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Part One: Stay on the Right Side of the Law When Conducting Job Candidate Background Checks

Background Checks FormIn the past, background checks on prospective employees were done as a matter of course by employers. The only real risk employers faced was missing a red flag in a candidate’s background, resulting in a poor hiring decision.

In recent years, in the wake of new legislation, employers must take great care to avoid liability while filtering out information about their job candidates during the hiring process.

Some of the most common practices for conducting background checks during the job application process, such as criminal background checks, credit checks, and social media background checks, all pose risks for an employer. Accordingly, a company’s human resources professionals and in-house counsel must carefully examine their company’s hiring practices to make sure they walk the fine line between an employer’s right to screen its job candidates and a candidate’s right to privacy.

In the first part of this two part series, we will discuss the ins and outs of conducting both Criminal and Fair Credit Reporting Background Checks.

Criminal Background Checks

In April 2012, the Equal Employment Opportunity Commission (“EEOC”) issued updated “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions under Title VII of the Civil Rights Act of 1964.” The guidance deals with how, at least in the EEOC’s view, Title VII restricts an employer’s discretion to consider criminal records for hiring decisions.

The guidance states, “With respect to criminal records, there is Title VII disparate impact liability where the evidence shows that a covered employer’s criminal record screening policy or practice disproportionately screens out a Title VII-protected group and the employer does not demonstrate that the policy or practice is job related for the positions in question and consistent with business necessity.”

Specific criminal convictions (known as “targeted exclusions”) that are narrowly tailored to identify criminal conduct with a demonstrably tight nexus to the position in question can be used to exclude an individual from a position. However an exclusion based on an arrest, in itself, is not job-related and consistent with business necessity.

Before excluding an individual for a conviction, employers must conduct a targeted screen and individualized assessment of the candidate’s background. Conducting a “targeted screen” requires that an employer consider:

  1. The nature and gravity of the offense or conduct;
  2. The time that has passed since the offense or conduct and/or completion of the sentence; and
  3. The nature of the job held or sought.

Conducting an “individual assessment” consists of:

  1. Notice to the individual that he or she has been screened out because of a criminal conviction;
  2. An opportunity for the individual to demonstrate that the exclusion should not be applied due to his or her particular circumstances; and
  3. Consideration by the employer as to whether the additional information provided by the individual warrants an exception to the exclusion and shows that the policy as applied is not job related and consistent with business necessity.

In conducting an individual assessment, some of the relevant evidence that a candidate can present and an employer should consider, includes:

  • The facts or circumstances surrounding the offense or conduct
  • The number of offenses for which the individual was convicted
  • Older age at the time of conviction, or release from prison
  • Evidence that the individual performed the same type of work, post-conviction, with the same or a different employer, with no known incidents of criminal conduct

While the EEOC has undertaken aggressive, and often successful, enforcement of its criminal background check guidance, in August 2019, in the case of Texas v. EEOC, the U.S. Court of Appeals for the Fifth Circuit affirmed a district court’s decision that the EEOC violated the federal Administrative Procedure Act in issuing its 2012 enforcement guidance. While the impact of the decision has no precedential effect outside the Fifth Circuit, it is an interesting development regarding criminal background checks that we will continue to monitor.

In the meantime, some of the best practices that employers should follow when conducting criminal background checks on candidates include:

  • Eliminate any policies or practices that exclude people from employment based on a criminal record
  • Train managers, hiring officials, and decision makers about federal and state laws prohibiting employment discrimination
  • Record the justification for the policy and procedures
  • Note and keep a record of consultations and research considered in crafting the policy and procedures

Fair Credit Reporting Act Background Checks

The Fair Credit Reporting Act (“FCRA”), which is enforced by the Federal Trade Commission, governs the way employers can ask for, receive, and use a background check from a third party.

Before conducting a background check, an employer must disclose in writing to the applicant that it may conduct a background check which could affect employment decisions. The disclosure document must be presented on its own—not as part of an employment application, an orientation packet, or other collection of documents.

In addition, an employer must obtain the applicant's written permission to do the background check, and certify to the company from which the employer is requesting the report that the employer:

  1. Notified the applicant and got their permission to get a background report;
  2. Complied with all of the FCRA requirements; and won't discriminate against the applicant, or
  3. Otherwise misuse the information in violation of federal or state equal opportunity laws or regulations.

Before taking adverse action, an employer must issue the candidate a written notice that includes a copy of the consumer report it relied on to make its decision, as well as a copy of "A Summary of Your Rights under the Fair Credit Reporting Act," which should be provided by the credit reporting company. By giving the individual the notice in advance, the individual has an opportunity to review the report and explain any negative information.

If a background check leads to an adverse decision against hiring a candidate, an employer must notify the applicant that he or she was rejected because of information in the report. The individual must also be provided with the name, address, and phone number of the company that issued the report, as well as an explanation that the company selling the report didn't make the hiring decision, and is unable to provide specific reasons for the employment decision. The individual must also be informed 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.

In the second part of this series on lawfully conducting job candidate background checks, we will discuss social media background checks, medical examinations and drug testing, along with any other background check best practices. If you have any questions about how to conduct background checks effectively and lawfully, please contact a member of Foster Swift’s employment law practice group.

Categories: Compliance, Criminal, Employee Handbook, Employment

Photo of Michael R. Blum

Mike Blum is an award-winning Michigan labor and employment lawyer in Detroit who has litigated some of the state’s most important cases. Part of Mike’s effectiveness as a litigator, in ADR and as a counselor to employers, comes from his 11 years with the National Labor Relations Board.

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