Liability Risk

What ‘Ban the Box’ Really Means for Employers

A majority of states bar employers from inquiring about convictions on job applications. But compliance without caution can have dire consequences.
By: | August 30, 2018 • 7 min read

Employers are facing a growing dilemma in the hiring process.

Under ‘Ban the Box’ legislation introduced across 31 states, they are now required to remove the question from their application form that asks candidates if they have been convicted of a crime. Advocates of the law believe it enables organizations to focus on relevant qualifications and gives applicants a fair chance to showcase their talents at the start of the recruitment process.


However, if an employer hires an employee with a conviction who goes on to commit a crime of a similar nature, courts may rule they are liable for that individual’s actions.

The National Federation of Independent Businesses, for one, has argued that ‘Ban the Box’ “unduly suppresses relevant criminal record information” about prospective employees, without which employers can’t protect themselves from loss or ensure the safety of their employees, customers or the public when making hiring decisions.

High-profile cases of ex-offenders committing further crimes at work have only exacerbated the problem. To make matters worse, ‘Ban the Box’ laws vary from state to state, meaning that employers who operate in multiple jurisdictions have to negotiate an even greater legal minefield.

“If an employer hires a candidate with a conviction who then commits a similar crime in the workplace, it could be argued that they were negligent because they hired that person,” said Tom Hams, Aon’s employment practice liability insurance practice leader.

Cody Bengtson, staff consultant, Gallagher Human Resources & Compensation Consulting

“So the onus is on the employer to ensure that they have done their homework on a candidate’s background.”

“ ‘Ban the Box’ gives an applicant with a conviction the chance to get in front of an employer and sell themselves and to explain the circumstances that resulted in them getting that initial conviction,” said Robert Hale, a partner at Goodwin Procter LLP.

“It also gives the employer the opportunity to consider their application in the wider context, taking into account the positive qualities they may bring rather than being influenced solely by their conviction.”

‘Ban the Box’ Movement

Laura Kerekes, chief knowledge officer at ThinkHR, said ‘Ban the Box,’ which was first deployed in the public sector several years ago, has gained momentum in private industry in recent years, targeting hiring practices that exclude applicants based on criminal records.

She said the checkbox question asking applicants to indicate whether or not they have been arrested and/or convicted of a felony discourages qualified candidates from applying.

“By removing the checkbox, qualified applicants are given a fairer chance to move further into the selection process before their conviction records are exposed,” she said.

“By encouraging more qualified applicants to apply for open positions by banning the box, hiring managers have a wider applicant pool and, in theory, better candidates, so that jobs can be filled quicker and workplaces benefit from skilled talent given a fair chance in the process.”

However, Kerekes added that recent studies have indicated ‘Ban the Box’ may be causing more harm than good. In one case, she said employers found other reasons to disqualify applicants who might have criminal records by requiring higher education standards than those required for the role.

“Eliminating the box means that once the applicant’s criminal history becomes known late in the hiring process, the employer must take extra care to evaluate and document the reasons for either hiring the applicant or disqualifying them for further consideration,” she said.

“Most employers already understand that rejecting an applicant from further consideration because of a past criminal history could be a legal problem and is just not good HR practice.”


Robert Tice, an attorney with Collins Einhorn Farrell, said employers should consider the nature of the crime committed, how long ago it was and how the individual has responded to redeem themselves.

They should also define the relevant job specifications for the role and train their hiring managers to ask the right questions, he said.

“If the conviction is relevant to the type of employment that individual is going to be required to do, then the employer is entitled to obtain that information,” he said.

Case-by-Case Basis

Hale said the Equal Employment Opportunity Commission states that to disqualify an applicant, their prior conviction should be related to the role and each applicant needs to be considered individually.

Employers are also only allowed to ask candidates about their history dating back no more than seven years under the Fair Credit Reporting Act. They are typically not allowed to ask about arrests either, Hale said.

“Employers have a legal duty to their employees to provide a safe workplace, therefore eliminating background checks for convenience may not be the best course of action.” — Cody Bengtson, staff consultant, Gallagher Human Resources & Compensation Consulting

“Employers should be asking job-related questions at the interview,” he said. “But that shouldn’t preclude them from asking questions about convictions if they are relevant.”

One trap many organizations fall into is adhering to ‘Ban the Box’ but not carrying out a background check on a candidate’s criminal record after the initial application, or not asking them the question at the first interview because they are worried about potential liability, said Cody Bengtson, staff consultant at Gallagher Human Resources & Compensation Consulting.

That is particularly relevant when hiring for sensitive positions such as those involving money handling if it turns out the applicant has been convicted for fraud or theft, or for positions in childcare if the applicant has committed offenses against minors.

“Employers have a legal duty to their employees to provide a safe workplace, therefore eliminating background checks for convenience may not be the best course of action,” Bengtson said.

“If a candidate was previously convicted of assault or battery, the employer has to make a judgment call if the candidate’s background could affect any other employees. It’s a harder decision and employers will have to turn to case law to find their answers.”

Source: ThinkHR

Tightening the Net

Beth Goldberg, chief underwriting officer, financial lines, Starr Companies, said that laws such as California’s Assembly Bill No.1008 take ‘Ban the Box’ a step further, requiring all employers in the state with five or more employees to complete any inquiries into an applicant’s criminal history after a conditional offer.

“If an employer wants to deny an application for a position solely or in part because of conviction history, the company must take a number of steps to be compliant with AB 1008,” she said.

“This is where thorough training comes in for those individuals handling the HR role or company hiring managers to ensure awareness and compliance specifically with the company’s job application, interview guidelines and procedures for criminal background checks.”

Karl Lindegren, a partner at Fisher and Phillips LLP, said employers should work with their brokers to ensure they have the right coverage in place to protect them.

But they also need to understand the limits and employment acts that are excluded to mitigate against negligent hiring claims, he said.

“Talk to your broker or carrier to discuss your needs and to understand what coverage you have, and what is excluded,” he said.

Already Happening in Court

A recent decision by California’s Supreme Court ruled that Liberty Surplus Insurance must pick up the defense costs of Ledesma & Meyer Construction Company after it was sued for negligently hiring a twice-convicted registered sex offender who later raped a 13-year-old girl at a school construction site.


L&M hired Darold Hecht in 2003 as an assistant superintendent assigned to a San Bernardino Unified School District construction site. In 2010, a 13-year-old student sued L&M in State Court alleging Hecht had sexually abused her. The allegations included the negligent hiring, retention and supervision of Hecht.

The student was awarded $3.2 million from L&M, which covered the school district’s legal costs under the contract. Liberty subsequently filed a Federal lawsuit, arguing that it wasn’t obliged to cover the district’s costs as an accident under the policy.

However, the California Supreme Court ruled that Hecht’s actions didn’t preclude potential coverage for L&M.

The court stated: “Absent an applicable exclusion, employers may legitimately expect coverage for such claims under comprehensive general liability insurance policies, just as they do for other claims of negligence.” &

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

A Recall Nightmare: Food Product Contamination Kills Three Unborn Children

A failure to purchase product contamination insurance results in a crushing blow, not just in dollars but in lives.
By: | October 15, 2018 • 9 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.


Reilly Sheehan, the Bethlehem, Pa., plant manager for Shamrock Foods, looks up in annoyance when he hears a tap on his office window.

Reilly has nothing against him, but seeing the face of his assistant plant operator Peter Soto right then is just a case of bad timing.

Sheehan, whose company manufactures ice cream treats for convenience stores and ice cream trucks, just got through digesting an email from his CFO, pushing for more cost cutting, when Soto knocked.

Sheehan gestures impatiently, and Soto steps in with a degree of caution.

“What?” Sheehan says.

“I’m not sure how much of an issue this will be, but I just got some safety reports back and we got a positive swipe for Listeria in one of the Market Streetside refrigeration units.”



Sheehan gestures again, and Soto shuts the office door.

“How much of a positive?” Sheehan says more quietly.

Soto shrugs.

“I mean it’s not a big hit and that’s the only place we saw it, so, hard to know what to make of it.”

Sheehan looks out to the production floor, more as a way to focus his thoughts than for any other reason.

Sheehan is jammed. It’s April, the time of year when Shamrock begins to ramp up production for the summer season. Shamrock, which operates three plants in the Middle Atlantic, is holding its own at around $240 million in annual sales.

But the pressure is building on Sheehan. In previous cost-cutting measures, Shamrock cut risk management and safety staff.

Now there is this email from the CFO and a possible safety issue. Not much time to think; too much going on.

Sheehan takes just another moment to deliberate: It’s not a heavy hit, and Shamrock hasn’t had a product recall in more than 15 years.

“Okay, thanks for letting me know,” Sheehan says to Soto.

“Do another swipe next week and tell me what you pick up. I bet you twenty bucks there’s nothing in the product. That swipe was nowhere near the production line.”

Soto departs, closing the office door gingerly.

Then Sheehan lingers over his keyboard. He waits. So much pressure; what to do?

“Very well then,” he says to himself, and gets to work crafting an email.

His subject line to the chief risk officer and the company vice president: “Possible safety issue: Positive test for Listeria in one of the refrigeration units.”

That night, Sheehan can’t sleep. Part of Shamrock’s cost-cutting meant that Sheehan has responsibility for environmental, health and safety in addition to his operations responsibilities.

Every possible thing that could bring harmful bacteria into the plant runs through his mind.

Trucks carrying raw eggs, milk and sugar into the plant. The hoses used to shoot the main ingredients into Shamrock’s metal storage vats. On and on it goes…

In his mind’s eye, Sheehan can picture the inside of a refrigeration unit. Ice cream is chilled, never really frozen. He can almost feel the dank chill. Salmonella and Listeria love that kind of environment.

Sheehan tosses and turns. Then another thought occurs to him. He recalls a conversation, just one question at a meeting really, when one of the departed risk management staff brought up the issue of contaminated product insurance.

Sheehan’s memory is hazy, stress shortened, but he can’t remember it being mentioned again. He pushes his memory again, but nothing.

“I don’t need this,” he says to himself through clenched teeth. He punches up his pillow in an effort to find a path to sleep.


“Toot toot, tuuuuurrrrreeeeeeeeettt!”

The whistles of the three lifeguards at the Bradford Community Pool in Allentown, Pa., go off in unison, two staccato notes, then a dip in pitch, then ratcheting back up together.

For Cheryl Brick, 34, the mother of two and six-months pregnant with a third, that signal for the kids to clear the pool for the adult swim is just part of a typical summer day. Right on cue, her son Henry, 8, and his sister Siobhan, 5, come running back to where she’s set up the family pool camp.

Henry, wet and shivering and reaching for a towel, eyes that big bag.

“Mom, can I?”

And Cheryl knows exactly where he’s going.

“Yes. But this time, can you please bring your mother a mint-chip ice cream bar along with whatever you get for you and Siobhan?”

Henry grabs the money, drops his towel and tears off; Siobhan drops hers just as quickly, not wanting to be left behind.


“Wait for me!” Siobhan yells as Henry sprints for the ice cream truck parked just outside of the pool entrance.

It’s the dead of night, 3 am, two weeks later when Cheryl, slumbering deeply beside her husband Danny, is pulled from her rest by the sound of Siobhan crying in their bedroom doorway.

“Mom, dad!” says Henry, who is standing, pale and stricken, in the hallway behind Siobhan.

“What?” says Danny, sitting up in bed, but Cheryl’s pregnancy sharpened sense of smell knows the answer.

Siobhan, wailing and shivering, has soiled her pajamas, the victim of a severe case of diarrhea.

“I just barfed is what,” says Henry, who has to turn and run right back to the bathroom.

Cheryl steps out of bed to help Siobhan, but the room spins as she does so.

“Oh God,” she says, feeling the impact of her own attack of nausea.

A quick, grim cleanup and the entire family is off to a walk-up urgent care center.

A bolt of fear runs through Cheryl as the nurse gives her the horrible news.

“Listeriosis,” says the nurse. Sickening for children and adults but potentially fatal for the weak, especially the unborn.

And very sadly, Cheryl loses her third child. Two other mothers in the Middle Atlantic suffer the same fate and dozens more are sickened.

Product recall notices from state regulators and the FDA go out immediately.

Ice cream bars and sandwiches disappear from store coolers and vending machines on corporate campuses. The tinkly sound of “Pop Goes the Weasel” emanating from mobile ice cream vendor trucks falls silent.

Notices of intent to sue hit every link in the supply chain, from dairy cooperatives in New York State to the corporate offices of grocery store chains in Atlanta, Philadelphia and Baltimore.

The three major contract manufacturers that make ice cream bars distributed in the eight states where residents were sickened are shut down, pending a further investigation.

FDA inspectors eventually tie the outbreak to Shamrock.

Evidence exists that a good faith effort was underway internally to determine if any of Shamrock’s products were contaminated. Shamrock had still not produced a positive hit on any of its products when the summer tragedy struck. They just weren’t looking in the right place.


Banking on rock-solid relationships with its carrier and brokers, Shamrock, through its attorneys, is able to salvage indemnification on its general liability policy that affords it $20 million to defray the business losses of its retail customers.


But that one comment from a risk manager that went unheeded many months ago comes back to haunt the company.

All three of Shamrock’s plants were shuttered from August 2017 until March 2018, until the source of the contamination could be run down and the federal and state inspectors were assured the company put into place the necessary protocols to avoid a repeat of the disaster that killed 3 unborn children and sickened dozens more.

Shamrock carried no contaminated product coverage, which is known as product recall coverage outside of the food business. The production shutdown of all three of its plants cost Shamrock $120 million. As a result of the shutdown, Shamrock also lost customers.

The $20 million payout from Shamrock’s general liability policy is welcome and was well-earned by a good history with its carrier and brokers. Without the backstop of contaminated products insurance, though, Shamrock blew a hole in its bottom line that forces the company to change, perhaps forever, the way it does business.

Management has a gun to its head. Two of Shamrock’s plants, including Bethlehem, are permanently shuttered, as the company shrinks in an effort to stave off bankruptcy.

Reilly Sheehan is among those terminated. In the end, he was the wrong person in the wrong place at the wrong time.

Burdened by the guilt, rational or not, over the fatalities and the horrendous damage to Shamrock’s business. Reilly Sheehan is a broken man. Leaning on the compassion of a cousin, he takes a job as a maintenance worker at the Bethlehem sewage treatment plant.

“Maybe I can keep this place clean,” he mutters to himself one night, as he swabs a sewage overflow with a mop in the early morning hours of a dark, cold February.


Risk & Insurance® partnered with Swiss Re Corporate Solutions to produce this scenario. Below are their recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

Shamrock Food’s story is not an isolated incident. Contaminations happen, and when they do they can cause a domino effect of loss and disruption for vendors and suppliers. Without Product Recall Insurance, Shamrock sustained large monetary losses, lost customers and ultimately two of their facilities. While the company’s liability coverage helped with the business losses of their retail customers, the lack of Product Recall and Contamination Insurance left them exposed to a litany of risks.

Risk Managers in the Food & Beverage industry should consider Product Recall Insurance because it can protect your company from:

  • Accidental contamination
  • Malicious product tampering
  • Government recall
  • Product extortion
  • Adverse publicity
  • Intentionally impaired ingredients
  • Product refusal
  • First and third party recall costs

Ultimately, choosing the right partner is key. Finding an insurer who offers comprehensive coverage and claims support will be of the utmost importance should disaster strike. Not only is cover needed to provide balance sheet protection for lost revenues, extra expense, cleaning, disposal, storage and replacing the contaminated products, but coverage should go even further in providing the following additional services:

  • Pre-incident risk mitigation advocacy
  • Incident investigation
  • Brand rehabilitation
  • Third party advisory services

A strong contamination insurance program can fill gaps between other P&C lines, but more importantly it can provide needed risk management resources when companies need them most: during a crisis.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at