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What Employers Need to Know About Background Checks

By Michael Klazema on 3/11/2014

The Equal Employment Opportunity (EEOC) and the Federal Trade Commission (FTC) have issued a joint publication entitled, Background Checks, What Employers Need to KnowThe publication offers guidance from both agencies to employers when considering the background of applicants and employees in making employment-related decisions. The EEOC enforces federal laws against employment discrimination based on a person’s race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability, or genetic information. The FTC enforces the Fair Credit Reporting Act (FCRA), the law that protects the privacy and accuracy of the information in credit reports.

This update highlights the three main areas that these agencies discussed in the publication.

Before You Get Background Information
The EEOC offers the following guidance to employers before getting background information on an applicant or employee:

  • Treat everyone the same. It is important that if you conduct background checks on applicants and employees, that you conduct the checks on all applicants and employees the same.
  • Except in rare circumstances, do not try to get an individual’s genetic information, which includes family medical history.

The FTC requires the employer to follow these specific procedures before background information is obtained on an individual for employment purposes.:

  • Tell the applicant or employee that you might use the information when making a decision about his or her employment;
  • If you are asking for an “investigative report”, that is a report based on personal interviews about a person’s character, general reputation, personal characteristics, and lifestyle, you must tell the applicant or employee of his or her right to a description of the nature and scope of the investigation;
  • Get the individual’s written permission to conduct the background check; and
  • Certify to backgroundchecks.com or another company from which you are getting the report that you complied with the FCRA requirements and that you will not discriminate against the applicant or employee, or misuse the information in violation of federal or state equal employment laws or regulations.

Using Background Information
When using background information, the EEOC states you should: 

  • Apply the same standards to everyone;
  • Take special care when making employment decisions based on background problems that may be more common among people of certain protected characteristics. The EEOC stresses that background information should only be used if it is job related and consistent with business necessity; and
  • Be flexible when considering background information. Employers should be prepared to make exceptions for problems caused by a disability and revealed during a background check.

The FTC requirements related to the use of background information are two-fold, that is before and after taking adverse action. Before taking adverse action, the employer must:

  • Give the applicant or employee a notice that includes a copy of the consumer report you relied on to make your decision; and
  • Give the individual a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act”, received from backgroundchecks.com or another company that sold you the report. This allows the person an opportunity to review the report and explain any negative history.

After taking adverse action, the employer must tell the applicant or employee (orally, in writing, or electronically) the following:

  • That he or she was rejected because of the information in the report;
  • The name, address, and phone number of the company that sold the report;
  • That the company selling the report did not make the hiring decision, and cannot give specific reasons for it; and
  • That he or she has a right to dispute the accuracy or completeness of the report, and to get an additional free report from the reporting company within 60 days.

Disposing of Background Information
With regard to records, the EEOC wants employers to keep all personnel or employment records made for one year or after a personnel action is taken, whichever comes later. This requirement is extended to two years for education institutions, state and local governments, and federal contractors that have at least 150 employees and a government contract of at least $150,000.

The FCRA requires that disposal of the reports and all information gathered from them be disposed of in a secure manner. Records should be burned, pulverized, or shredded, and electronic information destroyed so that it cannot be read or reconstructed.

backgroundchecks.com offers compliance products and services to clients. Our General Counsel, Chris Lemens, hosts a webinar entitled, “A Final Consensus on Criminal Background Checks and Equal Employment Opportunity” that offers in-depth instructional knowledge about compliance in this area. The next webinar is scheduled for May 13th. Go here to register: http://www.backgroundbiz.com/campaigns/cceeo-webinar-invitation.html.

The joint publication also offers access to sites identified by the EEOC and the FTC of related topics that may be helpful to employers. The publication can be viewed here: http://business.ftc.gov/documents/0487-background-checks-what-employers-need-know


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