Who Pays for Background Checks? | DCR Workforce Blog

Who Pays for Background Checks?

The recent efforts by the Kentucky Labor Cabinet to enforce the state’s law prohibiting employers from charging job aspirants for background checks (and medical tests) brings to light a dormant issue which has avoided much discussion and detection. Many states in the US do make it illegal to pass on such charges to prospective employees but we all know that the matter is more honored in its breach. Kentucky’s plan to impose penalties ranging from $100 to $1000 per aggrieved worker does create a daunting deterrent to such violations in the future. Voluntary admission of transgression provides safe harbor benefits which will not apply to cases which are tried on the basis of a complaint.

Background checks:

Background checks are used to screen a person on the basis of their criminal, commercial and financial records and typically help with past employment verification and credit score to establish trustworthiness and for safety and security reasons.

Various searches can be conducted with focus on verifying aspects of a person’s Education records, Employment records, Licensing records, Medical, Mental, and Physiological evaluation and records, skills assessment, reference checks; Citizenship, immigration, or legal working status; Driving and vehicle records, Drug tests, Financial information, Military records, Social Security Number; credit reports and Patriot Act searches, arrest, incarceration, and sex offender records, Litigation records with specific focus on participation in qui tam suits.

Resume frauds and threat of negligent hiring charges generally drive the need for background checks higher. Using them purposes like unlawful discrimination (or employment discrimination), identity theft, and violation of privacy is illegal and carries its own consequences.

Conflicting Information:

While background checks are necessary and useful in different ways for both businesses and individuals, there is no consensus on the method employed to obtain them. The numerous queries posted in forums online stand testimony to the reigning confusion in the minds of people due to the varied opinions being circulated like some of the following:

  • Commercial businesses must pay for pre-employment background checks.
  • Non-profits are not required to pay and can ask the volunteer/employee to pay as a way to ascertain their commitment to the task being signed up for.
  • Some believe tenants are required to pay up while others think the landlord needs to pay.
  • Many people are voluntarily buying their own background checks in the run-up to a job interview. Through this they get to know what a potential employer would learn about them through such verification and may also resolve any errors, conflicts (which could occur when someone makes a wrong entry of their Social Security number) and identity thefts.
  • An individual must provide his/her consent in order for the employer to obtain a credit report.

Perception of Employers:

The general consensual opinion likes to look upon employees being asked to pay for the background check as a scam and something one must avoid doing when seeking a job though it is acceptable when they are looking to rent a house. Whether it is illegal to make the employee pay for a background check or not, employers do end up asking the candidates to cough up for the checks.

  • Background checks are expensive and tend to be recurring as employees hop jobs and do not stay long enough to justify the investment. So, it is not always easy to consider it as part of the cost of doing business.
  • Then there is the threat of facing charges for discriminatory practices based upon the information revealed by the background checks.  Getting the employee to initiate the background check could protect an employer from such exposure, while allowing them to conduct the required verifications and avoid indictment for negligent hiring.

No Real Answer:

The stand taken by the different state governments also makes it difficult to answer the question on who picks up the tab for the background checks. At best, the answer goes ‘It depends’ – because it really depends upon the particular state the employer is in and the laws in force in that state. This is so because some states, like Kentucky, expressly prohibit employers from passing on the cost of pre-employment screenings while others do not render it unlawful. Even in such states, some employers choose to assume the costs, as a normal cost of doing business or as a HR best practice, as the case may be.

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.