Federal Agencies Issue Best-Practice Guidance on Background Checks

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WASHINGTON, D.C.—The U.S. Equal Employment Opportunity Commission (EEOC) and the U.S. Federal Trade Commission (FTC) recently co-published two guidance documents reiterating how the agencies’ respective laws apply to background checks performed for employment purposes. The documents do not introduce any new agency guidance but provide “best-practices” guidelines and additional resources. One document is for employers; the other is for job applicants and employees.

The guide for employers provides a review of an employer’s obligations under the Fair Credit Reporting Act (FCRA), and a snapshot of additional obligations under the Americans with Disabilities Act, the Genetic Information Nondiscrimination Act and Title VII’s recordkeeping requirements. Employers conducting background checks should be sure to evaluate their policies and processes in light of these publications and also train their office staff responsible for human resources on these laws.

Employers should also keep in mind that many state and local requirements may be applicable to conducting background checks and taking adverse actions based on the results. Additionally, employers should understand that the EEOC oversees employment-based background checks to prohibit unlawful discrimination, and the FTC monitors employers’ use of background checks performed by consumer reporting agencies to enforce the FCRA’s notice and fair play provisions.

Key requirements for you to know and for assurance in complying with federal nondiscrimination laws and the FCRA include:

  • Before You Get Background Information. Treat everyone equally. It’s illegal to check the background of applicants and employees when that decision is based on a person’s race, national origin, color, sex, religion, disability, genetic information (including family medical history) or age (40 or older). For example, asking only people of a certain race about their financial histories or criminal records is evidence of discrimination, the EEOC document states.

    Except in rare circumstances, and after consulting with your legal counsel, do not try to get an applicant’s or employee’s genetic information, which includes family medical history. If you have that information, do not use it to make an employment decision. Do not ask medical questions before a conditional job offer has been made. If the person has already started the job, do not ask medical questions unless you have objective evidence that he or she is unable to do the job or poses a safety risk because of a medical condition.

    Provide notice to the applicant or employee that you might use background information from a consumer reporting agency for decisions about his or her employment. This notice must be in writing and in a stand-alone format. The notice cannot be in an employment application.

    Tell the applicant or employee of his or her right to a description of the nature and scope of investigative reports conducted by third-party providers.

    Get the applicant’s or employee’s written permission to perform a 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 his or her written permission to get a background report; complied with all of the FCRA requirements; and will not 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. Apply the same standards to everyone, regardless of their protected status. “For example, if you don’t reject applicants of one ethnicity with certain financial histories or criminal records, you can’t reject applicants of other ethnicities because they have the same or similar financial histories or criminal records,” the EEOC said.

    Take special care when making an employment decision that “significantly disadvantages individuals of a particular race, national origin, or another protected characteristic, and does not accurately predict who will be a responsible, reliable or safe employee.” The EEOC considers these practices to have a “disparate impact.”

    Before you take an adverse employment action (not hiring an applicant or terminating an employee), you must give the applicant or employee a notice that includes a copy of the consumer report you relied on to make your decision and a copy of A Summary of Your Rights Under the Fair Credit Reporting Act, which you should have received from the company that sold you the report. By giving the person the notice in advance, he or she has an opportunity to review the report and explain any negative information.

    After you take an adverse employment action, you must tell the applicant or employee (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 company that sold the report; that the company selling the report did not 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 company within 60 days.

  • Disposing of Background Information. Any personnel or employment records you make or keep (including all application forms, regardless of whether the applicant was hired, and other records related to hiring) must be preserved for one year after the records were made or after a personnel action was taken, whichever comes later. The Department of Labor extends this requirement to two years for federal contractors that have at least 150 employees and a government contract of at least $150,000. If the applicant or employee files a charge of discrimination, you must maintain the records until the case is concluded.

    You may securely dispose of any background reports you have received after satisfying all applicable recordkeeping requirements. That can include burning, pulverizing or shredding paper documents and disposing of electronic information so that it can’t be read or reconstructed.

    Hedley Lawson, Contributing Editor
    Managing Partner
    Aligned Growth Partners, LLC
    (707) 217-0979
    hlawson@alignedgrowth.com
    www.alignedgrowth.com