Dos and Don’ts in Using Background Checks in Employment Decisions

Background checks are an extremely useful tool for employers in making employment decisions and can often help employers avoid mistakes in the hiring process. In some situations, background checks may even be necessary, such as when a position requires security clearance. When conducting a background check, employers generally seek guidance about a prospective employee's general character and suitability for a particular position. Specific information that may be used in this assessment includes verification of the applicant's social security number and past addresses, criminal record, driving record, credit history, education and past employment, professional licensure, reference checks, bankruptcy records, military service records, and even social media presence. Employers should be aware of certain legal requirements that may be relevant to each of these categories of information.

With the exception of certain restrictions related to medical and genetic information, the law permits employers to require background checks or question applicants about their background. However, any time background information is used to make employment decisions, there are a number of federal and state laws with which employers must comply. Most notably, employers must adhere to federal non-discrimination laws, enforced by the Equal Employment Opportunity Commission ("EEOC"), and the Fair Credit Reporting Act ("FCRA"), enforced by the Federal Trade Commission. Accordingly, employers must be extremely cautious when conducting background checks and making employment decisions based on those checks. The following tips can help employers avoid violations of federal and state laws when conducting background checks.

Before Conducting a Background Check

• Apply the same standards to everyone, regardless of their race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (e.g., if a conviction of reckless driving disqualifies an applicant, it should disqualify all applicants regardless of race, national origin, etc.).
• When using a third-party credit reporting agency ("reporting agency") to conduct a background check, employers must provide applicants with prior written notice, informing them that any information discovered may be used in employment decisions. This notice cannot be part of an employment application.
• Always obtain written permission before conducting a background check. This permission may take the form of a signature on the document used to notify the individual of the report.
• When using a reporting agency to provide an "investigative report" based on personal interviews concerning the character, general reputation, personal characteristics, and lifestyle of an applicant, employers must inform that individual of his or her right to a description of the nature and scope of the investigation.
• When using a reporting agency, employers must certify to the reporting agency that: (1) the applicant gave his or her permission for the background report; (2) the employer has complied with all FCRA requirements; and (3) the employer will not discriminate against the applicant, or otherwise misuse the information in violation of federal or state laws or regulations.

Employment Decisions Based on Background Information

Non-Discrimination

• To comply with non-discrimination laws, employers must not use background information in a discriminatory manner, meaning employment decisions must not be based on race, national origin, color, sex, religion, disability, genetic information, age, or any other protected status.
• Be cautious when making employment decisions based on information or occurrences that tend to arise more commonly among people of a certain protected class. For example, the EEOC advises employers against policies that exclude individuals with certain criminal records if the policy significantly disadvantages individuals of a particular race or color.
• Employment decisions should not be based on arrest records, as opposed to conviction records. Because there is evidence that racial and ethnic minorities may be treated differently at the arrest level, the EEOC warns that decisions based on arrest records may lead to discrimination, particularly since arrest records alone do not establish that any criminal conduct has actually occurred.
• Be prepared to make exceptions when problems identified in a background check were caused by a disability. The EEOC advises that in such a situation, unless doing so would result in significant financial or operational difficulty, employers should allow the person to demonstrate his or her ability to perform the job before making an employment decision.
• Though no such law exists in Virginia, many states, counties, and municipalities have enacted laws prohibiting employers from asking applicants about their criminal history until after a conditional offer of employment is made. Some states take this one step further and prohibit employment decisions based on criminal or credit history.

The FCRA

• Though the requirements of the FCRA apply only to employers that use a reporting agency to furnish background information, employers should follow FCRA guidance even when gathering background information independently, without a reporting agency.
• The FCRA mandates that before an employer may take adverse employment action, the employer must provide the applicant with a notice that includes copies of the consumer report the employer relied on in its decision making and "A Summary of Your Rights Under the Fair Credit Reporting Act." This notice gives the individual an opportunity to review the report and explain any negative information.
• After adverse employment action is taken, an employer must inform the applicant, orally, in writing, or electronically:
  • That he or she was rejected because of information in the report;
  • The name, address, and phone number of the reporting agency the employer used;
  • That the reporting agency didn't 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 agency within 60 days.

Social Media

• Though no law in Virginia prohibits employers from viewing information about an applicant or employee that is publicly available on social media outlets, such as Facebook or Twitter, the use of such practice is not advisable. Reviewing the social media account of an applicant or employee may lead to an improper assessment of an individual's criminal history or the discovery of protected information such as age, disability, or other protected status.
• Virginia law prohibits employers from requesting the login information of the social media account of a prospective or current employee.
• Employers in Virginia may not require a prospective or current employee to add an employee, supervisor, or administrator to his or her social media account. Many states also have laws prohibiting employers from asking applicants/employees to lower privacy settings or to "Like" or "Follow" the employer on social media.

Disposing of Background Information

The EEOC requires employers to keep any and all personnel and employment records for one year after the records were made or kept, or after a personnel action was taken — whichever is later. This includes all applications and other records related to hiring, whether or not the applicant was hired. This requirement is extended to two years for educational institutions, state and local governments, and federal contractors with 150 or more employees and a government contract of at least $150,000.

After expiration of the applicable time period, employers may dispose of any background reports and other information received. However, disposal is not as simple as throwing documents in the trash. The Federal Trade Commission requires that any background reports and information be disposed of securely, which can include burning, pulverizing, or shredding paper documents and disposing of electronic information so that it can't be read or reconstructed.

If you have any questions about your company's background check processes, please contact us.