Bringing on a new employee represents a significant investment for any organization. Most companies want someone who will be with them long term to get the most of their investment.
Unfortunately, even with multiple rounds of interviews, it’s hard to vet someone through conversations alone. Candidates always seek to put their best foot forward and make a positive impression. Companies and their HR leaders and hiring managers need to be appropriately skeptical.
In addition to ensuring a good fit, employers have an interest and a duty in ensuring they’re hiring reputable, trustworthy employees.
The Importance of Background Checks
Employee background checks are an important tool to help employers ensure that the employees they hire have the background, skills, and credentials they claim and that they don’t represent any potential risk to the organization.
But conducting background checks is also fraught with a certain amount of risk. If mishandled, employers may be subject to fines and, of course, also risk making poor or potentially damaging hiring decisions.
Employers must balance their right to vet candidates with legal requirements designed to protect privacy and prevent discrimination.
FCRA Compliance
One of the primary federal laws governing background checks is the Fair Credit Reporting Act (FCRA). While many people associate FCRA with the banking industry, it also applies to background checks, given the broad nature of information collected under such reviews.
Under FCRA, employers using third-party services to conduct background checks must obtain written consent from the candidate before accessing the report.
In addition, if the report influences a decision to reject a candidate, employers are required to provide a pre-adverse action notice and a copy of the report, giving the candidate an opportunity to address inaccuracies. A final adverse action notice must follow if the employer decides not to hire the individual.
State Laws
State laws add another layer of complexity. Many states have implemented “ban-the-box” laws, which prohibit employers from asking about criminal history on job applications or during initial interview stages.
For example, California and Illinois have such laws, requiring employers to delay inquiries about criminal records until after a conditional job offer. Other states, like New York, have additional protections requiring employers to justify how a criminal record is relevant to the specific role.
Employers must also be cautious of practices that could result in discrimination. Blanket policies disqualifying candidates with criminal records may disproportionately exclude individuals from protected classes, potentially violating Title VII of the Civil Rights Act of 1964. Employers must ensure their background check policies are narrowly tailored and job-related.
Background Check Best Practices
To maintain compliance, employers should:
- Obtain proper consent and provide required notices.
- Avoid overly broad or blanket policies.
- Stay informed of state-specific regulations.
- Regularly review and update background check policies with the help of legal experts.
Navigating the compliance requirements for background checks can be daunting, but companies that approach them thoughtfully can protect their operations while treating candidates fairly.
Consider consulting with an employment lawyer to ensure your background check process meets all federal and state legal requirements.
Lin Grensing-Pophal is a Contributing Editor at HR Daily Advisor.
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