that might help the student. The policy did not allow positive test results from a random test to be used in disciplinary proceedings against the student. 

In the court's view, all of this was a reasonable and constitutional fulfillment of the role of the public schools as temporary guardians of the children entrusted to their care. 

Top of page

Federal statutes provide a measure of protection from liability for consumers who have been the victims of credit card or banking fraud. Depending on the kind of account and the speed with which the consumer reports the problem, the consumer's exposure will often be limited to $50 or less. 

Credit Cards 

If the consumer reports the problem before unauthorized charges to a credit card are actually made, the consumer owes nothing. In any case, the $50 cap applies to any consumer liability. 

ATM Cards 

Time is of the essence in the case of someone whose automated teller machine (ATM) card is lost or stolen. If the owner of the card reports that the card has been lost or stolen within two business days of discovering the loss (not within two days of a transaction by an unauthorized person), the owner's maximum liability is $50. 

Maximum exposure jumps to $500 if the missing card is reported after two business days but no more than 60 days. If the owner does not report the lost or stolen card until more than 60 days have passed, he could be liable for all the money the thief obtained with the card, as well as related bank charges, such as fees for bounced checks. 

Top of page

Debit Cards 

Consumers tend to think of debit cards as being like credit cards, because they are both used at cash registers or to order merchandise by telephone. By law, however, debit cards have been treated more like ATM cards when they are lost or stolen, potentially subjecting the owner to much more than $50 in liability. The risk is especially great for so-called "off-line" debit cards, for which no personal identification number is required, because these cards are more susceptible to fraud. 

In response to some consumer groups and legislators, some issuers of debit cards voluntarily have capped an owner's loss from a missing card at $50. Until this rule is imposed across-the-board in legislation, owners or prospective owners of debit cards should contact the card issuer for information about its policy for dealing with the unauthorized use of a missing card. 

Checks 

State laws control whether an account holder will be responsible when a lost or stolen check is used in a forgery. In general, the bank customer will not be held liable for the loss unless the customer has not taken reasonable steps to pay attention to the account and to protect it against misuse. To increase the likelihood that the bank will reimburse a customer for a forged check, the customer should safeguard the checks, write them out so as not to make them easy to alter, examine bank statements promptly after receiving them for suspicious transactions, and notify the bank of unauthorized transactions without delay. 

Stored-Value Cards 

These cards are essentially electronic cash. Their loss or theft is like the loss of cash, with the consumer's exposure being equal to the dollar value remaining on the card.