Conducting background checks is common in the world of human resources. Barring medical and state exceptions, companies can legally protect their assets and reputation by screening current and prospective employees for:
- County Criminal Search
- DOT Employment Verification
- Driving History Report
- Education Verification
- Employee Credit Report
- Employee E-Verify Solution
- Employee I-9 Solution
- Employment Verification
- FACIS Levels (I, II, III)
- Federal Criminal Searches
- National Criminal Database
- National Federal Criminal Check
- National Sex Offender & Violent Abuse Registry
- OFAC – Terrorist Watch List
- Professional License Verification
- Professional/Personal Reference
- State Law Enforcement Check
- State Law Enforcement Search
How companies obtain this information, and the decisions based on their findings, are regulated by both the Equal Employment Opportunity Commission (EEOC) and the Fair Credit Reporting Act (FCRA.) The following explains how these regulations work together for the protection of employees and applicants.
The EEOC governs most companies employing 15 or more people; this includes employment agencies and labor unions. EEOC laws apply to all employment situations, including hiring, promotions, training, wages, harassment, and firing for protection against discrimination in the workplace based on:
- Sex (including pregnancy, gender identity, and sexual orientation)
- National origin
- Age (40 or older)
- Disability or genetic information
The EEOC also protects those who have complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit.
While almost all companies fall under EEOC requirements, the FCRA only regulates those using a consumer reporting agency (CRA.) In other words, organizations performing their only own background checks – without using a third-party provider – do not fall under FCRA guidelines.
Often, companies think hiring another for background screening relieves them from FCRA compliance. This assumption is untrue; due diligence failure can leave a company vulnerable to lawsuits, actual or statutory damages, and legal fees. Before conducting a background check, according to the Federal Trade Commission (FTC) which enforces the FCRA, a company must:
- Get the applicant’s or employee’s written permission for conducting a background check.
- Inform the applicant or employee, in writing, that the information is for employment decisions.
- Tell the applicant or employee when requesting an investigative report and their right to know the nature and scope of the investigation.
- Certify to the company running the reports that the organization:
- Notified the applicant or employee of the background report request and received permission.
- Complied with all of the FCRA requirements.
- Won’t discriminate against the applicant or employee, or otherwise misuse the information in violation of federal or state equal opportunity laws or regulations.
Actions and Results
According to the EEOC:
- Any information a company obtains via a background check may not be used to discriminate
- Not applying the same standards to every applicant or employee is a violation of federal law.
Following these guidelines means not basing employment decisions on information discovered in the background check that may be more common to a specific group of people.
Employers are also expected to make exceptions for negative information revealed during a background check resulting from a disability.
When a company wants to take adverse action based on information in a background check provided by a third-party, FCRA rules apply:
- Before taking adverse employment action, the applicant or employee must receive:
Giving the applicant or employee advance notice allows them to review the report and explain negative information.
- After taking adverse employment action, the company must inform the applicant or employee (orally, in writing, or electronically:)
- The rejection has resulted from information in the report.
- The name, address, and phone number of the CRA.
- The company providing the report didn’t make the hiring decision and can’t give specific reasons for the rejection.
- The applicant or employee has the right to dispute the accuracy or completeness of the report, and to get an additional free report from the reporting company within 60 days.
Though sanctioned by different agencies, the EEOC and FCRA work together to ensure applicants and employees are treated fairly during hiring and employment. The EEOC regulates employment background checks by prohibiting discrimination under Title VII of the Civil Rights Act of 1964. The FCRA imposes requirements on employers’ use of background checks – compiled by CRA’s – in compliance with federal and state EEOC regulations.
For more information, please watch our on-demand webinar: FCRA 101: A Nuts And Bolts Guide To Background Screening Compliance