Employers may consider requiring background checks of applicants and employees when making personnel decisions. This includes hiring, retention, promotion, and reassignment. Some employers may want to find out about an applicant’s work history, education, criminal record, financial history, or use of social media. However, anytime you use an applicant or employee’s background information to make an employment decision, you must comply with federal laws that protect the applicant or employee from discrimination, which are enforced by the Equal Employment Opportunity Commission (EEOC). Additionally, when you run background checks, you must comply with Fair Credit Reporting Act (FCRA), which is enforced by the Federal Trade Commission (FTC).
It is a good idea to review the laws of your state and municipality regarding background reports and information because states and municipalities regularly use that information for employment purposes. Below we will explain how to comply with both federal nondiscrimination laws, EEOC, and the FTC following every step of the background information process.
Before Getting Background Information
EEOC
- Make sure you are treating every applicant and employee equally. It is illegal to check the backgrounds of applicants and employees when it is based on a person’s race, origin, color, sex, religion, disability, genetic information (including family history), or age. If you are only asking people of a certain race about their financial history, that is evidence of discrimination.
- If you are able to obtain the applicant or employee’s genetic information, don’t use it to make an employment decision.
FTC
- If you get background information (for example, a credit or criminal background report) from a company in the business of compiling background information, there are additional procedures the FCRA requires beforehand:
- Tell the applicant or employee you might use the information for decisions about his or her employment. This notice must be in writing and in a stand-alone format. The notice can’t be in an employment application. You can include some minor additional information in the notice (like a brief description of the nature of consumer reports), but only if it doesn’t confuse or detract from the notice.
- If you are asking a company to provide an “investigative report” – a report based on personal interviews concerning a person’s character, general reputation, personal characteristics, and lifestyle – you must also tell the applicant or employee of his or her right to a description of the nature and scope of the investigation.
- Get the applicant’s or employee’s written permission to do the background check. This can be part of the document you use to notify the person that you will get the report. If you want the authorization to allow you to get background reports throughout the person’s employment, make sure you say so clearly and conspicuously.
- Certify to the company from which you are getting the report that you:
- notified the applicant and got their permission to get a background report;
- complied with all the FCRA requirements; and
- won’t discriminate against the applicant or employee, or otherwise misuse the information in violation of federal or state equal opportunity laws or regulations.
Using Background Information
EEOC
Any background information you receive cannot be used to discriminate in violation of federal law. This means:
- Apply the same standards to every applicant and employee, regardless of race, national origin, color, sex, religion, disability, genetic information, or age.
- Take care when basing employment decisions on background problems that might be more common among people of a certain race, color, national origin, sex, religion, disability, or age.
- Be prepared to make exceptions for problems revealed in a background check that were caused by a disability.
FTC
Before taking an adverse employment action, you must give the applicant or employee
- a notice that includes a copy of the consumer report; and
- a copy of “Summary of Your Rights Under the Fair Credit Reporting Act”, which you should receive from the company that provided you with the report.
When you give the applicant or employee notice, the person can review the report and explain the negative information that was uncovered in the report.
After you take adverse action, you must tell the applicant or employee, orally, in writing, or electronically:
- that they were rejected because of information in the report;
- the name, address, and phone number of the company that provided the report;
- the company selling the report did not make the hiring decision; and
- the applicant or employee has the right to dispute the accuracy of the report, and get an additional report from the reporting company within 60 days.
Disposing of Information from the Background Check
EEOC
- Any employment records you make or keep must be preserved for one year after the records were made, or after personnel action was taken, whichever comes later.
- For educational institutions and state and local governments, the EEOC extends this requirement to two years.
- The DOL extends this requirement to two years for federal contractors that have at least 150 employees and a government contract of at least $150,000.00
- If the applicant or employee files a charge of discrimination, you must maintain the records until the case has concluded
FTC
- Once you have satisfied all recordkeeping requirements, you may dispose of any background reports that were received.
- However, the law requires you dispose of the reports and any information gathered from them, securely. This includes burning, pulverizing, or shredding paper documents and disposing of electronic information.
If you need further information about EEOC, please visit www.eeoc.gov or call the EEOC toll-free number, 1-800-669-4000
If you need further information about federal laws relating to background reports, visit www.business.ftc.gov, or call the FTC toll-free number, 1-877-382-4357
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