Background checks can play an important role in evaluating job candidates. It’s important to understand the regulations surrounding the use of background checks and the boundaries of their effectiveness.

Background Checks Alone Can’t Determine the Hiring Decision

The hiring decision should be based on an all-around evaluation of the job candidate. No hiring decision should be based solely on the results of a background check. A conviction should not necessarily automatically disqualify a candidate. The hiring process should usually include a written job application, one or more interviews, various tests relevant to the job position such as drug testing or fit for work testing (Learn more in "State Drug Testing Laws: What Should Employers Know?"), and a background check. (Learn more in "Pre-employment Medical Exam Legal Issues Employers Need to Understand".)

When the hiring process includes a background check you need to understand the regulations and best practices that apply.

At the federal level there are Equal Employment Opportunity Commission (EEOC) and Federal Trade Commission (FTC) regulations aimed at protecting the job seeker from discrimination and preserving accuracy and fairness in credit reporting.

At the state, county, and local levels you will find more regulations that vary by jurisdiction. Some states dictate that a background check is required for certain jobs, like being a teacher or nurse. For this reason it’s important to consult a labor attorney when questions come up and hire a qualified investigative agency to conduct any background checks.

Because the labor law regarding the use of background checks is so complex it is best practice for your company to have a written policy that documents how and when background checks are used. Having and using such a policy can help you avoid costly lawsuits and/or union actions.

Background Checks Have Limitations

Even the most thorough background check can be missing information. There is no single repository for criminal or court information. Generally, criminal and court repositories are in the jurisdiction where the activity took place. Because of this a county-level check won’t include state-level information and vice versa. Federal information is also stored on its own.

Even when the correct jurisdiction is checked, certain pieces of information won’t be reported. For example, pending charges don’t always show up and certain pieces of information only go back so far in time. For example, the Fair Credit Reporting Act (FCRA) limits the reporting of certain records to seven years.

Required Steps When Using a Background Check

When using background checks as part of the hiring process you must:

  1. Disclose to the job applicant that a background check will be used. A statement pointing this out is most often included on the job application form.
  2. Get consent from the job applicant so that you and your investigative agency can access court, credit, and other records as part of the background check. Most often job application forms include disclosure information and a place for the applicant to sign-off. Just like medical records, (Learn more in "Guide to Understanding HIPAA as an Employer".) many records looked at in background checks are under privacy protections of some sort.
  3. Conduct the investigation. Because of the legal requirements it’s best to hire a qualified agency to complete the investigation. The National Association of Professional Background Screeners is the recognized accrediting agency for background checkers.
  4. Review the results.

Should you decide to not hire an applicant because of something reported on their background check, that is called an adverse action and you must notify the job applicant and give them an opportunity to respond.

If a Conviction is Found During a Background Check

The EEOC regulates the use of arrest and conviction records in employment under Title VII of the Civil Rights Act of 1964. When updating its guidance in 2012, the EEOC noted that “National data supports a finding that criminal record exclusions have a disparate impact based on race and national origin,” and this provides the basis for the EEOC to regulate this area and investigate possible violations.

The EEOC requires the employer to look at the essential duties and actual circumstances of the job when using a criminal record as part of the hiring decision.

When there is a conviction listed on a background check, the EEOC says the employer must consider all of the following:

  1. The nature of the crime.
  2. If, or how, the crime relates to the job responsibilities.
  3. How long ago the conviction happened.
  4. The job candidate’s behavior in the time since.
  5. Whether the conviction “conflicts with a business necessity.”

Other Items on a Background Check to Consider

While reviewing a job candidate’s background check there are a number factors beyond a conviction that may need to be considered in making the hiring decision.

Arrest record - While an arrest does not establish criminal conduct, a pattern of repeated arrests might be reflect a pattern of conduct.

Dismissal without leave - This means that a court case was dismissed and the district attorney cannot amend or refile the complaint.

Warrants - Outstanding warrants means that the police can make an arrest, search a place, or take some other action related to the administration of justice.

Bond forfeiture - This document indicates that a defendant was released on a cash bond and then did not appear in court or violated the condition of their bail in some other way.

No probable cause - This designation means that there wasn’t sufficient evidence to support making a charge in court. Strictly speaking, no probable cause does not indicate guilt or innocence.

Stricken off leave - This designation is particular to Illinois and it allows a judge to remove a case from its calendar. It doesn’t dismiss the case completely, and the case can be reinstated or dismissed at some other point. Essentially, with stricken off leave the case remains unresolved.

Beyond criminal and court records there are a number of other kinds of records that might be relevant to the job hiring decision. Here are a few to consider.

Credit history can be particularly important if you are hiring for a job that involves handling cash, banking records, or credit card information.

Driving records are especially relevant for jobs that including driving the company’s or the employee’s vehicle(s). Charges such as driving under the influence or driving while intoxicated would be of particular interest, for example.

Sex offender records are applicable when hiring for jobs that involve working with children, the elderly, or other vulnerable populations. This is an area that you will especially want to consult with your human resources department or a labor lawyer to understand the requirements in your community and company.

Education records can be required for jobs that need a formal credentials.

When Denying a Job Because of a Background Check

When a job applicant is denied a job because of something reported on their background check, that is referred to as an adverse action and must be handled is a specific manner in order to honor the applicant’s legal rights. The agency hired to complete the background report should be able to help with this process but, ideally, procedures will already be laid out in the company hiring manual and policies.

The applicant must be formally notified of the decision not to hire and the reason behind it. The applicant must be given a copy of the background report, the contact information for the agency that prepared the report, and a copy of a pamphlet called A Summary of Your Rights Under the Fair Credit Reporting Act.

The applicant has the right to dispute incomplete and inaccurate information on their background report. The applicant must be given a reasonable amount of time to dispute their report.

When an applicant disputes a report the screening agents must repeat the investigation and pay particular attention to the aspects that led to the applicant being denied the job. The employer must also reconsider their decision to deny the applicant the job. Ultimately, the hiring decision lies with the employer.

Background Checks do not Dictate the Hiring Outcome

Background checks are only one factor in the hiring decision. Their use is regulated by federal, state, and local law so it is important to understand those regulations. By following best practices background checks can help inform hiring decisions while avoiding litigation, such as negligent hiring failure suits, or union actions.