By Kimberly S. Greenspan, Esq.
On March 10, 2014, the U.S. Equal Employment Opportunity Commission (EEOC) and the U.S. Federal Trade Commission (FTC) partnered to issue, for the first time, joint informal guidance on employment background checks. Two documents came out of the agencies’ collaboration: "Background Checks: What Employers Need to Know" and "Background Checks: What Job Applicants and Employees Should Know."
The unique intersection of anti-discrimination laws and the Fair Credit Reporting Act (FCRA) have resulted in these publications which define the rights and responsibilities governing employers, employees and job applicants when employers use background checks in making personnel decisions.
The EEOC enforces federal anti-discrimination laws, and emphasizes that any time an employer uses an applicant’s or employee’s background information to make an employment decision, the employer must comply with those laws. The FTC enforces the Fair Credit Reporting Act (FCRA), which protects the privacy and accuracy of the information in credit reports, and therefore regulates how background checks are conducted and used. If an employer runs a background check through a company in the business of compiling background information, the employer must comply with the FCRA.
Below are some of the main points that an employer should consider as a result of this guidance:
Fair Credit Reporting Act
The FCRA requires employers who get background information (i.e., a credit or criminal background report) from a company in the business of gathering background information, to follow specific procedures:
1. Employers must provide written notice to the applicant or employee that it might use the information to make decisions about that person’s employment. This notice must be in a stand-alone format, and cannot be included in an employment application.
2. If an employer asks a company to provide an investigative report, employers must tell the applicant or employee of his or her right to a description of the nature and scope of the investigation.
3. Employers need written permission from job applicants and employees before conducting background checks. This information can be part of the notification document referred to above. If the employer plans on conducting background checks throughout the person’s employment, that employer should make this information clear and conspicuous in the notification document.
4. The employer must certify to the company from which it is getting the report that it notified the applicant or employee, got that person’s permission to conduct the background check, and complied with all FCRA requirements. The employer must also certify that it will neither unlawfully discriminate, nor misuse the information in violation of federal or state equal opportunity laws or regulations.
Once the background information is gathered, the FCRA imposes additional requirements on the employer before that information can be used to take an adverse action. An employer must give the applicant or employee a notice that includes a copy of the consumer report it relied on to make the decision, and a summary of his or her rights under the FCRA. Providing the individual with advance notice allows the applicant or employee the chance to review the report and explain any negative information.
After the adverse employment action is taken, the employer must tell the applicant or employee that he or she was rejected because of the information in the report; the name, address, and phone number of the company that sold the report; and that the company selling the report did not make the hiring decision, and cannot give specific reasons for the decision. This information may be provided orally, in writing, or electronically. Furthermore, the applicant or employee has a right to dispute the accuracy or completeness of the report and to obtain an additional free report from the reporting company within 60 days.
Federal Anti-Discrimination Laws
Federal anti-discrimination laws make it illegal for an employer to use any background information that it receives to discriminate against an employee or applicant for employment. Therefore, it is illegal to discriminate against a person on the basis of race, color, national origin, sex, religion, age (40 or older), disability, or genetic information, including family medical history, when requesting or using background information for employment, irrespective of the information’s source.
The guidance advises employers against basing employment decisions on background problems that may be more common among individuals in a particular protected group. Should a background check policy disproportionately impact members of particular protected group, employers should ensure that the policy is job-related and consistent with business necessity. Employers are well-served to seek the same background information from all individuals, rather than only checking the background of a particular subset of employees or applicants.
Generally, an employer should not try to get an applicant’s or an employee’s genetic information, which includes family history, and if that information is obtained, it should not be used to make an employment decision. Medical questions cannot be asked before a conditional job offer has been made, and once a person has started to the job, the employer cannot ask medical questions unless there is objective evidence that the employee is unable to do the job or poses a safety risk due to a medical condition. To be compliant with the Americans with Disabilities Act, employers may need to make exceptions for disability-related problems that surface during a background check.
Records
Generally, employers must preserve personnel or employment records 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. Once an applicant or employee files a charge of discrimination, the employer must maintain the records until the conclusion of the case.
Conclusion
Despite the requirements or suggestions enumerated above, employers should not be dissuaded from using background checks. It is not illegal for an employer to ask a job applicant about his or her background or to require a background check, provided the employer does not unlawfully discriminate. Finally, employers should review their state and local laws regarding background reports or information, as there may be additional regulations beyond that required by federal law.
