An Update on Background Checks
Background checks are routinely used to help companies in their hiring decisions. Staffing companies, recruiters, and placement companies are especially likely to use checks before recommending candidates. A comprehensive background check can include credit history reports, drug testing, driving record, and criminal history reports. However, the general concept of checking into a person’s personal history as part of a routine hiring process has come under increased scrutiny with governments now legislating when checks may be run and how they may be used.
Federal Restrictions
Federal regulations have long prohibited the use of
background check or making an employment decision
based on an applicant’s race, national origin, color, sex,
religion, disability, or age. For example, if HR is only
looking at the credit history of individuals of certain
races, then your hiring process may be considered to
be discriminatory.
The Fair Credit Reporting Act (FCRA) requires an employer to provide every applicant with written notice of the background check and to get permission in writing before running the background check. Then, if the company takes an adverse action (i.e. not hiring an applicant) based on that background information, they must notify the applicant that the decision was based on the background check and provide a copy of the report used.
State and Local Regulations: New Laws
and Trends
Ban-the-Box
Many states and local municipalities have passed
employee protections known as “Ban-the-Box” laws
and regulations. These restrictions prohibit employers
from asking job applicants certain questions related to
criminal history or convictions. The practice has become
widespread with more and more cities joining
the trend. In the state of New York, it is generally illegal
to discriminate against an applicant who has been convicted
of one or more crimes. In California, employers
cannot obtain criminal history information until after a
conditional job offer has been made.
Credit Reports
There is also a movement across the country towards
limiting the use of an applicant’s credit history
information in making hiring decisions. The city of New
York prohibits an employer from making inquiry into
an applicant’s credit history unless certain exceptions
apply. In California, using credit history reports is
restricted to certain professions.
Previous salary
As a way to promote gender pay equality, jurisdictions
around the country have enacted regulations on
an employer’s ability to ask about an applicant’s previous
salary. For example, the states of California and
New York both prohibit inquiring about a potential
employee’s previous salary. Also, New York requires
employers to provide applicants with a salary range
if asked.
Genetic history
Genetic history testing has become more accurate
and widespread in the past few years. As a result, states
are passing laws protecting genetic history information
from being used in making employment decisions.
Illinois has passed a law that prevents an employer
from discriminating against applicants who refuse to
provide genetic history information.
Social Media
A very recent trend is to regulate employer’s screening
of an applicant’s or employee’s online activity.
Vermont is leading in regulating a prospective
employer’s use of social media in making hiring
decisions. Employers in Vermont may neither ask an
applicant or employee to provide information about
their social media accounts nor direct an employee
to take any actions regarding their personal social
media accounts.
As more information on individuals becomes readily available, federal and state governments are recognizing the need to limit the use of that information especially with respect to employment. Companies and their HR Departments need to stay abreast of changes as these laws evolve and are instituted. For a full survey of current regulations, check out the resources available at the Society for Human Resource Management at https://www.shrm.org.
Business Insights is hosted by the Law Firm of KPPB LAW (www.kppblaw.com).
Sonjui L. Kumar is a founding partner of KPPB LAW, practicing in the area of corporate law and governance.
Disclaimer: This article is for general information purposes only, and does not constitute legal, tax, or other professional advice.
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