Legal Considerations for Employee Background Checks (Part 1)

Do you conduct background checks on job applicants? Have you ever thought of doing so? If you answered ‘yes’ to either of these questions you need to be aware of the legal considerations.

There are a number of federal and state laws, along with local ordinances in some cities, which govern background checks. At the federal level there is the U.S. Equal Employment Opportunity Commission (EEOC) and Title VII of the Civil Rights Act of 1964, which states in part “…a person cannot be denied employment based on a criminal record alonethe decision to hire or not hire must be based on a business necessity…” Some of the points to consider include, but are not limited to:

  • The nature and gravity of the offense or offenses
  • The time that has passed since the conviction and or completion of the sentence
  • The nature of the job held or sought

The EEOC has issued extensive guidelines for employers when considering the criminal history of a job applicant or employee and new guidelines were issued in April 2012. At the state level, 17 states have passed “Ban the Box” laws where your job application cannot ask if the applicant has ever had a criminal conviction. There are also 100 cities/counties that have passed a similar ordinance.

Another federal law that will apply is the Fair Credit Reporting Act (FCRA), which set national standards for employment screening done by an outside company called a “consumer reporting agency.” Under FCRA, a background check is called a “consumer report” – the same name given to your credit report – and the following cannot be reported:

  • Bankruptcies after 10 years
  • Civil suits, civil judgments and records of arrest, from date of entry, after seven years
  • Paid tax liens after seven years
  • Accounts placed for collection after seven years
  • Any other negative information (except criminal convictions) after seven years

Also, under FCRA you must obtain an applicant’s permission to obtain their credit report and this has been interpreted to include the driving history or Motor Vehicle Report (MVR).

As you can see, conducting a proper and fair background check is not easy, but it’s an effective way to discover potential issues that could hurt your business.

Download this whitepaper: “Protect Your Business: Employee Background Checks.”

Click here for more risk management resources to strengthen your loss prevention efforts.

-Tim Hoffmann

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