5 Tips to Keep Your Background Checks Compliant


Putting together a pre-employment background check process that is thorough, effective, and efficient would be a challenge under any circumstances. Figuring out which types of criminal checks to use, whether or not to go after driving records and credit information, and which background check firm to work with can take many hours of research from multiple people on your human resource team. It can all be so daunting, in fact, that you forget about arguably the most important step in the entire process: making sure your company background check policy is compliant with all laws, rules, and regulations.

For human resources departments preparing to screen potential employees, the most important rules are laid forth either by the EEOC (Equal Employment Opportunity Commission) or the FCRA (Fair Credit Reporting Act). Following the rules of these two entities will ensure that your company doesn’t face any lawsuits over its background check policies—either from federal agencies or rejected applicants. There’s no substitute for actually researching the FCRA and EEOC on your own and making sure each rule has been followed, but in the meantime, here’s a basic checklist to make sure you’re not breaking or bending some of the most notable rules.

1. Treat all applicants equally with your background checks.

From one job opening to another, you might tweak your basic background check plan. For instance, you might include a credit history check for a job involving finances, but skip it for a standard desk job. This is to be expected, as not all jobs are equal. Just make sure you aren’t tweaking your background checks from person to person in a way that could be deemed discriminatory. For instance, you can’t run driving history checks on female applicants if you aren’t going to run them on males.

2. Inform the applicant in writing that you will be conducting a background check (and get their written permission to do so).

The FCRA stipulates that employers must formally notify their applicants, in writing, that they are planning to obtain a background check for hiring purposes. The applicant must then give his or her signed, written approval before the background check can proceed. A less-remembered part of this rule is that the notification of the background check must be provided as a standalone document, and cannot be a part of the traditional employment application. The applicant can sign this standalone document in order to give consent.

3. Be careful of discrimination in assessing background check information.

The EEOC is a stickler for what is called “disparate impact” in background checks. This means that background check information cannot be used for hiring decisions in such a way that strongly disadvantages one specific group. For example, if your company’s policy for rejecting applicants based on criminal history results in the dismissal of 75% of one race or ethnic group, but only 25% of all other groups, then your background check policy is having a disparate impact on different races.

4. Decide on objective criteria for judging applicants based on background information (then stick to it).

Before you start sorting through background check reports for different applicants, make sure you have an objective criteria for judging who is and is not fit to perform the job at hand. Decide which pieces of background information would mark someone as unfit to perform a specific job. If you are hiring a daycare worker, for instance, you would reject an applicant with a history of child abuse, violent crimes, or sexual offenses. On the other hand, you would not reject an applicant for the same job based on poor credit or a few speeding tickets, as such information is irrelevant to the job in question.

Related: [Free Download] Example Employee Handbook

The more extensive your criteria is, the better. If you have a set of rigid rules you are following, you’ll reduce the chances of making decisions based partially on race, age, gender, or other factors that might cause a bias.

5. Notify applicants of adverse decisions and inform them of their rights.

At least five business days before you decide to reject an applicant based on a background check report, you must provide the applicant a copy of the report. That gives the person a chance to verify the information is correct and if not, dispute the information. After that waiting period, if you still want to deny the applicant the job based on the records found, you should notify the person orally, in writing, or electronically. Most employers prefer to provide the notification in writing, though, so that there is a record proving that FCRA guidelines were followed.

The notification must include a number of elements:

  • First, inform the applicant that he or she has been rejected from employment consideration based on information found in their background check report.
  • Second, provide the name, address, and contact information of the company that provided the background check report. State that the hiring decision was made by you—the employer—and not back the background check firm.
  • Finally, inform the applicant that he or she has the right to dispute the information provided in the background check report. The applicant also has the right to contact the background check firm and request a free copy of the report, so long as the request comes within a period of 60 days.

Employers should also provide a copy of the background check report used to make the adverse hiring decision, as well as a document highlighting the rights afforded to job applicants or employees under the FCRA. Background check firms are supposed to provide employers with a copy this document, titled “A Summary of Your Rights Under the Fair Credit Reporting Act,” upon the purchase of a background check report. If your human resources office for some reason did not receive a copy of this rights document, then it can be found online right here.

The above items do not fully represent the rules and guidelines laid forth by the FCRA and EEOC. However, they do stand as important checklist items to remember as you put together a background check policy. Most lawsuits or legal issues surrounding the FCRA or EEOC have to do with one of these five items!

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Ed Fox

Ed Fox

Ed Fox works closely with partnership stakeholders and product leaders on business strategic planning, as Director of Technology. Ed leads the product and technology teams, directing operations while working with clients to ensure a successful development process and, when appropriate, integration with existing platforms. Ed’s specialty is aligning technology vision and strategy with product and business direction, and converting strategic plans into platforms that can grow in the market.