What Employers Need to Know When Doing a Background Check

In an effort to hire the best employees, employers often look at an employee’s background – previous employment, credit history, and criminal history. If you perform background checks, you know you must comply with the Fair Credit Reporting Act (FCRA), but what other federal, state, and local laws exist? Here are some key points to remember and consider:

When can employers perform background checks?

With the exception of some bans on federal contractors conduct criminal background checks prior to the offer, federal law generally does not prohibit criminal background checks. However, state and local laws may limit when you can conduct criminal background checks on applicants or employees and how you can use that information. For example, some states allow background checks only after you make a conditional job offer. These laws may also limit how and when you can use a potential employee’s criminal history.

What advice should you give during the background check?

If you use a third party agency (a screening agency, private investigator or other third party), you must comply with the requirements of the Fair Credit Reporting Act (FCR). If the FCRA applies, you must provide a disclosure and receive clearance before proceeding with any background checks. Additional requirements apply if you make a negative employment decision based on the background check. For example, before making a decision, you must provide the plaintiff with a notice of adverse action, a copy of the background report, and an opportunity to rebut the contents of the background report. The FCRA does not limit your ability to make an adverse decision – it simply requires that you provide the notice before making it.

The Equal Employment Opportunity Commission has also non-binding advice which discusses how employers should use criminal history information to make hiring decisions. These guidelines state that an employer should generally not screen out applicants based on prior arrests or convictions (for example, screen out anyone convicted of a felony). Instead, the EEOC advises employers to create a focused selection process to allow for individualized assessment based on a candidate’s beliefs. For example, you would consider the nature of the offense and the elapsed time, as well as the nature of the position the candidate is applying for to determine if that particular arrest or conviction would preclude hiring.

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Here are some things to keep in mind if you are doing background checks:

  • Review all applicable federal, state, and local laws to confirm what basic information you may collect and how you may use that information. For example, New York prohibits investigations into an arrest that is not in progress or has not resulted in a conviction and requires that you complete an individualized assessment using eight different factors (e.g., time elapsed since arrest). offence, age at time of offence, seriousness of offence, etc.) before refusing employment or taking any action adverse to employment based on a prior criminal conviction.

  • Distinguish between arrests and convictions and, as a best practice, develop a process that allows for individualized review based on the position and any potential convictions.

© 2022 Bradley Arant Boult Cummings LLPNational Law Review, Volume XII, Number 111

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