Q: Here’s What to Know Before You Run an Employment Background Check

You’ve found the employee of your dreams, and you’re ready to hire! Before you sign on the dotted line and onboard this new person, should you do an employment background check?

It depends! Background checks are generally not required in the private sector unless your employees are contractors with a government agency that requires security clearances. 

While employers are legally allowed to run background checks on potential employees, overly broad pre-employment screens can eliminate perfectly good candidates with records that are long behind them. 

Due in part to the cultural stigma associated with having a criminal record, many people are automatically disqualified from consideration when a potential employer learns of their history. Advocates also say that this practice has a particularly harmful impact on people of color as they are incarcerated at disproportionately higher rates than their white counterparts. 

When making personnel decisions, employers want to learn about the person they are going to hire and entrust to perform functions of their business. Many employers do this with pre-employment screens that provide information relevant to a candidate’s qualifications for the position. For instance, employment verifications, education verifications, professional license verifications, and reference checks.  

If an employer chooses to run a background check on a job candidate, there are laws and guidelines restricting the way they do it. For example, employers must notify applicants that they plan to run a background check and get written permission. Employers also must notify an applicant when they have been rejected due to information from a report and provide an opportunity for dispute. 

Do I have to tell folks I’m checking their background?

Yes. 

The Equal Employment Opportunity Commission (EEOC) requires you to alert people about a planned background check for a job before beginning the process. If you surprise them with a background report, they can report you to the Federal Trade Commission (FTC).

Here are the rules for notifying the person before running a background check:

  1. Tell the applicant or employee about the upcoming background check in writing. This notice must be separate from any other information you provide. You can’t sneak a notice into an employment application, for example.
  2. Get written permission to perform the background check. For example, you can have the potential employee sign the notice you provide. (Want to check your employees’ backgrounds during employment? You’ll need to tell them that, too.) 

If you plan to get an “investigative report,” which includes character interviews about a new hire’s lifestyle, reputation, and more, there are more restrictions. The person whose background is being checked has a right to know the scope of the investigation, and additional disclosures may be required. Consult with a lawyer before getting these in-depth background checks. 

How do I do a background check?

There are many pre-employment background check services—and depending on which you choose, you may be able to select what you want to check for each role. 

You can work with a local pre-employment company or use an online service to personalize your background checks. 

Before picking a service, make sure they’re complying with the Fair Credit Reporting Act (FCRA). Otherwise, you—and them!—could be in trouble with the FTC and the Consumer Financial Protection Bureau, which jointly enforce the FCRA.

It’s best practice to only consider those convictions with a direct relationship to job duties and consider the length of time since the offense. Follow the best practices of the EEOC in evaluating convictions and avoid consideration of records of arrest not followed by a valid conviction. Do not consider sealed, dismissed, or expunged convictions. 

Take special care when setting your background check policy: discrimination laws still apply. 

You can’t use the results to discriminate based on an EEOC-protected category. These include: 

  • Age (for those 40 or older)
  • Color
  • Disability
  • Genetic information
  • National origin
  • Race
  • Religion
  • Sex (including pregnancy, gender identity, and sexual orientation)

For example, if you checked your accountant’s credit history, you need to check every potential new accountant’s credit—regardless of their gender, race, or any other protected qualities.

You should also avoid asking for genetic information or medical questions as those are rarely acceptable background check categories. If you think that information is relevant to the job, make sure to consult a lawyer beforehand to ensure your situation is allowed under the law. 

How long does a background check take?

Depending on who is running your background checks and how in-depth your requested information is, you may have the results instantly—or it may take weeks. 

In most cases, barring any surprises (like, say, the candidate goes by multiple names), you can expect the check to take less than a week.

What if I find something negative?

Before refusing to hire a candidate (or choosing to fire an employee) because of something in their background check, ask them for an explanation. It’s generally a good practice to avoid blanket exclusions and consider various factors about the candidate’s background. In fact, many states require employers to do this individualized assessment. (Keep reading for more information about state laws in the next section.)

For example, a misdemeanor a 40-year-old committed as a late-teen doesn’t necessarily exclude them from employment.

And consider if the problem might be disability-related—like a car accident or criminal records relating to an addiction (which can be considered a disability if they’ve been successfully rehabilitated). A person with a disability should be allowed to prove their ability to do the job unless doing so would severely impact your finances or operations.

If you do need to make an adverse decision based on a background check, make sure that you are rejecting fairly. If you’re not, the EEOC may be concerned. 

Remember that you must evaluate everyone with the same standards. 

That means if you hired another employee with a misdemeanor on their record, rejecting this person may be unlawful discrimination, especially if they fall into an EEOC-protected category. Learn more about these laws here—and keep in mind your state may have additional regulations and laws around employment discrimination.

If you believe you’re unlikely to hire a candidate because of their background check results, the FTC requires you to provide written notice before you officially make your decision. In addition, you must provide a copy of the background report you used and the pamphlet “A Summary of Your Rights Under the Fair Credit Reporting Act.” 

That gives the person a chance to tell you if there are inaccuracies that may change your decision. 

For example, perhaps the background check service mistook Erika A. Smith, aged 46, for Erika A. Smith, aged 35—and all the information is incorrect.

Once you’ve officially decided not to offer them a job, the FTC has one more requirement. You must provide a verbal or written notice that includes the following:

  • That the potential employee was rejected because of information in the attached report;
  • The contact information of the company that provided the report—and a note that the background check company didn’t make the hiring decision; and 
  • That they have a right to dispute the report and get an extra free report within the next 60 days.

The same processes apply if you’re taking adverse action against an existing employee after a background check.

Are there any state laws to pay attention to? 

Yes. State laws on background checks vary. 

For example, some states permit employers to consider information from background checks, but only if employers make an “individualized assessment” of the results—weighing factors like how long ago any convictions took place, what they were for, if it has a direct relationship to job duties, and how old the applicant was at the time. These laws are intended to help ensure that applicants are not unfairly impacted by actions they may have taken when they were young adults, among other things. 

Some states have additional restrictions on the background check information you can use in a hiring decision. For instance:

  • Illinois’s Genetic Information Privacy Act says you cannot ask for any genetic information from the potential hire or their family members.
  • The NYC Human Rights Law says you cannot make hiring decisions based on criminal history unless their criminal history would directly interfere with your business. 
  • Vermont bans employers from asking potential hires for any social media information.
  • Pennsylvania law prohibits employers from considering an applicant’s criminal history unless there is a direct relationship between an offense and the position they applied for.

Many states also have “Ban the Box” laws, which prevent employers from asking about previous criminal convictions on employment applications. 

Before beginning background checks, be sure you understand any state-specific laws that may affect how you gather and use employees’ information. 

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