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Understanding the Power of Employment Waivers

by Jonathan Hauer

Some people are just plain trouble. Take me, for instance. I was born with two left feet and 10 thumbs. I make a bull in a china shop look graceful. I am, if you didn’t catch my oh-so-subtle hints, clumsy. You can tell this just by looking at me — and the shattered Ming dynasty vase regularly lying near my feet.

So when I showed up for my Xtreme Super ThrillTM skydiving lesson last weekend, it came as no surprise that I had to sign a waiver. The waiver listed every conceivable type of liability. I didn’t even know that my jump could harm livestock, but there it was: “Xtreme Super ThrillTM LLC bears no responsibility should you land on or collide with, and subsequently harm, third-party farm animals — including, but not limited to, llamas and geese.” It turns out that landing on a llama hurts — a lot.

As I sit here typing with my one good finger, I realize the importance of a well-written waiver to any business. And I wonder why more employers don’t similarly use waivers during their hiring process. As we all know, many job applicants are as litigious as I am clumsy. Why not require them to sign a waiver protecting you from some of the many legal pitfalls associated with checking their backgrounds?

A recent federal case in the Ninth U.S. Circuit Court of Appeals explored the benefits (and hazards) of applicant waivers.

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Something litigious this way comes
Christine Nilsson applied for a police officer position with the city of Mesa. When she applied, she agreed to “waive all legal rights and causes of action” arising out of a Mesa Police Department background check. The waiver included “investigation into [her] employment history, health, family, personal habits, and reputation.”

A Mesa police officer investigated Nilsson’s background and — after an initial review — gave her a “thumbs up,” passing her name along to the department’s hiring board. His review continued, however, because he couldn’t answer the hiring board’s questions about legal proceedings against her previous employer (also a police department) or the conditions under which she’d left.

When the officer next spoke with Nilsson, he learned that she’d left her previous department as part of her settlement from a discrimination claim. She had been involved in numerous civil proceedings, had filed a workers’ compensation claim, and was involved in a labor board proceeding — all of which, obviously, is frightening news to a potential employer.

Yet the Mesa hiring board extended Nilsson an offer of employment conditioned on passing a physical aptitude test, a medical exam, and a psychological evaluation. She passed the first two but failed the psychological evaluation and wasn’t hired by the Mesa Police Department. As you might guess, she filed an Equal Employment Opportunity Commission (EEOC) charge asserting violations of the Americans with Disabilities Act (ADA), 42 U.S. Code Section 1983, and Title VII of the Civil Rights Act of 1964 and then filed suit against Mesa.

State-by-state comparision of 50 Employment Laws in 50 States, including background checks and drug and alcohol testing

Catch the waiver
Nilsson alleged that the city violated her ADA rights by “investigat[ing] and inquir[ing] into [her] workers’ compensation claims before submitting a conditional offer of employment to [her].” And while such an act normally might subject an employer to liability, the Ninth Circuit held that the city’s review of her EEOC and workers’ comp claims were “part and parcel of the investigation.” Thus, the waiver she accepted precluded her from pursuing ADA and Section 1983 claims against the city.

In other words, the waiver placed a protective bubble around the city’s background check. Similarly, such a waiver can protect you from federal claims if you uncover past disabilities or sticky legal problems in the course of a legitimate background check.

Ignorance of the waiver is no excuse
The Ninth Circuit dismissed Nilsson’s argument that the waiver was invalid because “she did not understand it.” The court reasoned that a college-level education and previous work experience with a police department provided “sufficient education and experience to understand the waiver.” Thus, if your employee base is reasonably educated or experienced, that probably will validate your waiver.

Just the same, the city of Mesa put the following language in its waiver: “READ CAREFULLY BEFORE SIGNING — IF NOT UNDERSTOOD, SEEK COMPETENT LEGAL ADVICE.” If you include similar language, and we recommend that you do, you should be covered if your applicants can read. Nilsson v. City of Mesa, 2007 U.S. App. LEXIS 21912 (9th Cir., 2007).

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A caveat
Unfortunately, a background-check waiver isn’t going to solve all your problems. If your litigious applicant is anything like Nilsson, she probably will sue for both improperly uncovering previous disabilities and retaliation against her for engaging in protected activity related to those disabilities.

The Ninth Circuit found that the background-check waiver didn’t bar Nilsson’s Title VII retaliation claims because they weren’t part and parcel of the investigation. Instead, retaliation would form an independent claim based on information learned from the investigation.

While the distinction between the two is difficult to discern, it’s easier to simply remember that you must never base a “no-hire” decision on an applicant’s previous protected activity (such as filing an EEOC charge, asking for an accommodation, or complaining about sexual harassment). If you do, you’re engaging in retaliation, even with a waiver.

Ultimately, the Ninth Circuit held that the city’s legitimate reason for not hiring Nilsson (she failed her psychological test) overcame her retaliation claim. Waivers are a tremendous help if you plan to look into your applicants’ backgrounds. And while they may undermine some claims, the pernicious retaliation claim probably will remain. Just the same, so long as you have legitimate reasons for choosing not to hire an applicant, background-check waivers may save you a world of trouble.

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