Conducting background checks is a crucial step in the hiring process for most companies. Whether it is for permanent or temporary employees, companies need to ensure that their potential hires are trustworthy, have a good track record, and fit the job description. However, as much as background checks are necessary, they also come with legal implications that companies need to be fully aware of. In this article, we will explore the legal implications of conducting background checks, the importance of complying with federal and state laws, and tips for companies to avoid legal pitfalls.
What are background checks, and why are they important?
A background check is a comprehensive review of an individual's history, including their criminal record, work experience, education, credit score, and personal references. The purpose of a background check is to determine if an individual is suitable for employment, tenancy, or volunteer work. Employers conduct background checks to maintain a safe working environment, reduce the risk of liability claims, include dependable staff, and ensure they make informed choices.
Legal Implications of Background Checks
While background checks may seem like a routine and harmless practice, they come with significant legal implications. Employers must ensure they are not violating any federal and state laws while conducting background checks. Failure to comply with these laws can result in legal consequences such as lawsuits or fines. Here are some common legal implications of background checks:
1. Discrimination
Discrimination in employment is illegal under Title VII of the Civil Rights Act of 1964. Employers must ensure that their use of background checks does not discriminate against individuals based on their gender, race, religion, national origin, or disability. Employers who use criminal history to disqualify applicants without considering whether the conviction is related to the job's duties may indirectly discriminate against minority groups. Employers must also ensure that their policies do not have an adverse impact on any protected class of applicants.
2. Invasion of Privacy
Employers must ensure that their background check policies do not invade an individual's privacy interests. Employers cannot conduct background checks without the individuals' permission or consent. Employers also cannot use information obtained from background checks for other purposes other than hiring, promotion, or termination decisions. Employers must also comply with the Fair Credit Reporting Act (FCRA) when obtaining consumer reports from third-party agencies such as credit reporting agencies or investigative consumer reporting agencies.
3. Negligent Hiring
Employers have a duty to undertake reasonable steps to hire and retain competent and reliable employees. Employers who negligently hire an employee that harms another employee or member of the public may face liability claims. The employer must demonstrate that they conducted reasonable background checks and found no evidence of prior misconduct or criminal history. Employers that fail to conduct reasonable background checks may be considered negligent and face liability claims.
4. Compliance with Federal and State Laws
Employers must comply with federal and state background check laws when conducting background checks. There are different laws depending on the jurisdiction that employers need to comply with. For example, the FCRA requires employers to provide applicants with disclosure notices and obtain their written consent before accessing consumer reports. Employers in California must comply with the California Investigative Consumer Reporting Agencies Act (ICRAA) when obtaining investigative reports from third-party agencies.
Tips for Employers to Avoid Legal Pitfalls
Employers can avoid legal pitfalls associated with background checks by following these tips:
1. Develop and Comply with Background Check Policies
Employers should develop policies that comply with state and federal laws governing background checks. Employers should ensure they obtain consent from the applicants before conducting background checks, comply with disclosure requirements under FCRA, and establish a fair and consistent policy for conducting background checks.
2. Conduct Reasonable and Job-Related Background Checks
Employers should conduct background checks that are job-related and consistent with business necessity. Employers should only use background checks to make decisions consistent with the job description and avoid using information obtained from background checks to discriminate against protected classes of applicants.
3. Keep Records of Background Checks
Employers should maintain accurate records of background checks they conduct. Records should contain information on how background checks were obtained, how the information was used, and the reasons for the decisions made.
4. Inform Applicants of Adverse Actions
Employers must inform applicants if they decide not to hire them based on information obtained from background checks. Employers must provide applicants with the necessary information on what was found in their background checks, where it was obtained, and the name and contact information of the agency that conducted the check.
In conclusion, background checks are an essential part of the hiring process, but they also come with legal implications that employers need to comply with. Employers must develop policies that comply with federal and state laws, conduct reasonable and job-related background checks, maintain accurate records, and inform applicants of the results of the background checks. Failure to comply with these laws can result in legal consequences such as lawsuits or fines. Compliance with these laws ensures that employers maintain a safe and legal working environment and make informed hiring decisions.
