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Tips for employee background checks

Many employers rely on background checks when making important hiring decisions. In doing so, they need to comply with a patchwork of local, state, and federal laws.

While federal law does not generally bar criminal background checks, state and local laws may limit when or how you may use this information. Likewise, there are clear federal rules you need to follow when conducting credit checks, with state laws overlapping.

For example, some states only allow background checks after you have made a conditional job offer. Others limit how you use a candidate’s criminal history.  Here is some general advice:

  1. Consistent process. When deciding to conduct background checks, apply the same standards to every applicant for that position. You can run into legal issues if you run a haphazard process and it’s found, for example, that you tend to conduct more background checks for people of a certain race or other protected status.
  2. Notices and consent. If you use a third-party screening agency, you must comply with the requirements of the Fair Credit Reporting Act (FCRA). That includes notifying candidates ahead of time and obtaining their written consent.
    If you make an adverse hiring decision based on the background data, you must notify the applicant, provide them a copy of the report, and give them an opportunity to refute its contents. You don’t want to miss out on a good employee because a background report was incorrect.
  3. Criminal history. Many states, counties, and local municipalities have so called “ban-the-box” laws that prohibit employers from asking about criminal history on job applications. Generally, employers in those areas can ask about any criminal history later in the process.
    However, laws vary on how you can use this information. The Equal Employment Opportunity Commission (EEOC) has non-binding guidance which indicates employers should generally avoid blanket bans on employees with prior convictions. Instead, employers should create an individualized screening tool that takes other factors into consideration.
    New York, for example, requires employers to weigh eight different factors (e.g., time elapsed since offense, age at time of offense, severity) before making adverse hiring decisions.
  4. Credit history. Some states prohibit the use of credit reports for hiring decisions. As a rule, employers should only obtain credit reports when it’s clearly relevant to the position and would be considered a business necessity.

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