2020



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March 3, 2020
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What does IR35 mean for background screening?

When it comes to the upcoming changes to IR35 legislation, worker status should not be the only thing on employers’ minds. They also need to consider how any changes could impact background screening, says Personnel Today's Caroline Smith.

While the ins and outs of IR35 are hotly debated, many companies, including some large UK-based multinational banks, have already opted for a cautious approach, making public their decision to move away from engaging with contractors through personal service companies (PSCs).

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For some organisations, this may mean their HR team is frantically completing the necessary paperwork to turn all of their contract roles into PAYE positions on their company payroll before the legislation comes into force for private sector employers in April.

But in order for this to happen, the contractors first need to agree to their new terms of employment, which may not be favourable for them, particularly regarding tax and NICs.

Many companies may also be reluctant to commit to bringing their contractors in as employees, especially if they make up a significant proportion of their workforce.

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This could have significant repercussions for their business, including increased overheads, additional HR resource required to support new employees, new equipment needing to be bought and NICs to be paid by the company for the new workers.

However, the situation is being addressed by the companies affected, it’s important to consider the impact IR35 may have on an employer’s background screening programme.

What’s the difference?

From a legal standpoint, in the UK there are a few key differences between a contractor and an employee.

These include mutuality of obligation (whereby contractors are not required to accept or to be offered work), control (contractors will probably have freedom over the hours they work and set their own schedule) and substitution (when a contractor could hire someone in their own right or get someone else to do the work).

However, in reality, many businesses may have employees and contractors conducting identical roles for their company.

Yet, the background screening process that contractors go through may be less stringent than that of an employee. This could be for a number of reasons, such as:

  • The contractor is needed for an urgent project and the company does not have time to process a full background check before they can start.
  • The contractor may have refused certain employment checks as completing them may have made their role seem more like that of an employee and not a contractor with possible tax implications.
  • To reduce HR admin around the screening process.
  • The contractor may only be engaged on a short-term basis and so it is not considered cost-effective to conduct a full background screening.
  • The role is working remotely so the perceived risk is less than an employee based in the office.
  • The company that the contractor works for conducts their own background screening process that is less rigorous that the company’s own policy.
  • The contractor is not a fixed person (for example, a company is contracted to complete the work, but a number of individuals may be sent by the company to complete this work over time).

Assessing the risk

Many companies already use a risk matrix to assess the level of background screening that is proportionate for their workforce.

A risk matrix can be used to split workers into a number of different categories depending on the perceived level of risk, with those in senior positions or with access to financial information typically being screened more rigorously than those in entry-level jobs.

However, contractor roles are not always included in this risk matrix, meaning that existing contractors may have only been subject to a minimal background check, or possibly no check at all.

It’s an area to review, particularly when considering that many contract roles are well-paid highly-skilled specialist roles where the individuals are immediately placed in positions of trust, potentially with access to confidential company information.

Arguably, contract workers could pose a greater threat to a business than its employees do as they are often working independently and unsupervised and could even be contracting for a direct competitor of theirs.

It is advisable to assess the risk of each worker based on their job role, seniority and what is legally permissible and proportionate to screen, not based solely on whether they are an employee or a contractor.

This will help ensure that background screening processes are sufficient to mitigate against the risk that each worker brings to a business.

Background screening and IR35

For companies looking to add current contractors to their payroll and who already conduct pre-employment screening on their new hires, now is the time to think about how to manage this process for soon-to-be employees and how to introduce them to background screening if they’ve not had a background check before.

Given that the legislation around IR35 is due to be implemented (for private sector companies) on 6  April, employers have quite a narrow window to go through the necessary process to transition their freelance workforce to PAYE employees (if this is the path they choose to go down), and also to conduct any pre-employment screening that is needed to ensure that their new employees are screened to an equivalent standard as their existing staff.

If your business currently hires contractors and is going to be affected by IR35, you should consider getting in touch with your background screening provider to discuss how they can support your changing screening needs.

This can help to ensure that your old contractors have all had their information verified to your company’s employment standards before bringing them on board, helping to mitigate your people risk before bringing potentially thousands of new people onto your company’s payroll.

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March 2, 2020
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Inside the Statehouse: Experts say 'ban the box bill' could improve eviction rate and help with homelessness

The affordable housing crisis is difficult for everyone -- but it's especially hard on those with criminal histories, since finding a place to rent can sometimes feel next to impossible. Housing experts say Idahoans with criminal convictions are facing eviction crises at alarming rates.

But the Fair Chance Employment Act, Senate Bill 1318, could potentially change that.

Also called the "ban the box bill," it's legislation that would prohibit employers from asking about criminal records until the applicant is given an interview or conditional offer of employment.

At Monday's public Senate Judiciary Committee hearing, 17 people testified in favor of S.B. 1318, and just one person against. That person was Fred Birnbaum of Idaho Freedom Foundation, who expressed the foundation's concerns that the bill would bring potential crime into the workplace.

"Why do you commit crime in the first place?" said Sen. Patti Anne Lodge (R-Huston). "And then you come back and want individual businesses to make a choice to help you."

Despite expressing concerns, Lodge ultimately voted to endorse the bill. The decision was unanimous among lawmakers on the committee.

"The cards are really stacked against people when they exit the criminal justice system," said Ali Rabe, executive director, Jesse Tree of Idaho. "And it got unanimous support, so that's really exciting!"

Housing and homelessness stakeholders are some of the foremost supporters of this bill. Rabe runs a local nonprofit that helps people who are in danger of being evicted to stay in their homes.

"We've talked to 826 households over the last several months, and 289 of those households -- so about 35 percent -- are formerly incarcerated, and they're being evicted due to employment related issues," said Rabe.

If they are evicted, that often makes their reputations even worse to potential landlords.

"When somebody has not only an incarceration record, but an eviction record, the cards are double-stacked against them when they're applying for housing," said Rabe. "In this market, there's so much demand for housing, people [with prior criminal convictions] are not really likely to get housing," said Rabe.

So, she says, if this bill is signed into law --

"That will allow them to pay their bills on time, stay in housing, and it will reduce eviction and homelessness in our community," said Rabe.

S.B. 1318 now heads to the full Senate. 6 On Your Side will keep you updated.

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March 2, 2020
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Oakland, California, Bans Criminal Background Checks on Renters

California's affordable housing nightmare is well known: More than 40% of residents are now classified as housing cost-burdened, the highest proportion of any state, reports USA News.

In many cities in the San Francisco Bay Area, the nation's tightest housing market, the median rent for a one-bedroom apartment now exceeds $2,500, a figure that contributes to a growing homelessness problem, exacerbates gentrification and pinches ostensibly middle-class professionals like teachers and police officers as well as those even higher up the income ladder.

For one demographic the crisis is amplified. "I was born and raised in Oakland," Lee "Taqwaa" Bonner, a former felon turned advocate, said at a recent news conference. "I am employed in Oakland. However, I cannot live in Oakland based solely on my criminal record, which happened 30 years ago." Excluded from the rental market, Bonner has often resorted to living in his car. Others have fared worse, spiraling into permanent homelessness, drug addiction and even death.

On Feb. 4, Oakland's City Council passed a new ordinance designed as a remedy, prohibiting public and private landlords from inquiring about potential tenants' criminal histories. The new law, called the Oakland Fair Chance Housing Ordinance, is the most expansive of its kind in California and among the first for major American cities. Decades after the start of the "ban the box" movement, which aims to stop employers from discriminating against the formerly incarcerated, proponents hope it will also act as a new catalyst in the battle to secure equal opportunity for the more than 70 million Americans burdened by criminal records.

"With more and more people returning home from the criminal justice system, housing is really the most basic need that people [have] in order to get back on their feet," says Council member Nikki Fortunato Bas, a co-sponsor. "It's really going to help create more opportunity and sort of level the playing field."

For decades criminal justice experts have highlighted the rampant stigma and discrimination that stifles former prisoners as they attempt to re-enter society – a phenomenon accelerated by the recent ubiquity of online background checks, an invesitgative tool critics point out is often incomplete or seriously flawed. And while the criminal justice system disproportionately impacts black men, it's also black men who, after their release, are often excluded from jobs, apartments, public benefits, and even vocational licensing on the basis of a conviction they've already served time for. "The real punishments begin," as one African American man who spent 17 years behind bars told The Washington Post, "when we are released from prison."

In 1998, Hawaii became the first state in the United States to pass legislation aimed at easing the burden, with a "ban the box" law that restricted both public and private employers from considering a prospective employee's criminal history until after a job offer was made. Since then, 35 states and more than 150 cities and counties have adopted similar "ban the box" employment discrimination laws. (Most apply only to public employers, although 13 states and 18 cities and counties have extended the legislation to the private sector. Some laws also apply to public contractors.)

Laws aimed at easing housing discrimination have come only recently, despite an overwhelming need: In one national survey of people affected by incarceration, nearly 80% of former inmates reported being denied housing because of prior convictions. In some cases whole families were evicted because a formerly incarcerated family member returned to the home; other respondents told of being forced to settle for substandard conditions.

"All of the places that I wanted to live – that were nice and where I could raise kids told me 'no,'" one study participant from Kansas told researchers from the California-based Ella Baker Center for Human Rights and elsewhere. "So I ended where I am now, in a rundown four-plex that's a slum with moldy walls."

Oakland's new law has various predecessors. In 2017, Seattle passed what advocates hailed as the country's most progressive "ban the box" housing law, an ordinance that prohibited most private landlords from considering applicants' criminal histories at all. The new law was promptly challenged by the city's real estate industry, which argued that it compromised safety and violated landlords' exercise of free speech. Critics also suggested council members had the wrong target. "If the city of Seattle is serious about reforming the criminal justice system, it should focus on reforming the criminal justice system," William Shadbolt, board president of the Rental Housing Association of Washington, said at a news conference. (In November, a Washington state Supreme Court judge ruled favorably toward the law, although a federal decision remains pending.)

Other cities, including Detroit, Chicago and Minneapolis, have also recently passed similar but less sweeping measures, stipulating that landlords cannot perform background checks until the end of the application process or that they can only consider more recent convictions. Two Bay Area cities, Richmond and San Francisco, have passed ordinances that apply only to affordable or municipally-subsidized housing.

But Oakland's new law, which became effective immediately, represents the state's first to apply more broadly to nearly all city rentals, allowing exceptions only for landlord-occupied units. Landlords also do not have to accept tenants on the federal lifetime sex offender list; affordable housing rentals are also permitted to exclude tenants with prior convictions related to manufacturing meth. Proponents argue the new law will help reduce recidivism and ease the area's homelessness crisis, as well as set off a new wave of municipal protections: Nearby Berkeley is expected to vote on a similar measure within weeks.

"Those of us who worked on this legislation are hoping that this is sort of the next frontier of this particular movement," says Bas, who previously worked on various "ban the box" employment policies.

Yet even supporters concede that the legislation amounts to a kind of Band-Aid for a far larger problem. America's structural racism continues to disadvantage people of color in virtually every segment of society, with the very need for "ban the box" laws serving as further evidence of the rampant overcriminalization and segregation of black men, says Andre Perry, a fellow in the Metropolitan Policy Program at The Brookings Institution, a Washington, D.C.-based think tank. In some cases the laws can even prove counterproductive, as employers or landlords simply find other, more generalized ways to discriminate against former prisoners and people of color, like excluding applicants with long gaps in their resumes or names that people associate with African Americans, he adds.

"I'm for banning the box, but it's insufficient as a tool when you're dealing with disrcimination," he says, where the real change needed is an adjustment in the underlying culture. "And that requires leadership. It requires investment in black communities. It requires hiring people."

Bas agrees. But with an already overcrowded local shelter system and increasing numbers of formerly incarcerated residents returning to a city where they can't find housing, Oakland is already facing an urgent crisis. "And if we don't address that," she says, "people's lives will be lost."

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