Employee Management

Guidelines when conducting background checks

What you need to know about conducting background checks, from start to finish.

By HR360

As part of the hiring process, employers sometimes want to consider the backgrounds of individual applicants — for example, a person's work history (not to include salary history), education, or criminal record. While additional facts may help an employer make a more informed decision, it is essential that employers comply with federal and state laws governing access to, and use of, background information.

Before you begin

While federal law generally does not prohibit employers from asking questions about an applicant's background or requiring a background check, several state laws prohibit or limit an employer's use of salary history, consumer credit reports, criminal records, or certain other components of a background check.

Certain states and localities also prohibit discrimination based on credit or criminal history information. Therefore, it is prudent to consult with a knowledgeable employment attorney prior to conducting any background checks to be sure your company's actions comply with the law.

Employers that get reports from companies that are in the business of compiling background information must comply with the federal Fair Credit Reporting Act (FCRA), which, among other things, requires the employer to notify an applicant that background information may be used to make employment decisions, and to obtain the applicant's written authorization prior to getting a background report. State laws may also require written permission before obtaining a background check.

Using background information

Regardless of where background information is obtained, it is illegal for employers subject to federal nondiscrimination laws to discriminate based on a person's race, color, national origin, sex (including pregnancy, sexual orientation, and gender identity), religion, age (40 or older), disability, or genetic information when requesting or using background information for employment. States may have similar nondiscrimination laws that apply to smaller employers and/or that include additional protected groups. 

Keep the following do's and don'ts in mind when using background information:

  • DO treat everyone equally. The decision to check an applicant's background — and any employment action taken as a result of the information revealed — should not be based on a person's race, national origin, color, sex, religion, disability, genetic information, age, or other protected characteristic.

  • DON'T seek out information that is not relevant to the position. As a general rule, information obtained and requested through the pre-employment process should be limited to that which is essential for determining if a person is qualified for the job. Moreover, in some states and localities, employers are precluded from asking candidates about their salary history, so be sure to check the law in your area or consult with an attorney.

  • DON'T use a policy or practice that excludes people with certain background issues if it significantly disadvantages individuals of a particular race, national origin, or another protected characteristic. Unless the policy or practice is "job related and consistent with business necessity," it may be in violation of the law.

  • DO be prepared to make exceptions for problems revealed during a background check that were caused by a disability. Employers covered by the federal Americans with Disabilities Act (and certain state disability discrimination laws) may be required to provide reasonable accommodation to a job applicant with a disability, unless doing so would cause significant financial or operational difficulty for the employer.

  • DO maintain applicant records in accordance with the law. Under laws enforced by the U.S. Equal Employment Opportunity Commission, any personnel or employment records an employer makes or keeps (including all application forms, regardless of whether the applicant was hired, and other records related to hiring) generally must be preserved for one year after the records were made, or after a personnel action was taken, whichever comes later.

  • DO keep background check information confidential. Information pertaining to an applicant's background, in particular concerning matters such as criminal records and financial history, may be sensitive or private and should be kept confidential.

  • DO provide required notices in the event of a negative hiring decision. The FCRA requires an employer to provide certain notices to an applicant that is not hired based on information that is obtained through a company in the business of compiling background reports.

Background checks can be an effective means of helping employers determine which applicants are most qualified for a particular job. At the same time, employers must proceed with caution and ensure that their policies and practices related to the use of the information obtained do not violate federal and state nondiscrimination laws. Due to the complexities of the law in this area and the sensitive nature of background checks, it is important to consult with an employment attorney before conducting any background checks.

HR360 is the award-winning online HR library featuring easy-to-understand guidance on federal and state labor laws and Health Care Reform along with interactive HR tools and hundreds of forms and posters. HR360 also features step-by-step guidance in key HR areas such as hiring, performance reviews, disciplining, and termination. Reviewed and maintained by a team of attorneys, HR360 helps employers nationwide successfully manage their employees while complying with changing employment laws.

The information and materials herein are provided for general information purposes only and are not intended to constitute legal, tax or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy.

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