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Before conducting background checks, have standards and procedures in place that balance the company’s “need to know” with employee privacy rights. Managers and other decision makers should be trained on how to implement your procedures consistent with applicable nondiscrimination and background screening laws. Consider:
- What types of positions will be subject to background checks?
- What types of job-related information will be sought?
- What federal, state, and local laws govern the background checks?
- How will you assess information contained in background checks?
- How will you handle negative information?
Step 1: Determine which positions will be subject to background checks.
Employers need to have a legitimate business reason to conduct background checks. The use of job descriptions, provided they are accurate, can be helpful when making this determination. For example, many employers conduct background checks for “sensitive” positions. Sensitive positions may include, but are not limited to, those that:
- Involve direct access to, or control over, cash, checks, or credit card account information
- Allow privileged access to sensitive data, such as customer or client social security numbers, addresses, and phone numbers
- Allow the possession of keys or access codes into company facilities
- Are responsible for the care, safety, and security of people or property
In some cases, background checks may be required by state or federal law.
Step 2: Determine the type of information you will collect.
Background checks must be job-related. In general, the type of background check an employer conducts will depend on the nature and duties of the position. For example, a motor vehicles check may be appropriate for an employee who regularly drives a vehicle in order to conduct company business, but it may not be appropriate for an employee who works exclusively in an office.
Note: Some states and local jurisdictions restrict the types of information that employers may obtain, including credit history and certain criminal history information.
Step 3: Provide notice and obtain consent.
Notify applicants early in the hiring process that background checks are part of the company’s selection process. Obtain written consent before performing any type of background check on an applicant or employee. Note: Disclosure and authorization must be separate from the application form.
Step 4: Determine when you will conduct background checks.
In general, employers should conduct background checks after they have made a conditional job offer. The job offer should be made in writing and indicate that it is contingent upon successful completion of a background check and any other pre-employment requirements.
Step 5: Establish procedures for assessing information.
Have procedures and written guidelines for determining whether the information contained in background checks demonstrates fitness for the job. Since information used to make employment decisions must be job-related, it is critical to identify the essential requirements of the job and the circumstances under which the job is performed.
Note: It is strongly recommended that employers follow the Equal Employment Opportunity Commission (EEOC)’s guidance from April 25, 2012. In the guidance, the EEOC reiterates its position that an employer cannot simply disregard any applicant who has been convicted of a crime. Instead, employers should show how the specific criminal conduct, and its dangers, relates with the risks inherent in the duties of a particular position (see Criminal Records for more information) .
Step 6: Establish adverse action procedures.
When a background check reveals negative information, employers may consider taking adverse action, provided such action is permitted by federal, state, and local law. In this context, taking adverse action typically means not hiring, or not promoting someone based on the results of a background check.
The Fair Credit Reporting Act (FCRA) applies to employers that use third parties to investigate and conduct background checks. The FCRA regulates how employers may obtain and use the information disclosed in consumer reports. Among other things, the law requires that employers follow certain steps before taking adverse action based on the information in these types of reports (see Fair Credit Reporting Act (FCRA) for more information on these requirements).
The Fair Credit Reporting Act (FCRA) is a federal law that imposes certain requirements on employers that use a third party to conduct background checks. Under the FCRA, these third parties are known as credit reporting agencies, or “CRAs.” Note: The FCRA extends to all types of background checks obtained using a third party.
Consumer reports include any written, oral or other type of communication issued by a CRA bearing one or more of the following: (1) credit worthiness, credit standing, or credit capacity; (2) character, general reputation, or personal characteristics; or (3) mode of living. Examples include, but are not limited to, criminal and civil records, credit reports, driving records, workers’ compensation records, and reference checks performed by a CRA.
Before Obtaining a Background Check from a CRA:
- Provide notification. Notify the individual, in writing, that a background check will be conducted for employment purposes and that the report may include information about the individual’s character, general reputation, personal characteristics, and mode of living. The notice must also include a statement informing the individual of his or her right to request a disclosure pertaining to the nature and scope of investigation and to receive a written Summary of Rights. The notice may NOT be included in an employment application, it must be a separate document.
- Obtain consent. Obtain the individual’s written authorization. The authorization may be part of the notification.
- Provide certification to the CRA that you: notified the applicant or employee and obtained their permission; complied with all FCRA requirements; and will not discriminate against the applicant or employee or misuse the information.
Before Taking Adverse Action:
Before taking adverse action based in whole, or in part, on a consumer report, an employer must provide the individual with:
- A copy of his or her consumer report;
- A Preliminary Notice of Adverse Action; and
- A copy of “A Summary of Your Rights under the Fair Credit Reporting Act.”
Adverse action is defined broadly and includes, but is not limited to, denying a job application, reassigning or terminating an employee, or denying a promotion.
After Deciding to Take Adverse Action:
If you decide to take adverse action, the FCRA requires you to provide a final notice to the individual that:
- Identifies the action taken;
- Lists the name, address, and phone number of the CRA that supplied the report;
- Includes a statement that the CRA did not make the decision to take adverse action and is unable to give specific reasons for it; and
- Notifies the individual of his or her right to dispute the accuracy or completeness of any information the agency furnished, and his or her right to an additional report from the CRA within 60 days of a request.
The FCRA provides special procedures for investigations of suspected misconduct relating to employment, violation of company policy, or compliance with federal, state, or local laws and regulations. As long as the employer complies with these procedures, there is no requirement to obtain employee consent before conducting an investigation into an employee’s misconduct (provided the employer gives the employee a summary describing the nature and scope of the inquiry if an adverse action is taken based on the results of the investigation).
To fall under this exception, the report may not be made for the purpose of investigating the employee’s credit worthiness, credit standing, or credit capacity, and the report may not be provided to any party besides the employer, its agent, or a legal or regulatory authority.
Several states have passed their own background screening laws, which may require additional notice requirements and/or restrict the use of certain types of background information in connection with employment decisions. For example, a number of states prohibit most employers from using an applicant’s or an employee’s credit history for employment purposes unless the credit information is “substantially job-related.” Check your state law to ensure compliance.
Social Security Number Validation:
Generally, when conducting background checks employers start with a Social Security Number (SSN) validation. The Social Security Administration (SSA) operates a program called the Consent-Based Social Security Number Verification Service (CBSV). With the consent of the SSN holder, background screening providers may use the CBSV to verify whether a name and SSN combination match the SSA’s records. The CBSV returns a “yes” or “no” verification indicating that the submission either matches or does not match records. The service doesn’t verify identity; it only determines whether the name and SSN combination is a match in the database.
Note: The Administration also operates the Social Security Number Verification Service (SSNVS). However, employers are prohibited from using it to verify an applicant’s SSN or to screen an applicant. Use of the SSNVS is limited to IRS Form W-2 purposes only, after an employment relationship has been established.
Education and Credential Verification:
Many employers require applicants for certain positions to meet minimum education requirements in order to be considered for employment. Additionally, some positions and/or state regulations require that an individual hold a current professional license (e.g., lawyer, certified public accountant, doctor, etc.).
Education and credential verifications are intended to:
- Verify if a degree or credential was obtained;
- Confirm the date a degree or credential was awarded; and
- Identify any fictitious school or diploma the applicant has listed
Some employers choose to obtain an individual’s criminal history when making certain employment decisions. However, the use of criminal records must be job-related and based on business necessity.
Using criminal history information to make hiring decisions may inadvertently result in disproportionately screening out a protected class of individuals. For this reason, the Equal Employment Opportunity Commission (EEOC) has provided guidance for employers in this area.
Title VII of the Civil Rights Act prohibits employers from discriminating against applicants and employees on the basis of race, color, religion, sex, or national origin. The EEOC has held that there are two ways the use of criminal records could violate Title VII:
- Disparate Treatment: Treating applicants or employees differently based on a protected characteristic, such as their race, color, or national origin. For example, an employer may not reject a minority applicant based on his criminal record but hire a similarly situated white applicant with a comparable criminal record.
- Disparate Impact: When an employer’s seemingly neutral policy or practice has the effect of disproportionately screening out a protected group. If a disparate impact exists, it violates Title VII unless the employer demonstrates that the use of criminal records is job related and consistent with business necessity.
According to the EEOC, since an arrest is not evidence of guilt, an exclusion based on arrest information is not job related and consistent with business necessity (and therefore violates Title VII). However, an employer may make an employment decision based on evidence of conduct underlying an arrest if the conduct makes the individual unfit for the position in question. This would require an inquiry into the alleged conduct, such as allowing the person to explain the circumstances of the arrest and making a reasonable effort to determine the person’s credibility.
Note: Many states and some local jurisdictions have specifically prohibited, restricted, or advised against the use of arrest records to make employment decisions.
To establish that an exclusion based on a criminal conviction is job related and consistent with business, the employer must show a link between the specific criminal conduct, and its dangers, and the risks inherent in the duties of a particular position. Avoid broad exclusions based on a criminal conviction.
The EEOC has identified two ways employers can consistently demonstrate that an exclusion based on a criminal conviction is job related and consistent with business necessity:
- The employer validates the criminal conduct screen for the position in question per the Uniform Guidelines on Employee Selection Procedures standards (if data about criminal conduct as related to subsequent work performance is available and such validation is possible); or
- The employer:
- Develops a targeted screen considering at least the nature and gravity of the offense, the time elapsed since the conviction or completion of the sentence, and the nature of the job; and
- Conducts an ” individualized assessment” for those excluded by the screen to determine whether the policy as applied is job related and consistent with business necessity.
According to the EEOC, an individualized assessment should consist of:
- Notice to the individual that he or she has been screened out because of a criminal conviction;
- An opportunity for the individual to demonstrate that the exclusion should not be applied due to his or her particular circumstances; and
- Consideration of whether the additional information provided by the individual warrants an exception to the exclusion and shows that the policy as applied is not job related and consistent with business necessity.
Consider a variety of factors to determine whether exclusion based on an individual’s criminal record should be applied, including:
- The facts or circumstances surrounding the offense or conduct;
- The number of offenses for which the individual was convicted;
- Older age at the time of conviction, or release from prison (the EEOC notes that recidivism rates tend to decline as an ex-offender’s ages increases);
- Evidence that the individual performed the same type of work, post-conviction, with no known incidents of criminal conduct;
- The length and consistency of employment history before and after the offense or conduct;
- Rehabilitation efforts (e.g., education/training);
- Employment or character references and any other information regarding fitness for the particular position; and
- Whether the individual is bonded under a federal, state, or local bonding program
Asking About Criminal History on Job Applications:
The EEOC recommends that employers avoid asking about convictions on job applications. If and when employers ask about convictions later in the selection process, inquiries must be job related and consistent with business necessity.
Some states and local jurisdictions expressly prohibit employers from asking for criminal history information on job applications and require employers to delay asking these types of questions until later in the pre-employment process. For example, some states require employers to wait until a candidate has been selected for an interview before asking about criminal convictions. Others require employers to wait until after extending a conditional job offer.
Compliance with Other Laws and Regulations:
Various federal laws and regulations restrict the employment of individuals with certain criminal records. In its guidance, the EEOC said that if an employer adopts a practice to comply with such laws, it would satisfy the job related and business necessity requirements. However, state and local laws and regulations are preempted by Title VII if they would require or permit a practice that is prohibited by Title VII. In other words, if an employer’s practice is not job related and consistent with business necessity, the fact that it was adopted to comply with a state or local law or regulation does not shield the employer from Title VII liability.
Employers that use criminal records should review the EEOC guidance carefully and determine whether changes should be made to their criminal background screening policies and practices. Specifically, employers should consider:
- Identifying the essential requirements of jobs, the actual circumstances under which the jobs are performed, the specific offenses that may demonstrate unfitness for performing such jobs, and the duration of any exclusion based on a criminal record.
- Documenting the justification for using criminal records.
- Removing questions about convictions from job applications, and only asking about job-related convictions later in the selection process.
- Conducting an individualized assessment before screening out anyone because of a criminal conviction.
- Training managers and other decision makers on how to implement your policy and procedures consistent with Title VII.
While the Internet may be a valuable tool for identifying candidates for an open position, employers should exercise caution in this area. Employers cannot make employment decisions on the basis of protected characteristics. However, characteristics, such as race, age, religion, and disability, may be revealed on social media. Likewise, certain states protect workers from discrimination based on legal off-duty conduct, such as smoking or the consumption of alcohol, which may also be revealed on social media sites. Employers cannot use this information when making employment decisions.
Here are some guidelines to consider when conducting Internet searches:
- Designate a search person. To avoid the potential misuse of information obtained from the Internet, employers may want to consider having a third party or designated individual within the company who is not involved in hiring decisions review information that is publicly available on social media.
- Don’t take the information at face value. While some of the information you discover about a candidate may seem pertinent, such as the college where the candidate received their degree or the professional organizations to which he or she belongs, it’s important to realize that this information may not be accurate. Applicants and even other parties posing as the applicant may post erroneous information online. For these reasons, never make an employment decision based solely on information that was obtained online.
- Be consistent. Employers who decide they want to perform social media searches should conduct these searches on a consistent basis. For example, it is a good idea to perform the searches at the same point in the hiring process every time, conduct searches on all candidates who made it to that point in the hiring process, and use the same search sites every time.
Note: A number of states prohibit employers from asking applicants and employees for login credentials to their social media and other personal online accounts. Even if your state does not expressly prohibit this practice, the likelihood of uncovering private and potentially protected information increases if an employer accesses an individual’s private accounts.
To help make informed hiring decisions, employers often ask for references from prospective employees. Employers also provide references for former employees seeking subsequent employment. Whether you are conducting a reference check or are asked to provide a reference, have policies and procedures in place to handle these requests. Here are some guidelines to consider:
Conducting reference checks:
- Decide when to conduct reference checks. It is generally considered a best practice to wait until you have extended a conditional offer of employment before conducting reference checks. If your company performs reference checks earlier in the hiring process, be consistent and confirm that you can obtain the information you are requesting before extending an offer.
- Obtain authorization. Prior to checking a potential employee’s reference, obtain and retain written authorization from the individual.
- Decide what information to request. During the hiring process, many employers use reference checks to verify dates of employment and positions held. Most employers are willing to disclose this type of information, but may be less inclined to provide information on performance or conduct related issues.
- Don’t request, provide, or use information unrelated to the job. Reference checks for all similarly situated candidates must be subject to the same set of questions, and should only seek job-related information. Never ask for, provide, or use information that is protected by federal, state, or local law. Even if you ask for strictly job-related information, it is possible a former employer may inadvertently disclose protected information (e.g., the individual’s age, national origin, family status, etc.). In these cases, the employer should disregard such information when making a hiring decision.
- Talk to references directly. It is a best practice to contact a reference directly via phone, even if a job candidate provides a letter from the reference. Most employers check at least three references. These should generally be professional references from previous employers. Ideally, the reference should be someone who has directly supervised the employee.
- Comply with FCRA if using a third party. If you hire another company to perform certain background or reference checks, you must make sure you comply with the Fair Credit Reporting Act (FCRA). The FCRA requires that employers provide written notification to, and obtain authorization from, any individual subject to a background investigation. The FCRA also has very specific guidelines employers must follow when taking adverse action against an individual (e.g., failing to hire) based on the results of the investigation. Several states have their own laws similar to the FCRA so it is important to review applicable state laws to ensure compliance.
- Obtain authorization. Prior to providing a reference for a former employee, obtain and retain written authorization from the individual.
- Designate a point of contact. To help ensure consistency, it is a best practice to designate a single individual (such as an HR representative) to handle all reference requests. Supervisors and employees should be instructed to direct all reference inquiries to the designated individual. This person should be trained on providing references in accordance with company policies and federal, state and local laws.
- Don’t violate state blacklisting laws. Some states have enacted laws that prohibit employers from “blacklisting” former employees. These laws prohibit employers from intentionally trying to prevent a former employee from obtaining other employment.