Background Checks Without Backfires: Compliance Tips for Employers

It is critical to have written guidelines surrounding your background check process. The guidelines should outline when you will run a regular criminal check, when you will add a credit check, or a motor vehicle records (MVR) check. For example, in organizations where employees are responsible for large sums of money or have access to a great deal of customer or client information, a credit check might be applicable. If employees will be driving on company business, a motor vehicle records check is essential.

Here are the best practices to follow:

• Mention background checks to the candidate during the interview process (it may save you time if the candidate knows they won’t pass), and if the candidate discloses information during the interview process, refer to your adjudication guidelines or your human resource professional on the appropriate response.

• Ensure the offer letter states that the offer is contingent upon passing a background check.

• Outline which checks will be performed (i.e., criminal, credit, MVR) based on the job requirements;

• Obtain a signed authorization form and ensure it is up-to-date with the regulations (it is a Fair Credit Reporting Act (FCRA) requirement).

• Initiate background checks only after the candidate has accepted the employment offer.

There are several reasons why running the background checks prior to acceptance of the employment offer is not considered a best practice.

1. You may be violating state law or statute.

Although there is no current federal law on the issue, some states prohibit the practice of running the background check prior to the offer. Additionally, the “ban-the-box” legislation may apply, which bans an employer from asking certain questions related to criminal history during the hiring process.

2. Background checks are costly.

Thorough background results are not cheap. Don’t waste your company's money on background checks for candidates who won’t receive an offer of employment.

3. Beware of pre-adverse and adverse action requirements.

The Fair Credit Reporting Act (FCRA) requires notifying the candidate when the background check information leads to an adverse hiring decision. There is a specific process to follow, and it becomes an awkward situation to pull a job offer that you haven’t even made!

4. You may be setting yourself up for discrimination claims and other problems

The goal of filling a position is to hire the best-qualified candidate for the position. If background checks are run inconsistently during the hiring process, you may gain more information on one candidate than another that is not pertinent to the qualifications for the position. Additionally, if you normally conduct the background check post-offer, deviating from this practice exposes your organization to liability, including litigation. An applicant may claim discrimination in the hiring process if he or she was chosen for a background check pre-offer and then not offered a position, as opposed to an applicant whose background check was run post-offer.

The bottom line to avoiding litigation and employment claims during your hiring process is by ensuring that you are complying with your state laws, following best practices, and being consistent. If you don’t currently have a background check policy that outlines an adjudication process, implement one. Such a policy compares the results of applicable background checks to established company standards to determine if an applicant’s background meets those standards.

The key in all employment practices is consistency.

Disclaimer: The information provided in this blog is for informational and educational purposes only and should not be construed as legal advice. Laws and regulations vary by jurisdiction and specific circumstances. Employers and individuals should consult with their attorney or qualified legal professional to determine the appropriate course of action for their particular situation.

Roberta Edwards is a Senior HR Consultant with over 20 years of professional experience. Follow Edwards HR Consulting on LinkedIn and Facebook and read more about Roberta here.