Fresh Guidance on Background Checks | DCR Workforce Blog

Fresh Guidance on Background Checks

background checksBackground checks have always been a challenging aspect of hiring.  Employers are expected to know all about a job applicant or employee to secure the safety of the workplace but cannot infringe on the candidate’s right to privacy. The U.S. Equal Employment Opportunity Commission (EEOC) enforces federal laws against employment discrimination while the U.S. Federal Trade Commission (FTC) enforces the Fair Credit Reporting Act, the law that protects the privacy and accuracy of the information in credit reports.  The regulations issued by these two federal agencies are hazy at best, contradictory at worst. , Employers walk the “compliance tight rope”, while some job applicants and employees remain unsure of where their rights to privacy begin and end.

Here is some good news.

The UEEOC and FTC co-published two user-friendly technical assistance documents for employers, employees and job applicants. They have come together to explain how the agencies’ respective laws apply to background checks performed for employment purposes while reiterating the rights and responsibilities of both parties. This guidance provides clarity and assurance to people on whether their actions are legally permissible.

Guidance for Employers:

  • Employers can consider the backgrounds of applicant and employees when making personnel decisions – including hiring, retention, promotion, and reassignment.
  • Except for certain restrictions related to medical and genetic information, it’s not illegal for an employer to ask questions about an applicant’s or employee’s background, or to require a background check to learn more about the person’s work history, education, criminal record, financial history, medical history, or use of social media.
  • Employers must get written permission from job applicants before initiating the background verification process.
  • Regardless of where the information was obtained, it is illegal to discriminate based on a person’s race, color, national origin, sex, religion, age (40 or older), disability, genetic information, or family medical history, when requesting or using background information for employment.
  • Employers must comply with the federal non-discrimination laws and the Fair Credit Reporting Act when compiling background information.  They must also adhere to any other State and municipality regulations where the individual will be assigned to work.
  • Consistency is critical. When investigating for criminal records, financial history or other sensitive areas apply the same process to every candidate.
  • A candidate’s genetic information, or medical information, should never be requested without objective evidence that the candidate’s medical condition poses a safety risk or will cause the individual to be unable to do the job.
  • Before compiling background information on a candidate, let the person know that the information obtained will influence the decisions regarding hiring, promotion, retention or reassignment. Provide a separate notice to the individual in a stand-alone format; not as additional information included in any other document. The person being investigated must be informed that they have a right to know the exact nature and scope of the investigation being commissioned.
  • The potential employer (or company commissioning the background check) must certify that the individual has been informed and has granted permission for the specified checks.
  • The employer must be able to demonstrate that the background checking process does not have a disparate impact on individuals of a particular race, national origin or other protected characteristic.
  • If an employer believes that any disability may cause issues with delivery on the job, the person will be still given an opportunity to demonstrate the ability to do the job – unless such a trial would cause significant operational or financial difficulty.

 Guidance for Job Applicants and Employees:

  • Be aware that it is not illegal for potential employers to ask about your background, as long as the employer does not unlawfully discriminate.
  • Candidates can be rejected for refusing to agree to background checks or drug tests that clearly are aimed at determining suitability for the position at hand.
  • If and when you are turned down for a job or denied a promotion based on information in your background reports, you have the right to review the reports for accuracy and will be given an opportunity to correct any mistakes or offer further explanation regarding the findings.

In case of Adverse Decision (Not hiring or Firing):

  • After every adverse employment action, an employer needs to issue a notice to the individual who was investigated. Written notification of the reason for the decision should be provided, followed by a conversation.
  • A copy of the consumer report on which the decision was based must be shared along with the name, address and phone number of the company that provided the report.
  • The person shall receive a summary of “Rights under the Fair Credit Reporting Act”.
  • The person shall be given an opportunity to explain the negative information and dispute the accuracy and completeness of the report.  The individual shall also receive an additional free report from the reporting company within 60 days.

Disposal of Information Obtained:

  • All records of persons (whether hired or not) shall be preserved for one year after being made or personnel action was taken; whichever is later.
  • Educational institutions, state and local governments and federal contractors with at least 150 employees (or federal contract worth $150000) will have to retain these records for 2 years.
  • When facing any charges of discrimination, the records will have to be retained until the case is concluded.
  • Disposal will have to be through a secure method – like burning, pulverization or shredding.

More detailed information in the matter can be obtained from the websites of the two agencies.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.