Many companies choose to conduct background checks when making decisions about an individual's employment, either as part of the hiring process or in connection with the promotion or reassignment of a current employee. A background check can either confirm information that an applicant or employee has supplied, or, in some cases, it can bring new information to light that may result in a negative employment decision. As such, it is a good idea for employers to run checks through reputable contractors that specialize in background screening.
Proceed With Caution
A background check can be a useful tool when making employment decisions by providing companies with information about an individual's education and prior employment, criminal record, financial history, and other information that is relevant to the position. Remember that as a general rule, information requested and obtained should be limited to that which is essential for determining if a person is qualified for the job.
While federal law generally does not prohibit employers from asking questions about an applicant's or employee's background or requiring a background check, several state laws prohibit or limit an employer's use of, or inquiries regarding, consumer credit reports, criminal records, or certain other components of a background check. Therefore, it is prudent to consult with a knowledgeable employment attorney prior to conducting any background checks to be sure your company's actions comply with the law.
Any time an employer uses an applicant's or employee's background information to make an employment decision, it must comply with applicable federal laws that protect applicants and employees from discrimination. For employers with 15 or more employees, that includes discrimination based on race, color, national origin, sex (including sexual orientation and gender identity), religion, disability, and genetic information (including family medical history). Employers with at least 20 employees also may not discriminate based on age (40 or older) under federal law. States may have similar nondiscrimination laws that apply to smaller employers and/or that include additional protected groups.
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It is important to treat everyone equally. The decision to check the background of an applicant or employee should not be made based on a person's race, national origin, color, sex, religion, disability, genetic information, or age. For example, checking the criminal records or credit histories only for individuals of a certain race is evidence of discrimination. Similarly, apply the same standards to everyone. For example, if you don't reject applicants of one ethnicity with certain financial histories or criminal records, you can't reject applicants of other ethnicities because they have the same or similar financial histories or criminal records.
Be careful when basing employment decisions on background problems that may be more common among people of a certain race, color, national origin, sex, or religion; among people who have a disability; or among people age 40 or older. For example, employers should not use a policy or practice that excludes people with certain criminal records if the policy or practice significantly disadvantages individuals of a particular race, national origin, or another protected characteristic, and does not accurately predict who will be a responsible, reliable, or safe employee.
Additionally, be prepared to make exceptions for problems revealed during a background check that were caused by a disability. For example, if you are inclined not to hire a person because of a problem caused by a disability, you should allow the person to demonstrate his or her ability to do the job.
Fair Credit Reporting Act Requirements
In addition to nondiscrimination laws, employers that get reports from companies in the business of compiling background information must comply with the federal Fair Credit Reporting Act, or FCRA.
Among other things, the FCRA requires an employer to notify an applicant or employee that background information may be used to make employment decisions, and to obtain the individual's written authorization prior to getting a background report. Note that state laws may require written permission before obtaining a background check as well. The FCRA also requires employers to certify to the company compiling the background report that they have complied with the law and will not discriminate or otherwise misuse the information contained in the report in violation of federal or state law.
The Fair Credit Reporting Act also imposes additional requirements when an employer makes a negative employment decision based on information contained in the background report. These include providing the applicant or employee with a copy of the report as well as a summary of his or her rights under the FCRA before taking any negative employment action, and notifying the applicant or employee after taking a negative employment action that such action was due to information contained in the report. The employer also must provide certain information regarding the company conducting the background check and tell the applicant or employee that he or she has a right to dispute the accuracy of the report.
Finally, a word about drug testing, which falls slightly outside the scope of routine background checks. While federal law generally does not prohibit the practice of testing employees for drugs, there are several states that restrict or question an employer's ability to randomly drug test employees who are not in safety-sensitive positions. Thus, it is very important that employers work with experienced employment law counsel to familiarize themselves with the various state laws that may apply to their organization before implementing a drug-testing program. Furthermore, under certain circumstances, someone with a history of alcoholism or drug addiction may be protected under federal and state nondiscrimination laws, such as the federal Americans with Disabilities Act.
Remember, background checks are just one piece of the hiring puzzle—and employers must remain fair and legally compliant in all aspects of the process to minimize exposure to lawsuits and fines. It is always wise to contact an attorney if you have specific questions. In the meantime, to learn more about interviews, hiring, and avoiding discriminatory missteps, visit us at HR360.com.