If you conduct background checks on applicants or employees, then you are probably aware that there are several laws that regulate the use of background checks for employment purposes. Specifically, the Federal Trade Commission (“FTC”) enforces the Fair Credit Reporting Act (“FCRA”), a federal law that imposes obligations on employers who use third parties to conduct background and reference checks on applicants and employees, and the Equal Employment Opportunity Commission (“EEOC”) enforces federal laws that prohibit employment discrimination, including Title VII of the Civil Rights Act, the Americans with Disabilities Act and the Age Discrimination in Employment Act.
Recently, the FTC and the EEOC co-published two documents that explain how certain laws apply to background checks performed for employment purposes – one directed at employers and the other directed at applicants and employees.
The guidance document directed at employers (Background Checks: What Employers Need to Know) provides them with a good reminder about federal laws that impact background checks. A couple of key takeaways include:
- Remember to treat everyone equally. For instance, if you only ask applicants of a certain religion about their financial histories or criminal records, that is evidence of discrimination. Similarly, if you don’t reject applicants of one ethnicity with certain financial histories or criminal records, you should not reject applicants of other ethnicities because they have the same or similar financial histories or criminal records.
- Be careful when basing employment decisions on problems identified in the background check that may be more common among members of a protected class. As we’ve mentioned in previous blog posts, an employer’s neutral policy or practice may be problematic if it has a “disparate impact” on members of a protected class and is not job related and consistent with business necessity. For more detailed information about this, the EEOC’s Enforcement Guidance is a good place to start.
- If you are using a third party to conduct background and reference checks, don’t forget that you will need to comply with the FCRA. The FCRA outlines several requirements that employers will need to take prior to obtaining a background check, prior to taking any adverse action as the result of a background check and following adverse action based on the results of a background check. For more detailed information about the FCRA’s specific obligations, check out our previous blog post from March 27, 2013.
Finally, keep in mind that many states have enacted civil rights laws and laws regarding background checks that impose obligations above and beyond those required by federal law. As such, it is a good idea to review state and local laws regarding background checks.
For more information on background checks, please contact Mary Kate Liffrig at mliffrig@wp.hallrender.com or your regular Hall Render attorney.
