With the uptick in lawsuits targeting employers for using background checks improperly, it may time to review your practices and policies surrounding your organization’s background screening.
A legally sound background screening policy protects your business and your employees.
If a complaint is filed against your organization surrounding a candidate or employee’s experience during their screening process, one of the first items you can expect to be addressed will be your background screening policy. One way to minimize damages from the start, is to prove that a) you have a policy in place and b) you have documentation that shows that policy is followed.
What should be included in your background screening policy? We can look to EEOC guidance and FTC requirements for straightforward direction.
Note: This blog addresses considerations from a federal level. It’s a good idea to review applicable laws of your state related to consumer reports. For example, some states restrict the use of credit reports for employment purposes. Consult with your attorney to ensure you are covering state and local laws with your background screening policy.
Equal Employment Opportunity Commission (EEOC)
The EEOC states “Any background information you receive from any source must not be used to discriminate in violation of federal law.”
Consider including language in your policy to support your adherence to anti-discrimination laws. As an organization, you will:
Apply the same standards to everyone, regardless of their race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older). For example, if you don’t reject applicants of one ethnicity with certain financial histories or criminal records, you can’t reject applicants of other ethnicities because they have the same or similar financial histories or criminal records.
Take special care when basing employment decisions on background problems that may be more common among people of a certain race, color, national origin, sex, or religion; among people who have a disability; or among people age 40 or older. For example, employers should not use a policy or practice that excludes people with certain criminal records if the policy or practice significantly disadvantages individuals of a particular race, national origin, or another protected characteristic, and does not accurately predict who will be a responsible, reliable, or safe employee. In legal terms, the policy or practice has a “disparate impact” and is not “job related and consistent with business necessity.”
Are prepared to make exceptions for problems revealed during a background check that were caused by a disability. For example, if you are inclined not to hire a person because of a problem caused by a disability, you should allow the person to demonstrate his or her ability to do the job – despite the negative background information – unless doing so would cause significant financial or operational difficulty.
The Federal Trade Commission (FTC)
When ordering a consumer report (aka background check) through a company in the business of compiling background information (Consumer Reporting Agency – CRA), you must comply with the Fair Credit Reporting Act (FCRA). The FTC enforces the FCRA.
Consider including language in your policy to support your adherence to the FCRA before ordering a background check and after receiving the results of the background check. As an organization, you will:
Tell the applicant or employee you might use the information for decisions about his or her employment. This notice must be in writing and in a stand-alone format. The notice can’t be in an employment application. You can include some minor additional information in the notice (like a brief description of the nature of consumer reports), but only if it doesn’t confuse or detract from the notice. Keep it simple and separate from the application.
Let the applicant/employee know if you are asking a company to provide an “investigative report” – a report based on personal interviews concerning a person’s character, general reputation, personal characteristics, and lifestyle. In this case, you must also tell the applicant or employee of his or her right to a description of the nature and scope of the investigation.
Get the applicant’s or employee’s written permission to do the background check. This can be part of the document you use to notify the person that you will get the report. If you want the authorization to allow you to get background reports throughout the person’s employment, make sure you say so clearly and conspicuously.
Certify to your CRA that you:
- Notified the applicant and got their permission to get a background report;
- Complied with all of the FCRA requirements; and
- Don’t discriminate against the applicant or employee, or otherwise misuse the information in violation of federal or state equal opportunity laws or regulations.
What to do with your Consumer Report?
The EEOC and the FTC also weigh in on the use of information found on a background check. Your policy should include language that shows the steps you take to determine whether you will take adverse action based on information found on a report as well as how you will notify the employee of your intention to take adverse action.
The EEOC has extensive guidance regarding the use of arrest and conviction records in the hiring decision. Consider citing this guidance in your policy.
Before taking adverse action, as an organization, you should first consider:
- The nature and gravity of the offense or conduct
- The time that has passed since the offense, conduct and/or completion of the sentence
- The nature of the job held or sought
After this assessment process, if adverse action is found appropriate based on background information obtained through your CRA, the FCRA has additional requirements:
Before you take an adverse employment action, you must give the applicant or employee:
- Notice that adverse action is being considered based on information found on their background check, including a copy of the consumer report you relied on to make your decision
- A copy of “A Summary of Your Rights Under the Fair Credit Reporting Act,” which you should have received from the company that sold you the report.
By giving the person the notice in advance, the person has an opportunity to review the report and explain any negative information or dispute incorrect information. Not only is this fair, but it’s the law.
After you take an adverse employment action, you must tell the applicant or employee (orally, in writing, or electronically):
- That he or she was rejected because of information in the report;
- The name, address, and phone number of the company that sold the report;
- That the company selling the report didn’t make the hiring decision, and can’t give specific reasons for it; and
- 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.
Additional information to consider including in your policy:
- Who oversees the process
- Who has access to information
- Who authorizes the decision to take adverse action
- An adverse action checklist
Disposing of Background Information
Consider including information regarding the disposal of information in your policy.
Any personnel or employment records you make or keep (including all application forms, regardless of whether the applicant was hired, and other records related to hiring) must be preserved for one year after the records were made, or after a personnel action was taken, whichever comes later. (The EEOC extends this requirement to two years for educational institutions and for state and local governments. The Department of Labor also extends this requirement to two years for federal contractors that have at least 150 employees and a government contract of at least $150,000.) If the applicant or employee files a charge of discrimination, you must maintain the records until the case is concluded.
Once you’ve satisfied all applicable recordkeeping requirements, you may dispose of any background reports you received. However, the law requires that you dispose of the reports – and any information gathered from them – securely. That can include burning, pulverizing, or shredding paper documents and disposing of electronic information so that it can’t be read or reconstructed. For more information, see Disposing of Consumer Report Information? Rule Tells How.
Protecting your organization can be as simple as creating and adhering to a compliant policy. The suggestions in this article are based on guidance from the FTC and EEOC. Be sure to consult with a reputable employment attorney to ensure a complete and compliant policy.