When completing background checks it is important to know and follow the laws. There are laws governing the proper procedure for obtaining and using background checks. Discrimination laws such as Americans with Disabilities Act (ADA), and gender/ racial discrimination laws form boundaries as to how background checks can be used.

The  Fair Credit Reporting Act (FCRA) governs the mechanics of background checks policies.

Employment criminal background checks and credit reports are considered consumer reports. When you use consumer reports to make employment decisions, including hiring, retention, promotion or reassignment, you must comply with the Fair Credit Reporting Act (FCRA).

You must take certain steps before you can get a consumer report, and before and after you take an adverse action based on that report.  A summary of these steps is provided below:

  • You mustForewarn the applicant or employee in a separate writing (not in the employment application) that you may use information in their consumer report for decisions related to their employment and get written permission from the applicant or employee to obtain the report.
  • Before You Take an Adverse Action: Before you reject a job application, or applicant, reassign or terminate an employee, deny a promotion, or take any other adverse employment action based on information in a consumer report, you must give the applicant or employee: a notice, copy of the consumer report, and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act.”  Giving the person the notice in advance gives the person the opportunity to review the report and tell you if it is correct.
  • After You Take an Adverse ActionIf you take an adverse action based on information in a consumer report, you must give the applicant or employee a notice of that fact – orally, in writing, or electronically, which must include:  the name, address, and phone number of the consumer reporting company that supplied the report; a statement that the company that supplied the report did not make the decision to take the unfavorable action and can’t give specific reasons for it; and notice of the person’s right to dispute the accuracy or completeness of any information the consumer reporting company furnished; and to get an additional free report from the company if the person asks for it within 60 days.

It’s a good idea to review applicable laws of your state related to consumer reports. Some states restrict the use of consumer reports – usually credit reports – for employment purposes.

Anti-discrimination Laws provide the bounds of how background checks can be used:

A paraphrasing of Equal Employment Opportunity Commission’s (EEOC) published Best Practices for Testing and Selection is provided below:

  • Uniformly apply all background checks and other screening processes to all applicants.
  • Specifically tailor background checks and other screening processes to the position.
  • Complete a review of your background checks and other screening processes to ensure that the processes are not unfairly disqualifying minorities and other protected persons.
  • Review job descriptions regularly to ensure that the background checks and screening processes are specifically tailored to the duties.
  • Educate your employees about the effective use of background checks and other screening processes.
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