One typical question that comes up during an FFL compliance visit is how does the company determine if an employee should be in active or constructive possession of firearms for business purposes. In general, if you’re an FFL and have employees, you should have written policies in place, a background check process in place, frequent reviews of policies regarding background checks, and at least annual background checks for all employees who are in active or constructive possession of firearms in the business.
An FFL that has employees should have a policy in place regarding background checks. It is wise to conduct a background check on any employee who may be in possession of firearms, at any time, in your company. This includes the employee who simply receives firearms from FedEx, the employee who just has keys to the firearms vault or showcase, contract gunsmiths, the sales team, etc. Basically, if someone touches a gun for your company, they need a background check.
Regarding your written policies, it is good planning to think of likely situations you will run into with your specific shop. However, notifications requirements are important for any written policy. Specifically, what are the required notifications to company management if an employee participates in an event that renders them prohibited from active or constructive possession of the company’s firearms?
For example, let’s say that you hire an employee named Joe, perform an initial background check, and put Joe to work as a part of the store team. However, the week after you hire Joe, he gets involved in a domestic violence incident with his wife after work hours and gets arrested. What policies do you want in place to ensure that Joe promptly report any and all events that would render him a prohibited person?
Furthermore, what policies do you want in place regarding Joe’s employment after an event that renders him a prohibited person? Should he be moved to a position in the company where he does not have active and/or constructive possession of a firearm, or should he be automatically terminated. At the very least, there should provisions in your policy that states if any employee becomes prohibited from possessing a firearm, for any reason, they should promptly notify management within 24 hours and not come into active or constructive possession of firearms for company business. ATF Form 4473, Section A, Question 11 and 18 U.S.C. Section 922(g) provide a definition of a prohibited person:
“[It is] unlawful for certain categories of persons to ship, transport, receive, or possess firearms or ammunition, [including] any person:
- convicted in any court of a crime punishable by imprisonment for a term exceeding one year;
- who is a fugitive from justice;
- who is an unlawful user of or addicted to any controlled substance (as defined in section 102 of the Controlled Substance Act, codified at 21 U.S.C. Section 802);
- who has been adjudicated as a mental defective or has been committed to any mental institution;
- who is an illegal alien;
- who has been discharged from the Armed Forces under dishonorable conditions;
- who has renounced his or her United States citizenship;
- who is subject to a court order retraining the person from harassing, stalking, or threatening an intimate partner or child of the intimate partner; or
- who has been convicted of a misdemeanor crime of domestic violence.”
Prohibited persons also includes 18 U.S.C. Section 922(d), which makes it unlawful to “sell or otherwise dispose of firearms or ammunition to any person who is prohibited from shipping, transporting, receiving, or possessing firearms or ammunition.” Furthermore, 18 U.S.C. Section 922(n) is also referenced, which makes it “unlawful for any person under indictment for a crime punishable by imprisonment for a term exceeding one year to ship, transport, or receive firearms or ammunition.”
Next, it is prudent to consider instituting an annual background check for all employees who will have actual or constructive possession of firearms for your company. Additionally, all employees should sign an annual acknowledgement that they have not become a prohibited person.
Without going into specifics of employment and labor law, an employment policy should be in place to address these issues. Also, each employee should receive a copy of this policy, sign off on it, and management should retain a copy of the employee’s consent in their files. Furthermore, it is prudent to consider holding an annual review of company policies with all staff to ensure all employees fully understand the background check policies, what constitutes a prohibited person, and employees’ rights regarding background checks and policies regarding employment status after becoming a prohibited person.
One common question FFLs ask is who should they use to conduct background checks for their employees. An old adage stated by some FFLs is “get them to buy a gun on day one of employment, and if they pass NICS, that’s good enough for the business.” While technically this is possible, this does not provide a comprehensive method for routinely checking an employee’s status as a prohibited person.
Under state and federal law, companies have an obligation to learn as much as possible, and as much as they are legally entitled to, about potential employment hires. It can be argued that the LLC Member responsible for screening and hiring employees may potentially violate their duty of care to the LLC if they recklessly disregard procedures for hiring employees and hire someone with an adverse history that poses a business and/or safety risk to the company and clients, especially if hiring someone with an adverse history leads to an ATF investigation that results in the revocation of the company’s FFL.
Another common question asked by FFLs is whether they can simply use the NICS system to facilitate employee background checks. It must be emphatically stated that the NICS system can only be used for a firearms transaction. The FBI NICS Licensee Manual details some of the serious consequences for anyone who chooses to use NICS for anything other than firearms transactions:
“II. Unauthorized Use — AN FFL is never authorized to utilize the NICS for employment or other type of non-Brady ACt-mandated background checks. An FFL must have a signed ATF Form 4473 prior to initiating a NICS check. Per 28, C.F.R. Sec. 25.11 of the NICS Regulations, accessing or using the NICS, or permitting access to or use of the NICS by another, for any unauthorized purpose is a violation of federal law, sanctions for which may include criminal prosecution, a civil fine not to exceed $10,000, and/or cancellation of the NICS inquiry privileges.” FBI NICS Licensee Manual [Section 7, II, pg. 27, revised 8/2011]
Since an FFL cannot use NICS for employment background checks, your company will need to engage the services of a background check vendor that is both efficient at conducting thorough checks and disseminating this information for your company’s use, while also protecting the rights of a potential or current employee. A good place to start your search for a vendor would be finding a vendor that is accredited by the National Association of Professional Background Screeners (NAPBS).
Care and caution must be used regarding the type of information sought in a background check for potential or current employees. For instance, many employers obtain a potential employee’s credit rating during the hiring process, but there must be a legitimate business purpose behind requesting this information. Furthermore, eliminating a potential employee based on their credit score alone can create a discriminatory hiring dispute, so caution should be exercised as to when, how, and why you use credit report information for employment purposes.
Another common example of relevance is an employer who routinely requests driving records of all potential and/or current employees. Once again, there must be a legitimate business purpose behind requesting that type of information. If an employer blanket requests driving records for all employees, but only have two drivers, it can be argued that the employer did not have a legitimate business purpose for requesting that information on employees who are not drivers.
Consistency is paramount to conducting background checks for your business. As stated earlier, clear and definitive policies must be in place regarding background checks, and all employees must receive actual notice of these policies. If you conduct background checks for pre-employment and also conduct annual background checks for all employees, it should be consistent. For instance, if you conduct a pre-employment check on a new hire in October and conduct annual background checks in January, that new hire should also be included in annual check in January.
Finally, FFLs should be mindful of the requirements under the Fair Credit Reporting Act (FCRA) when screening potential employees or running background checks on current employees. The FCRA applies any time an employer obtains a background check for employment purposes from a third-party vendor. Reports of this nature can include criminal history, education verification, employment verification, professional licenses, health care sanctions, and motor vehicle reports. Any and all background checks obtained for employment purposes should be maintained in secure, confidential files and not readily shared.
Compliance with the FCRA is strict and can be costly if disregarded. The FCRA requires an employer who obtains a background check from a third-party vendor to do very specific things during the initial employment screening process. Employers are routinely sued in federal court for violations under the FCRA each year. Compliance with the FCRA is much cheaper than litigation or costly financial settlements. While the employment screening process may seem rather complex, the simplest requirements of the FCRA are often the most litigated aspects of FCRA suits. The following are common areas of compliance concern with the FCRA for employers:
- Disclosure – Before an employer requests a background report from a third-party vendor, the employer must information the potential employee that a background check may be obtained. The content and the format of this disclosure is extremely important and frequently litigated in FCRA actions. The disclosure must be written, in a stand-alone document, and include only disclosure language. For example, it should not be included as a part of an employment application, or in an employment information packet. It must be a stand-alone document. Furthermore, the language of the disclosure document must only include disclosure language; meaning, it must not contain any extraneous information that does not apply to disclosure. “Extraneous” is another aspect frequently litigated and covers a wide range of employment topic such as on-the-job conduct, employment and/or company benefits, and requirements for a drug-free workplace. Another problematic aspect of “extraneous” information that has been the basis for class-action litigation is the inclusion of a waiver of liability in the disclosure language. Simply put, in a disclosure statement, stick to disclosure language and nothing else.
- Authorization – Before an employer can request a background check on an employee, the employer must obtain the prospective or current employee’s written consent. Electronic signatures that comply with E-SIGN requirements are also acceptable for this purpose. The FCRA does not have specific language for authorization, only that specific content and format be used for an authorization. Authorization can be in a separate document from disclosure, or it can be in the same document. However, separating the two documents would be wise to drive home the point that one document is for disclosure and the other is for authorization. Regardless of whether you use one or two documents, it should be abundantly obvious to the reader that he or she may be subject of a background report, and that he or she affirmatively consents and authorizes to the preparation of the background report for employment purposes.
- Adverse Action Notices – Any time an employer takes a “negative employment action” (not hiring, not promoting, firing), based in whole or in part on information contained in a background report, the employer must follow the specific FCRA adverse action process:
- Notify the potential or current employee that an adverse action is being considered by the company.
- Provide the federal “Summary of Rights under the FCRA” and a copy of the background report obtained. Inform the potential or current employee that they may dispute the contents of the report. Be sure to give a specific and reasonable amount of time to initiate the dispute. (However, it should be noted that if adverse action is taken against a current employee, it is imperative that the current employee not be in actual or constructive possession of firearms for the company during the time allowed for the dispute.)
- Next, you must wait out the dispute period you provided in the notice. Remember, if it is your company policy to terminate upon an employee becoming a prohibited person (and, if you discover it through a routine background check), you cannot take an adverse action against the employee during the waiting period, and you cannot let the employee be in actual or constructive possession of firearms either.
- After the allotted dispute time has passed, if you make an adverse employment decision against a prospective or current employee, you must notify the employee again. This time, you will explain the specific action being taken, provide the contact information for the third-party vendor who provided the background report, and inform them that they can get another copy of the report from the third-party vendor, and may still dispute the contents of the report if they wish to do so.
While this is not an exhaustive analysis of an employer’s requirements under the FCRA, this should give FFL employers a basic guideline for their requirements under the FCRA. Overall, FFL employers should at the very least put policies in place regarding employee background checks and follow the FCRA closely. However, the best path for an FFL is to consider forming a Texas Limited Liability Company, draft an FFL-specific Company Agreement that is crafted to protect LLC members and facilitate growth for your FFL business, draft provisions for heirship if the FFL will be kept in the family, and finally, draft a comprehensive employer handbook and/or policies if the FFL grows to a point where it needs to hire employees.