The Equal Employment Opportunity Commission (EEOC) and the Federal Trade Commission (FTC) have teamed up to bring us a handy-dandy guide to what employers need to know about background checks. I know there are many people who may say "What?? What does the FTC have to do with criminal background checks done by employers?" To the uninitiated, it does seem like a strange pairing. However, the FTC controls the usage of "consumer reports", and that includes criminal background reports as well as credit reports as regulated under the Fair Credit Reporting Act.
Anytime you consider the background information of an applicant or employee in making employment decisions, you must comply with laws that protect applicants and employees from discrimination; that’s where the EEOC comes in. This includes discrimination based on race, color, national origin, sex, or religion; disability; genetic information (including family medical history); and age (keep in mind that states and localities have added additional categories such as sexual orientation, gender identity and family status).
If you use an outside company in the business of compiling background information, then you also must comply with the Fair Credit Reporting Act (FCRA).
So, here’s the short version of the interplay of laws:
Employment decisions (whether related to hiring, promotion, demotion, training, firing, etc.) cannot be made based on a person’s race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older). For example, asking only people of a certain race about their financial histories or criminal records is evidence of discrimination.
If you’re using a company in the business of compiling background information
Inform the applicant or employee you may use the information for decisions about their employment. This notice must be in writing and in a stand-alone format (can't be in an employment application).
- If you are asking a company to provide an "investigative report" (a report based on personal interviews relating to a person's character, general reputation, personal characteristics, and lifestyle) you must also inform the applicant or employee of his or her right to a description of the nature and scope of the investigation.
- Always get the applicant's or employee's written permission to do the background check. This can be part of the document you use to notify the person that you will get the report. If you want the authorization to allow you to get background reports throughout the person's employment, make sure you say so clearly.
- Certify to the company from which you are getting the report that you:
- notified the applicant and received their permission to get a background report;
- complied with all of the FCRA requirements; and
- won't discriminate against the applicant or employee, or otherwise misuse the information in violation of federal or state equal opportunity laws or regulations.
Once you have the information in hand, it can’t be used to discriminate in violation of equal opportunity laws. The same standards must be applied to everyone; for example, you cannot reject applicants of a particular race (or age, religion, etc.) with certain financial histories or criminal records, if you wouldn’t reject applicants of another race (or age, religion, etc.). Beware of standards that may have a "disparate impact" on those of a certain race, for instance. Only use standards that are job related and consistent with business practice.
If you take an "adverse action" (deciding not to hire, or terminating an employee) based on information you obtained in the background check from a company in the business of compiling background information, the FCRA requires additional actions:
Before you take an adverse employment action, you must give the applicant or employee:
- a notice that includes a copy of the report you relied on to make your decision; and
- a copy of "A Summary of Your Rights Under the Fair Credit Reporting Act," which you should have received from the company that sold you the report.
Giving the person the notice in advance, allows her an opportunity to review the report and explain any negative information.
After you take an adverse employment action, you must tell the applicant or employee (orally, in writing, or electronically):
Source: What Employers Need to Know