Man on cell phone sits with woman on a laptop as they collaborate

5 Important Facts About Employer Background Checks

by Eileen Hess, PHR, SHRM-CP, on December 15, 2017
Conducting background checks is a vital yet risky mission that employers take on when hiring and retaining employees. Failure to vet a potential new employee could place a company’s assets and its employees in jeopardy. Many positions require various levels of background checks for employees to be eligible to work.  However, in trying to accomplish this added task, employers  may miss some mandatory steps in the process and find themselves in hot water with the Federal Trade Commission for failure to follow Fair Credit Reporting Act laws, the Equal Employment Opportunity Commission guidance on background checks, and state regulations.

Many new state and local laws enacted in 2017 have already taken effect or will go into effect in 2018 and limit or restrict criminal background check inquiries. In light of recent trends and the promise of increased state restrictions on the horizon, employers need to be aware of their rights, duties and limitations before conducting background checks.

When conducting background checks on prospective employees, an employer must take into account the nature of the position when determining the scope of the inquiry. For example, an employer hiring a bookkeeper would certainly want to check the criminal history report for convictions involving fraud or theft. However, the employer must remember that automatically rejecting applicants for an arrest or conviction, especially when the past convictions do not relate to the essential duties of the job, is treading on thin ice and may make the employer subject to a claim of discrimination.

Employers should be able to demonstrate that federal and state mandates were followed, all applicants were held to the same job-related standards, and blanket policies such as “applicants with criminal histories are ineligible to work” are not in effect.  

Within the limitations imposed by their operating location, employers who currently do not consider criminal history or credit history as part of their pre-hire process should consider implementing a background check program depending on the job duties of the position and the nature of the employer’s business, particularly jobs involving confrontation, dangerous tools, weapons, and entry into private homes. Employers face the challenge of safeguarding their business assets and the well-being of their workers, in addition to complying with the limitations and restrictions in place in the jurisdictions in which they operate.  Choose a reputable background provider that emphasizes compliance with the Fair Credit Reporting Act. The FCRA governs the way reporting agencies handle consumer information to ensure accuracy, fairness, and privacy. 

5 Important Employer Takeaways:
  1. Know the limitations or ordinances involving criminal background inquiries in each state or municipality in which the employer’s company operates.
  1. Develop a written process for conducting background inquires that ensures state and federal compliance and that is consistently implemented company wide.  Modifications will be required to accommodate individual state operating locations.  Do not assume the background provider has this in place. Due diligence remains the responsibility of the employer.    
  1. Create a Notice and Disclosure form that explains the company’s intent to conduct a background check and receive the applicant’s/employee’s written permission before obtaining the report. Applicants should also verbally be made aware that the company will be completing a background check during the interviewing process.
  1. If an adverse action is taken based on information contained in one of these consumer reports, the applicant/employee must be provided in writing a notice of the adverse action. The notice must contain the name, address, and telephone number of the consumer reporting agency that created the report, a statement the consumer reporting agency did not make the adverse decision, notice that the applicant has a right to obtain a free copy of the report, and the applicant’s/employee’s right to dispute the information in the report.
  1.  Applicants should have the opportunity to meet with the employer and explain irregularities in their background checks. Many applicants are able to reasonably explain the irregularities and to provide documentation to support their version of events.        

Eileen Hess, PHR, SHRM-CP

Eileen carries out the role of Human Resources Manager for LandrumHR in Pensacola, Florida, serving clients in multiple states. In this role, she advises clients on current and trending state and federal laws influencing human resources. Eileen also provides assistance in dispute resolution and utilization of best human resources standards. She serves as a knowledgeable and trusted advisor to clients “helping them to work a better way.” Eileen has over 25 years of human resources experience in the corporate, healthcare, and manufacturing environments, and is certified as a Professional in Human Resources (PHR) through the Human Resource Certification Institute and the Society for Human Resource Management.

View more blogs by Eileen Hess, PHR, SHRM-CP