New Florida Law Protects The Real Estate And Hospitality Industries That Conduct Background Investigations
 
April 1, 2000
 

Employers in the real estate and hospitality industries, like employers generally, must be prepared to cope with the liability issues presented when employees act in a criminal or intentionally tortious manner toward guests or coemployees.

Here is an example. A female concierge is attacked and sexually assaulted by a member of the maintenance staff. She sues the hotel and its management company for negligently hiring the defendant, who had been previously convicted of sexual abuse and a jury awards her $6.5 million. Of course, had the management company conducted a criminal background check before hiring that employee and discovered the sexual abuse conviction, the employee almost certainly would never have been hired.

But what if the maintenance man had no criminal record? The management company conducts the criminal background check, finds nothing problematic, and is sued for negligent hiring nonetheless. The Florida Legislature recently enacted an important new Florida law, Florida Statute § 768.096 (statute), which became effective October 1, 1999, to protect employers from just such a situation.

The new law will not prevent such lawsuits from being filed. However, it does create a valuable legal presumption in favor of an employer in cases involving claims against the employer for negligent hiring. A claim against an employer based on a negligent hiring theory may be brought when, prior to the time an employee is actually hired, the employer knew or should have known of the employee’s unfitness for the position of employment held. The primary issue in such cases is the adequacy of the employer’s pre-employment investigation into the employee’s background. Unlike many claims under federal and Florida employment laws, negligent hiring claims can be brought against employers of any size and can be brought not only by current or former employees, but by any person to whom the employer owes a legal duty. Legal issues regarding indemnity and contribution between the hotel owner and the management company, as to which bears legal responsibility for hiring a dangerous employee, may also be presented by a negligent hiring claim.

As part of its comprehensive tort reform package, the Florida Legislature enacted the statute, which provides that a Florida employer will be legally presumed not to have been negligent in hiring under certain circumstances. The employer may take advantage of the presumption against negligent hiring in a civil action for the death of, or injury or damage to, a third person caused by an "intentional tort" of an employee. "Intentional torts" are claims like battery, assault, false imprisonment and invasion of privacy. To take advantage of this presumption, the employer must have conducted a background investigation of the prospective employee before hiring the employee.

That background investigation must include all of the following:

• obtaining a criminal background investigation on the prospective employee from the Florida Department of Law Enforcement
• a reasonable effort by the employer to contact references and former employers of the prospective employee concerning the suitability of the prospective employee for employment
• requiring the prospective employee to complete a job application form that includes questions concerning whether he or she has ever been convicted of a crime, including detail concerning the type of crime, the date of conviction and the penalty imposed, and whether the prospective employee has ever been a defendant in a civil action for intentional tort, including the nature of the intentional tort and the disposition of the action
• obtaining, with written authorization from the prospective employee, a check of the driver’s license record of the prospective employee if such a check is relevant to the work the employee will be performing and if the record can reasonably be obtained
• interviewing the prospective employee

The background investigation conducted must not reveal any information which reasonably demonstrates the prospective employee’s unsuitability for the particular work to be performed or for the employment in general. Employers that conduct investigations under these guidelines will be able to avail themselves of the new Florida Statute as a defense to negligent hiring and retention claims asserted against the employer.

Because the hospitality industry faces such a high turnover rate in its workforce, it may not be financially practical to follow the above procedures with respect to every new hire. No penalty attaches under the new statute if the employer chooses not to follow these procedures. However, an employer may choose to conduct such investigations with respect to a group or class of employees, so long as no employee or group of employees is singled out because of the race, color, national origin, gender, religion, disability or any similar personal characteristic.

When requesting or conducting any background investigation, an employer should also consider the requirements of the Fair Credit Reporting Act (FCRA). The FCRA is designed to protect the privacy of information contained in "consumer reports," or information about an individual’s personal and credit characteristics, general reputation and lifestyle. To be covered by the FCRA, a report must be prepared by a consumer reporting agency; i.e., a business that assembles such reports for other businesses.

Before an employer can obtain a consumer report for employment purposes, the employer must notify an applicant in writing that such a report may be used. Before obtaining the report, the employer must also obtain the applicant’s written authorization to do so. The FCRA contains detailed requirements regarding the type of language that must be used for the employer’s notification and authorization obligations.

In addition, applicants are often asked to give references as part of their job application. An employer who verifies such references itself is not covered by the FCRA, but a reference verified by an employment agency or a reference-checking agency is covered. The FCRA provides special procedures for reference checking which must be consulted in these situations.

Furthermore, an employer who chooses not to hire an applicant based on information contained in a consumer report, or takes any other adverse action against a current employee based on such information, is obligated to give the applicant or employee a pre-adverse action disclosure that includes a copy of the consumer report and a summary of the affected person’s FCRA rights, as well as a post adverse action notice. The FCRA sets forth in detail the language required for the disclosure and notice.

In summary, the new Florida Statute provides employers with a valuable defense in negligent hiring cases worth taking advantage of, but when doing so employers should be cautious not to run afoul of the employer’s duties and obligations under the FCRA. Instituting these procedures and the forms and consents required to comply should be done under the supervision of counsel experienced in these areas. Monitoring of the employer’s background investigations should be monitored on a regular basis by trained personnel.

Employers in other jurisdictions should know and understand their potential liability and defenses in negligent hiring cases.

Mr. Gabrielle is a Real Estate attorney in the Ft. Lauderdale office. He can be reached at 954-468-7850 or egabriel@hklaw.com.