It is a common, recommended business practice for employers to conduct background checks on potential employees. Employment background checks, also known as consumer reports, can include criminal records, credit report, work history, educational background, and even social media use. However, employers must be diligent in adhering to strict guidelines regarding background checks. Any time you use an applicant’s or employee’s background information to make an employment decision − regardless of how you got the information, you must comply with federal laws.

The information used to make employment decisions must be jobrelated and not based on any protected category, to avoid discriminatory hiring practices.

JOB-RELATED

Background information used in hiring decisions must plainly and clearly be relevant to the job tasks. Recent guidance from the EEOC and the Federal Trade Commission, agencies with jurisdiction over background check compliance, clearly states that a policy that excludes everyone with a criminal record, for instance, from employment that is not “job- related and consistent with business necessity” is unlawful (unless it is required by federal law).

A conviction must be directly related to the job in question to be considered relevant in an employment decision. For example, a DUI conviction may be relevant for someone who drives a van as part of his job, but NOT for someone who is a custodian and not required to drive.  Therefore, a candidate cannot be rejected based on such a conviction.  Further, an arrest record alone may not be used to make hiring decisions. An arrest record does not establish that a person actually engaged in criminal conduct. However, an arrest may trigger an inquiry into whether the conduct

Underlying the arrest justifies an adverse employment action.

As an employer, you must prove a decision not to hire or promote someone based on his or her background check results is indeed job-related and consistent with business necessity. For a criminal conviction, the employer can prove this if it: (1) considers at least the nature of the crime, time since the criminal conduct occurred, and the nature of the job in question, and (2) gives an individual who may be excluded an opportunity to show why he or she should not be excluded.

Except in rare circumstances, disregard any information revealed about applicants or employees genetic information, which includes family medical history. Don’t ask medical questions unless you have objective evidence that he or she is unable to do the job or poses a safety risk because of the medical condition.

NON-DISCRIMINATORY

Discrimination based on race, color, national origin, sex, religion, disability, genetic information (including family medical history), and age (40 or older) is prohibited. Discrimination related to background checks can take different forms.

Treating job applicants with the same criminal records differently because of their race, color, religion, sex, national origin, or another protected characteristic is considered “disparate treatment discrimination.” For example, asking only people of a certain race about their financial histories or criminal records is evidence of discrimination.

Employers should also ensure that their policies do not significantly disadvantage people of a particular race, national origin, or another protected characteristic. This is known as “disparate impact discrimination.”  For example, employers may not enforce a policy that excludes people with certain criminal records if the policy or practice significantly disadvantages individuals of a particular race.

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 − despite the negative background information − unless doing so would cause significant financial or operational difficulty to the company.

While laws prohibiting employment discrimination technically apply to private employers with 15 or more employees, it is recommended that companies of all sizes abide by them.

BACKGROUND CHECK PROCESS

Employers must have written permission from job applicants and employees before getting background reports. This permission must be in writing and in a stand-alone document, not as part of another document such as an employment application. If you want the authorization to allow you to get consumer reports throughout the person’s employment, make sure the documents state this clearly.

Also, include a description of the nature and scope of the background investigation.

Before you reject a job applicant or employee based on results from a background check, you must provide all of the following:

  • a copy of A Summary of Your Rights Under the Fair Credit Reporting Act (downloadable here or available from screening company);
  • a copy of the consumer report you relied on to make your decision, including the name, address, and phone number of the company that sold the report;
  • notice that the hiring decision was made by your company based on specific information in the report;
  • notice that he or she has a right to dispute the accuracy or completeness of the report;
  • Notice that he or she can get an additional free report from the reporting company upon request within 60

RETENTION AND DISPOSAL OF CONSUMER REPORTS

Background check results and all other hiring records (regardless of whether the applicant was hired or not) must be retained for one year after the records were made or after a personnel action was taken, whichever comes later (record retention requirements may be longer in certain circumstances, such as for educational institutions and federal contractors). If the applicant or employee files a charge of discrimination, you must maintain the records until the case is concluded.

After the retention period has lapsed, you must securely dispose of the background check results report and any information you gathered from it. That can include burning, pulverizing, or shredding paper documents and disposing of electronic information so that it can’t be read or reconstructed.

ADDITIONAL RESTRICTIONS

In addition to adherence to these federal guidelines related to the use of consumer reports in employment decisions, you should also review the laws of your state and municipality regarding background reports or information. Currently, ten states limit employers’ use of credit information in employment decisions, and several states limit the use of criminal records.

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