Background checks have become a familiar arrow in the quiver for
employers in the applicant selection process. They have taken on an
important role in overall hiring schemes designed to help eager
employers glean the cream of the crop in a competitive job market.
Moreover, background checks are an effective tool for screening
candidates to minimize risk of workplace violence and potential
tort claims such as negligent hiring or negligent retention.
However, as federal and state law continues to evolve, careful
thought to the process of conducting background checks and the use
of their results in employment decision making is more important
than ever.
The Fair Credit Reporting Act (FCRA) applies to employers who
obtain consumer reports for employment purposes from a third party
service provider in the business of conducting background
screening, known as a consumer reporting agency (CRA). This federal
law requires a clear written disclosure that the report may be
obtained and requires written authorization from the applicant for
the disclosure of background information. If the information is
used in any adverse employment action, employers must provide
written notice before the adverse action is taken, including a copy
of the report and a summary of rights under the FCRA to the
candidate. In addition, employers must provide another written
notice upon taking the adverse employment action which provides
contact information for the consumer reporting agency, explains
that the agency played no role in the employment decision, gives
notice of the right to a free copy of the report within 60 days, as
well as the applicant's right to dispute the report's
accuracy.
State specific laws must also be considered before making an
employment decision based on information learned from a consumer
report, since many states prohibit consideration of an
applicant's arrest record. In addition, some states prohibit
consideration of criminal convictions unless there is a direct
relationship between the conviction and the job.
To further complicate matters, the Equal Employment Opportunity
Commission (EEOC) opines that the use of background checks and
other selection procedures may run afoul of discrimination statutes
if they are used to discriminate against candidates in a protected
class, such as race, color, sex, national origin, religion, age or
disability. As with any other employment decision, the use of
information obtained from a background check must be consistently
applied in decision making to reduce risk for discrimination claims
based on failure to hire. The EEOC has also taken the position that
the use of information obtained from consumer reports may have a
disproportionate impact on applicants in protected classes.
Furthermore, the EEOC recommends against using the information
unless there is a justifying business necessity by showing:
- the nature and gravity of the offense
- the age of any conviction
- the nature of the job
So where does this complicated web of compliance leave employers in effectively using background information as a way to recruit and retain a talented workforce? Consumer reports remain a critical tool to minimize legal liability and help gather the best pool of job applicants. As a guidepost, rather than bright line policies that any criminal conviction bars further consideration of an applicant's candidacy for a position, employers should consider the relationship between the competencies of the position and how the information obtained in the report is a concern for how the applicant's background fits with those competencies. For example, an applicant's criminal conviction for embezzlement may have some bearing on potential efficacy if applying for a position as a bank teller, or an applicant's conviction for abuse may have some bearing on the applicant's fit in a job at a nursing home. Careful tailoring of the information learned from a consumer report to a job-related analysis in applicant selection can help employers balance being in front of potential problem employees, and potential legal claims for hiring them, while minimizing legal risk of violating anti-discrimination statutes.
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