When making a hiring decision employers usually have to walk a tight line between protecting their company from making a bad hire on the one side, to maintaining compliance with federal laws and protecting the company from hiring-related litigation on the other. Background checks serve as a key tool used by companies and their human resources departments in making initial hiring decisions, as well as in assisting with promotion, retention and reassignment decisions; however, failure to adhere to federal laws regarding background checks can subject a company to government penalties and/or civil litigation from aggrieved applicants or existing employees. Not only is it important to maintain compliance with federal law, but also crucial to keep clear written policies in place with regard to background checks, and document all background-check screening steps taken during hiring or other employment-related decision making.

Inforex has been conducting background checks on behalf of businesses and is well schooled with the vagaries of federal law. They work with companies to ensure that they keep compliant with federal regulations during the background check process. In fact, Inforex’s employment screening process includes automated track changes to federal regulations that provide companies with notifications regarding consumer disclosure and adverse action notices.

The background check screening industry has evolved significantly over the years in large part due to evolution of federal laws that fall under the auspices of the Equal Employment Opportunity Commission (EEOC) and Federal Trade Commission (FTC). The former governs compliance with federal laws protecting job applicants and employees from discrimination, while the latter is responsible for governing compliance with the Fair Credit Reporting Act (FCRA), which is designed in part to protect employees and potential hires from incorrect reporting. In fact, the onus of complying with FCRA in background checks falls more on the background check company than it does the hiring company. However, it is imperative that the hiring company utilizes a good-standing background check company with extensive FCRA and FTC experience, as any liability from incorrect reporting can still pass down to the hiring company, even though it may not be directly at fault.

The primary hiring company protocols involved in handling and processing background checks include:

Prior to Conducting a Background Check

EEOC
  • Treat everyone alike by conducting the same background check on all applicants or employees seeking the same job
  • Do not seek an applicant/employee genetic information or use it to make any employment-related decisions
  • Never ask medical-related questions before making a conditional job offer
FTC/FCRA
  • Notify the applicant/employee in writing that background information might be used in employment decision-making
  • Secure the applicant/employee’s written consent to perform the background check
  • Such notifications must be stand-alone and cannot be part of an employment application
  • When asking another company for information on the applicant/employee, the applicant/employee must be informed that this information is being sought

Proper Use of Background Check Information

EEOC
  • Apply the same standards of use to all applicants/employees
  • Do not base exclusionary employment decisions on background problems that may be more common among applicants/employees of a specific race, color, national origin, sex, religion, disability, age or other protected characteristics
  • With regard to background check problems that may have been the result of a disability, consider allowing that applicant/employee the chance to prove their capabilities related to the job, unless such consideration would obviously cause the company significant financial or logistical difficulties
FTC/FCRA
  • When using background check information to deny an applicant a job or fire an existing employee, the affected applicant/employee must be given a notice that includes a copy of the consumer report that was used to make the decision, as well as a copy of the FTC’s “A Summary of Your Rights Under the Fair Credit Reporting Act.” This information should be provided to the applicant/employee prior to taking adverse action, in order to give the person an opportunity to review the report and explain any negative information within
  • When informing the applicant/employee of the adverse action related to background report information, he or she must be notified that the report served as the basis for the rejection; that the company providing the report did not make the employment-related decision; that he or she has the right to dispute the accuracy or completeness of the report; and that an additional free copy of the report is available for 60 days
  • The name, address and contact of the company providing the report must also be made available to the rejected applicant/employee

Disposing of Background Report Information

EEOC
  • No matter the final disposition of the applicant/employee’s employment status, all records made during the process must be retained for one year after their creation (two years for specific classes of employers, such as educational and state and government)
  • In the event of a legal discrimination challenge, such records must be maintained until the case is resolved
FTC/FCRA
  • As long as all other legal record-keeping requirements have been met, a company may dispose of any background report information, though it must be done in a secure manner, such as burning, shredding, pulverizing; or, in the case of electronic information, degaussing, hard-drive shredding, or other means that ensure that the information cannot be accessed or read

These are the basic requirements as called for by EEOC and FTC/FCRA regulations. Inforex keeps close tabs on regulatory updates regarding background check/screening requirements to ensure that its clients are always maintaining compliance. To learn more about Inforex’s background check screening solutions contact us for a free background screening consultation today.

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