The Need for ‘Hire’ Education: Rules to Follow Regarding Background Checks


Background checks are a vital tool used to avoid hiring problem employees and can help limit a company’s potential liability. With more than 65 million people in the United States having been arrested or convicted of crimes, and with employers successfully being sued for the criminal and civil acts of their employees, it is not surprising that more than 90 percent of employers conduct criminal background checks with almost 70 percent requesting broader “consumer reports” on all job applicants. However, care must be taken, because an employer can also run into serious trouble for not following the rules regarding background checks.

An employer’s ability to conduct background checks is limited by both federal and state laws and regulations. In 2012, the Equal Employment Opportunity Commission (EEOC), the federal agency responsible for enforcing federal discrimination laws under Title VII, issued guidance stating that sweeping companywide decisions to not hire or promote employees based on criminal backgrounds violated Title VII. Also in 2012, Congress amended the Fair Credit Reporting Act (FCRA), setting forth detailed procedures to be followed when a “consumer report” (which includes criminal, civil, and driving records; reference checks; social media research; and other information obtained about an applicant/employee by a consumer reporting agency) is used for employment purposes. Additionally, federal law makes it unlawful for an employer to make employment decisions based on an individual’s filing of bankruptcy.

Originally published in Banking Matters - Winter 2014.

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