Background Checks and Employee Rights

Conducting employee screening and background checks is so prevalent a practice these days that a basic check can be done for under $20. More complex investigations, also called investigative consumer reports (ICRs), are much pricier and are often conducted on candidates of high level positions.

Why Conduct a Background Check?

Employers elect to pay for background checks on prospective employees because they want to make informed hiring, promotion, reassignment, and retention decisions. The incentive is to protect their organization by hiring only the most trustworthy and qualified candidates, but there are a few things employers must ensure in order to maintain FCRA compliance and avoid litigation.

  1. There must be understanding between the employer and the CRA issuing the consumer credit report that the employer will comply with the Fair Credit Reporting Act.
  2. The employer must obtain written consent from the consumer/potential employee in question.

State and Federal Laws

Some of the provisions federal and state laws have placed on background checks for employers have to do with denying employment based on criminal history.

  • Some states prohibit the use of arrest data in employment decision if there was no conviction.
  • Other states allow taking adverse action in response to conviction history only in certain circumstances.
  • On a federal level, the Equal Employment Opportunity Commission (EEOC) prohibits the denial of employment based solely on a criminal conviction if that conviction is not relevant to the job.

The Fair and Accurate Credit Transactions Act

In 2003, the Fair and Accurate Credit Transactions Act was passed, which allowed a clause that omitted data from protections under the FCRA if the investigation is related to suspected misconduct of an employee, whether breaching the law or the employer’s written policies. The FCRA still protects the employee’s right to notice is the investigation results in adverse action being taken. Additionally, employees must provide explicit consent for the release of medical information to be used for employment purposes.