Regulations and Compliance Requirements for Employment History Checks

As businesses evaluate candidates applying for open positions, the resume is often the first time any hiring manager learns about an applicant. A well-crafted resume can be a positive sign of an engaged worker who might be worth consideration. However, the resume is a document fraught with bias — and possibly falsehoods. Applicants want to look as appealing as possible on paper, after all, and that could mean embellishing some elements, such as their job history. That makes using a background check with employment history an important process.

Today, much of the hiring process see regulation applied in one form or another. For example, many states now restrict when and how you can inquire about a candidate's criminal background. Are there similar rules for employment history checks and resume verifications? Understanding your obligations is key to avoiding the potential for lawsuits, claims of discrimination, or regulatory fines. 

First, let's look at why you should use employment verification even if it means an added element of compliance. Then we'll explore the various rules and best practices you should know. 

Why Invest in Verifying Employment History At All?

Selecting individuals with the right skills to work for you is critical. Some employers have the time and flexibility to train applicants on the job, which can expand the hiring pool. However, in many other cases, you may want to find someone with specific experience, such as in project management or advanced technology. Applicants might appear to have such experience based on their resumes, but how can you be sure?

While it's hard to know precisely what someone did at a previous job, you can still confirm their dates of employment, title, and other information. Speaking with a prior employer to verify that someone has the claimed experience protects your business from substandard work by unqualified individuals. It's worth verifying employment simply to develop confidence in a candidate's capabilities.

So, are there regulations and rules to follow during this process?

Understanding How "Ban the Box" Impacts Employment Verification

Most employers today are already very familiar with "ban the box" and "fair chance" rules enacted in many states, counties, and cities nationwide. There is even a version for federal employment today. These laws typically state that employers may not make criminal history inquiries or use background checks until you conduct an interview or provide a conditional job offer. Do these rules constrain when and how you can ask about employment history, too?

In short, no. "Ban the box" rules only apply to criminal history inquiries. Contacting an employer to verify service dates, service time, and job titles does not fall under this umbrella. You may choose to verify employment at any point in the process. However, review the language of any applicable local legislation to ensure you do not face additional constraints.

You Still Must Follow the FCRA

Even though "ban the box" rules might not tie your hands about verifying employment, you should remain mindful of certain federal laws. Specifically under the Fair Credit Reporting Act, this process could be seen as a "consumer report." That designation is especially likely if you use a third-party consumer reporting agency to help you conduct employment verification.

Under the FCRA, you must obtain an applicant's written consent while providing them with a standalone disclosure of their rights and your intention to use consumer reports for employment purposes. One disclosure typically covers all the background check procedures you might use during hiring. As always, be certain you have a compliant FCRA notification process. Violating this law can open the door to hefty lawsuits.

Are There Regulations About Reference Check Questions?

When you contact an employer, are you legally barred from asking certain questions? What about when you're contacting professional references listed on a resume? In both cases, the answer is no — you can legally ask whatever you like, so long as it is not discriminatory. However, businesses and references don't have to provide you with an answer. As a best practice, most companies will refuse to disclose anything beyond basic information about someone's tenure.

Think about what questions you'd like to ask ahead of time. To be efficient, plan to ask about an applicant's start date, end date, and job title. You may also ask why the applicant departed from the business, but again, you may not receive an answer. 

Beware Salary Questions

Can you ask an employer what they paid an applicant? Including salary verification is important to some employers during the negotiation process. However, many states have outright banned considering salary information during the hiring process. Others have restricted the practice, and even more states have repeatedly considered doing so.

Employers may hesitate to disclose this information to another company as they may consider it a secret. It is often best to avoid these questions unless your business operates in an area where such inquiries are legal. Even then, navigate this area carefully and consider whether it has any relevance.

Will There Be Future Compliance Concerns About These Inquiries?

Though it seems unlikely in the current political environment, it is always possible that future legislators could find reasons to put limitations on employment verification processes. The only changes that might appear are further restrictions on sharing or asking about salary information. As for simple questions about where and when someone worked, there are currently no efforts to regulate or restrict the practice.

Compliance Concerns as an Employer Fielding Requests From Others

It's worth noting that you, as an employer, may sometimes find yourself on the opposite end of this process. It could be your HR team fielding phone calls from other companies or consumer agencies with questions about a former employee. Are there any compliance concerns to know about here?

As mentioned, most companies won't share anything other than objective facts about a candidate. It is a good idea for your business to follow this lead. Speaking subjectively about a candidate, especially sharing negative information, can invite litigation from applicants who feel you may have caused them to face discrimination or prejudice. Instead of playing with fire, simply provide the same information you'd see: service dates, job titles, etc.

Creating a Thorough Background Check Procedure for Your Business

The good news: there are very few major compliance concerns when verifying someone's employment history. So long as you follow the guidelines for using any kind of consumer report, you can safely and effectively conduct verifications to learn more about your candidates. Avoid potential pitfalls, such as salary questions, which may be illegal in some states. Otherwise, obtaining this information is a straightforward process.

A background check with employment history included can help you streamline your hiring process. By letting a trusted third party conduct the necessary legwork, you can stay focused on the daily demands of your business rather than working the phones all day long. The right partner ensures you understand your compliance requirements, too. With a clear idea of how to implement an effective way to verify work history, you can move forward with greater confidence in the candidates you select.


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Michael Klazema

About Michael Klazema The author

Michael Klazema is the lead author and editor for Dallas-based with a focus on human resource and employment screening developments

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