Background checks have become a standard practice for many employers when hiring new employees. The purpose is to verify the information provided by potential employees, assess risk, and ensure a safe work environment. However, although background checks can be beneficial, they also come with legal implications that employers need to understand. In this article, we will dive into what are the legal implications of conducting background checks, how to succeed in doing so while staying compliant, the benefits of conducting background checks, the challenges employers may face, tools and technologies that can aid in conducting background checks, and best practices for managing the process.

What are the legal implications of conducting background checks?

While background checks are a common practice, it's essential that employers conduct them in compliance with federal, state, and local laws. A common misconception is that employers can request and review any information about a potential employee. However, there are limits to what information can be obtained.

The fair credit reporting act (FCRA) is a federal law that regulates the collection, dissemination, and use of consumer information, including credit reports and background checks. The FCRA applies to background checks performed by third-party screening companies retained to provide investigative consumer reports, which include more extensive investigation than a typical background check.

Additionally, certain states have their own regulations that govern background checks, such as restrictions on what information can be considered in the decision-making process. For example, some states prohibit employers from considering certain criminal records, like arrests that didn't result in convictions.

To ensure compliance with all relevant laws, employers should consult with legal counsel, their industry associations, or third-party screening companies to ensure they are following the applicable rules.

How to Succeed in What are the legal implications of conducting background checks

To succeed in conducting compliant background checks, employers must understand the applicable laws, and establish systems and processes that ensure compliance. Here are several key steps employers can take:

Develop a Written Background Check Policy

The written policy should cover the procedures and legal requirements for performing a background check, including the permissible purpose of the investigation, criteria for evaluating the results of the search, and the employee's rights under the FCRA.

Obtain Written Authorization from the Applicant

Before requesting a background check, employers must obtain written authorization from the applicant. The authorization must be separate from the employment application and written in a clear, conspicuous manner.

Ensure Adverse Action Requirements are Followed

If an employer determines not to hire an applicant based on the background check, the employer must follow adverse action requirements under the FCRA. Adverse action requirements mandate pre-adverse action requirements like providing a copy of the background check and summary of the consumer's rights, followed by time to dispute any inaccuracies in the information reported. After that, the employer must provide a final adverse action notice explaining that the decision not to hire was based on information in the background check and identifying the source of the background check.

The Benefits of What are the legal implications of conducting background checks

Conducting background checks has benefits beyond legal compliance. These benefits include:

Reducing Risk

Background checks can help reduce the risk of theft, fraud, and workplace violence. Employers can use background checks to verify education, employment history, and criminal history when making hiring decisions.

Increase Employee Retention

By conducting background checks before making a hiring decision, employers can avoid hiring individuals who may leave the position shortly after starting. Background checks can help identify red flags that may suggest the candidate isn't a good fit or may be a flight risk.

Creating a Positive Reputation

Employers who take the time to conduct thorough background checks can protect their brand reputation. Conducting background checks demonstrates a commitment to hiring only the best candidates and can help to create a culture of integrity.

Challenges of What are the legal implications of conducting background checks and How to Overcome Them

While background checks can be advantageous, they present a few challenges for employers. Here are some of the primary challenges and how to overcome them:

Cost

Background checks can be expensive, depending on the scope of the search. Employers can overcome this challenge by prioritizing which searches are necessary for each position and balancing the cost of the search with the risk and job's responsibilities.

Limited Information

Background checks won't provide a complete picture of the candidate. They offer a snapshot of a person's past but cannot predict how they will perform in the job. Employers can overcome this by supplementing background checks with interviews, pre-employment testing, and job-related skills assessments.

Inaccurate or Outdated Information

Background checks can also be problematic when inaccurate or outdated information is reported. Employers should work with reputable background screening companies, review copies of the background check report to ensure accuracy, and follow the pre-adverse and adverse action procedures under the FCRA, allowing job applicants to dispute incorrect information.

Tools and Technologies for Effective What are the legal implications of conducting background checks

Several tools and technologies can help employers conduct background checks effectively while ensuring compliance with the law. These include:

Third-party Screener Services

Employers can work with reliable third-party screening companies to conduct background checks. Screening companies have expertise in complying with legal requirements and can offer packages tailored to the employers' needs.

Online Criminal Searches

Online criminal search tools can help supplement traditional county court searches. These tools enable employers to search multiple databases simultaneously and reduce the chance of missing critical information.

Best Practices for Managing What are the legal implications of conducting background checks

To ensure employers conduct compliant and effective background checks, here are some best practices to consider:

Document Everything

Employers should document every step of the background check process, including establishing a written policy, obtaining written authorization, and following the pre-adverse and adverse action procedures.

Stay Up-to-Date on Legal Requirements

Employers should stay up to date with the relevant laws and regulations, as they may change over time.

Train Hiring Managers

Employers should train hiring managers and other employees with responsibilities related to background checks to ensure they understand the legal requirements and best practices.

Remain Consistent

Employers should follow consistent policies and procedures for all candidates, regardless of their position.

In conclusion, background checks are beneficial, but they come with their share of legal implications and challenges. Employers should understand the legal requirements, develop a thorough background check policy, stay up to date with legal requirements, and use proven tools and technologies to conduct background checks consistently and effectively.