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The Legal and Ethical Implications of Background Checks on Employee Selection

Background checks have become a routine part of many businesses' hiring process in recent years. With the increasing reliance on technology, the ease of gathering personal information online and the need for employers to ensure they make the best hiring decisions, background checks have become a standard practice. However, there are several legal and ethical considerations that businesses need to be aware of before conducting these checks. This article aims to explore why it is essential for businesses to consider these factors before conducting background checks, and the consequences of not doing so.

The Legal Considerations

Employers must abide by laws and regulations that dictate what information they can and cannot use in their hiring decisions. There is a range of federal and state laws that employers must follow to ensure that they are not discriminating against potential employees. Therefore, it is crucial that businesses conduct these checks consistently across all job applicants and ensure that they do not discriminate against individuals based on their personal information.

Federal law mandates that employers only use information that is relevant to the job when making hiring decisions. This includes past employment history, education, criminal records, and credit history that are relevant to the job's responsibilities. Employers can be sued for discrimination if they misuse personal information to inform hiring decisions that violate a person's rights.

For example, an employer cannot deny a job to an applicant because of their race, religion, or gender. Companies must ensure that their background checks are consistent for every applicant and that the criteria for hiring are not biased towards protected groups. For instance, conducting a criminal background check without being consistent and clear with the criteria can be discriminatory.

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Additionally, background checks of current employees must comply with privacy laws. Employers can only use background checks for specific reasons, such as promoting an employee or for transfer to a new job. They must receive written consent from the employee and inform them of their legal rights under the law.

It would be best if employers looked into specific state laws to ensure they're complying with areas that have their stance-overlooked by the Federal Government. For example, some states have passed 'Ban the Box' Laws that bar employers from asking job seekers about their criminal history in the initial job interview. Employers must be aware of these state-specific rules.

Ethical Considerations

While employers must conduct background checks for hiring purposes, they must also consider the ethical implications that accompany these checks. Background checks can reveal a person's private information and lead to prejudices against someone based on their past misdeeds.

For instance, a criminal record could come up in a background check where the job does not require much interaction with the public, and the crime is unrelated to the position. In such a scenario, the employer may be making assumptions that stigmatize the employee based on their past mistakes, resulting in unfair decisions.

Similarly, credit reports as part of background checks can be viewed as invading a person's privacy. Credit reports are not always an accurate measurement of personal responsibility and discipline, and it might not be relevant for many jobs. Some people may have had financial hardships that reflect on their report, but they may still be qualified for other positions.

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Therefore, businesses must consider the ethical implications when conducting background checks. Where possible, employers should only use such information that is directly related to a job's requirements. At the same time, it is important that employers do not make assumptions about individuals based on their past experiences.

Consequences of Non-compliance

Businesses found guilty of violating privacy or discrimination laws during background checks face severe consequences. Penalties for non-compliance can include hefty fines and legal liability costs. Additionally, violating privacy rights or committing any forms of discrimination during background checks can result in reputational damage to a business.

For instance, in 2018, Sterling, a background check company, agreed to pay almost $6 million to the state of California for violating the Fair Credit Reporting Act. The company was fined because they allegedly failed to provide accurate criminal background checks and did not correct the errors.

Another example is the case of the bedding manufacturer, Hollander Home Fashions. The company was required to pay $400,000 to settle a case for allegedly violating laws relating to criminal and credit history checks.


In conclusion, background checks are essential for making informed hiring decisions. However, businesses must be vigilant in ensuring that they adhere to legal and ethical requirements when conducting these checks. By following relevant laws and regulations, businesses can avoid lawsuits and reputational damages resulting from non-compliance with the law.

Moreover, while the information obtained during a background check can be valuable, it's crucial to ensure companies do not rely too heavily upon digressions in the potential employee's personal history. Building a culture of fairness and equal opportunities is vital, and employers must not only follow legal requirements but strive to achieve an ethical standard that values the individual beyond their legal past.

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