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Ultimate Guide to Employee Background Check Compliance

Ultimate Guide to Employee Background Check Compliance

When employing new staff, most businesses do background checks as standard practice. You may trust that the individual you hire has been thoroughly vetted thanks to this procedure. While this is a widespread practice, not all businesses do it consistently, which might have negative consequences. Background checks are essential, and employers would do well to learn their value, the rationale for implementation, and the ways in which best practices may enhance productivity and morale in the workplace.

The following benefits accrue to businesses when background checks are routinely used as part of the hiring process:

Background Checks: Regulations and Compliance Considerations

Employers can’t do their jobs without background checks. When performed properly, background checks may help businesses evaluate applicants, identify warning signs, and avoid allegations of negligent hiring. Background checks are an important part of any company’s due diligence process, but it’s important for employers to be aware of the many compliance rules that pertain to this practice. 

Employers risk legal action from candidates and watchdog groups like the Equal Employment Opportunity Commission if they fail to follow background check compliance. To assist businesses in becoming and remaining compliant, this article will go into the finer points of background check compliance and legislation. It’s crucial to stress right off the bat that companies can’t just do anything they want with information they find from background checks and criminal records during the recruiting process. Instead, regulations and ordinances govern how these checks may be used and what information can be shared as a result. Those regulations may also differ from one county or city to the next within the same state.

The Equal Employment Opportunity Commission

When it comes to workplace civil rights, the federal government’s Equal Employment Opportunity Commission (EEOC) is the authority to trust. Specifically, the EEOC’s mission is to eliminate discrimination in the workplace. The Equal Employment Opportunity Commission (EEOC) issues guidelines on background checks as a means of combating discrimination in the workplace.

Using federal statutes “that protect applicants and employees from discrimination,” the EEOC’s background check guideline is meant to guarantee that firms are in compliance. The Equal Employment Opportunity Commission (EEOC) may launch a lawsuit against an employer to enforce civil rights if a background check policy results in discrimination based on race, gender, religion, age, or other protected characteristics.  

In accordance with EEOC regulations, businesses must treat all applicants fairly when conducting background checks. To rephrase, all candidates for a given position, regardless of their race, color, sex, or anything else, should be subjected to the same background check. Discriminatory and contrary to EEOC advice is a policy that exclusively checks the criminal histories of applicants of a given race or origin. 

When conducting a pre-employment background check, the EEOC doesn’t only look for obvious signs of bias. It’s possible that discriminatory practices exist among employers who do background checks on all applicants. This is due to the fact that discriminatory practices based on background check results are all too common among companies.

All employers must be wary of what the Equal Employment Opportunity Commission (EEOC) calls “disparate impact” when making employment decisions based on background check findings. If a background check or hiring policy disproportionately disadvantages candidates “of a particular race, national origin, or another protected characteristic,” it violates EEOC guidance.

Employers might avoid a potentially discriminatory policy by instead zeroing in on specific criminal records that raise serious concerns about an applicant’s suitability for doing a particular job in a responsible, effective, safe, and legal manner. The greatest tactic is to seek for a criminal record that is directly related to the duties of the job. A shoplifting conviction, for instance, could be taken into account if the applicant is applying for a job in retail, as such convictions tend to be industry-specific. It would be more difficult to justify rejecting an applicant with a shoplifting record because of their interest in web design.

When deciding whether to take adverse action against a job candidate due to a conviction, the EEOC suggests taking into account more than just the conviction itself. The length of time since the conviction and whether or not the person is a repeat offender are also factors to consider. If an applicant has a clean record elsewhere and the conviction occurred many years ago, the employer should assign less weight to the conviction.

The Fair Credit Reporting Act

The Fair Credit Reporting Act is a crucial piece of legislation for companies to be aware of while doing background checks. Since the FCRA is a federal statute, all employers, regardless of location, industry, sector (public versus private), or other differentiating elements, must conduct background checks in accordance with the legislation.

Since its enactment in October 1970, the FCRA has been the primary piece of legislation governing the conduct of background checks. The legislation was designed and enacted with the intention of shielding customers from inaccurate information appearing on their credit reports. Introduced in 1950, credit cards quickly became a staple of everyday life in the United States. Credit reports emerged as a result of the widespread use of credit cards. Credit scoring was previously unstandardized and unregulated, leaving individuals defenseless against erroneous information being reported by credit bureaus. Additionally, credit reports back then carried more personal facts about one’s character, behavior, and even health than they do now. Legislators were concerned that these reports didn’t provide enough information and didn’t give consumers any real agency.

Concerns like these prompted lawmakers to pass the Fair Credit Reporting Act (FCRA) and establish protections for buyers. Specifically, the FCRA mandated that businesses and other organizations conducting consumer background checks must advise the subject of their plans and obtain a written agreement from the subject before continuing. The FCRA also detailed procedures that a searcher must follow before taking any punitive action against a customer on the basis of background check results. The law established procedures for people to review and challenge inaccurate material on their own background check reports.

The Fair Credit Reporting Act (FCRA) was one of the earliest U.S. regulations protecting individual privacy when it was enacted in 1970. Its original goal of making sure customers’ rights are protected during the background check process remains intact today. Employers are still required, more than 50 years after the FCRA was enacted, to provide written notice to job applicants of their desire to perform a background check. While an authorisation form can be sent alongside this notice, the two should be provided separately.

After that, if the background check leads to the employer deciding to retract or decline the offer of employment, the company must again inform the applicant in writing, this time including a copy of the background check report and an explanation of the applicant’s rights under the FCRA. The applicant should then have at least five days to reply to the notice and/or challenge the results of the background check.

The Case for Ban the Box

Compliance with the Fair Credit Reporting Act and the Equal Employment Opportunity Commission is mandatory for all companies, but ban the box is not. The term “ban the box” is a movement in American lawmaking that has gained momentum during the past decade. The “box” in “ban the box” is a reference to the question on employment applications asking if the candidate has ever been convicted of a crime. Lawmakers have been working to “ban the box,” making it illegal for companies to include this inquiry in application forms.

Employers can still do background checks despite the ban the box movement. Ban the box regulations do, however, postpone the time at which prospective employers might inquire about a candidate’s criminal record. Without a law to prevent it, companies can inquire about applicants’ criminal backgrounds throughout the hiring process. Background checks on potential employees are permissible so long as they adhere to FCRA and EEOC guidelines.

Ban-the-box regulations make it illegal to ask about a candidate’s criminal background during the hiring process.  Background checks are often delayed until after an employer has made a “conditional offer of employment.” 

These rules are meant to prevent potential employees from being automatically labeled as “criminals” and denied employment. Early in the employment process is when businesses make up their opinions regarding candidates who disclose a criminal background. It’s possible that this evaluation isn’t even purposeful or thought out. Instead, many persons in charge of making job decisions hold hidden prejudices towards people who have criminal records. Therefore, it may be quite challenging for even the most knowledgeable and articulate ex-offenders to establish themselves once they have answered “yes” to a query about their criminal background. Advocates of “ban the box” legislation argue that companies are more likely to take ex-offenders seriously if they are given a chance to shine before the topic of criminal background is brought up. Ban-the-box legislation has been enacted in 37 states and 150 local jurisdictions across the United States, as reported by the National Employment Law Project (NELP). Public institutions, including government agencies, are the only ones subject to many of these regulations. Other groups include private companies that conduct business with the government as suppliers or contractors.

Private companies are covered by ban-the-box regulations significantly less often than government agencies, but these rules have increased in prevalence in recent years. NELP announced in June 2022 that 15 states and 22 municipalities have made their ban-the-box laws applicable to private businesses.

One of the most crucial facts to keep in mind concerning ban-the-box legislation is that the number of such laws keeps growing. Everywhere you go, from local city councils and county boards to state legislatures and the federal government, new ban-the-box legislation is being passed. Employers, to ensure they are in compliance, should keep an eye out for new legislation or regulations that may bring the ban-the-box trend to their backyards, in addition to checking the laws and ordinances where they are headquartered.

Acceptable Use of Social Media

With the rise of social networking platforms like Facebook, LinkedIn, and Twitter, background checks on potential new hires have become standard practice. In certain cases, a “social media background check,” as it is colloquially known, might assist employers see red signals that they would have missed otherwise.

Potential employers may check candidates’ social media profiles to discover if they engage in negative talk about the company or their supervisor. It’s easy to see why organizations would want to avoid hiring people who are likely to engage in unfavorable internet discussion about their company.

Social media background checks are also commonly used by employers to see if an applicant has a history of using offensive language. There should be no barriers to entry into the workplace based on a person’s race, gender, sexual orientation, or any other aspect. Hiring someone with a racist perspective might be risky for the company’s culture and could even lead to legal difficulties.

Although it’s appealing to employers to identify these concerns on social media, doing social media background checks is fraught with legal peril. There are restrictions on how thorough an employer may be with these kinds of checks in some areas.

Problems with social media background checks are widespread even in jurisdictions where they are legally permissible to be conducted. Reviewing a candidate’s social media accounts is one example of how employers may gain information that might be used for discriminatory purposes during the hiring process. Social media users open up about aspects of their lives that are off-limits in the hiring process. Sexual orientation, gender identity, and nationality are all examples. A social media background check may affect a hiring manager’s objectivity if it reveals material such as this. Employers risk discrimination claims if they decide not to accept a candidate after discovering, via social media background checks, that they are, for example, transgender.

Compensation Record

Applicant’s previous employment and pay information is a popular topic of inquiry on job applications. This method, like doing credit checks, may be unlawful depending on the location of your organization. There are already rules in place in seventeen states and nineteen municipalities that restrict an employer’s access to an applicant’s salary history. Before including pay history sections on job applications, companies should make sure it is legal to do so where they are located.

Documentation of Prior Arrests

Employers often do background checks to learn about any felony convictions applicants may have. Employers are less convinced by an arrest that did not result in charges, led to the dismissal of charges, or resulted in a not guilty verdict than they are by an arrest that was followed by a conviction. However, arrest records are often included in background check reports because they are a component of the criminal record. The mere fact of an arrest can be enough for certain employers to rule out a candidate, even if they have never been formally convicted of a crime.

However, in many places, companies are allowed to take convictions into account when making employment choices but are prohibited from doing so based on arrest records. Once again, an arrest that did not result in a conviction is not conclusive evidence of guilt. Therefore, companies that use arrest records as a factor in the employment process run the danger of excluding applicants because of offenses they did not commit. The disproportionate nature of police contact with minority communities increases the likelihood that members of that community will have an arrest record, making any hiring policy that takes that into account suspect.

Checking of Credit Records

Employment in the banking, accounting, or customer service industries sometimes necessitates a thorough investigation of the applicant’s credit history. Employers in these fields often consider candidates’ financial habits and background to be important qualifications for open positions. A person’s capacity to handle financial concerns appropriately in the workplace may be indicated by factors such as their level of debt, credit score, payment history, and other similar factors.

However, several jurisdictions ban or place restrictions on these checks in the workplace. These include California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington. Some people argue that employers shouldn’t look too deeply into an applicant’s credit history since it doesn’t always reflect how responsible they would be with company funds. Many things might lead to financial difficulties, such as paying for education or an unexpected medical bill. Some people think it’s unfair that people with bad credit have a harder time getting hired so they can’t get a job and get out of debt. Laws prohibiting or placing restrictions on credit history checks are generally in line with these perspectives, as they aim to eliminate potentially unjust entrance obstacles to employment.

If a company is contemplating adopting this form of screening, it should examine how applicable it is to the position they are trying to fill. Even rules that limit credit check usage have loopholes for certain businesses, especially in the banking sector. However, for many positions, credit history is irrelevant and shouldn’t be used as a cause to reject a candidate.

Toxicology Testing

Drug-free workplace rules are preferred by many businesses and required by law in other sectors. Generally speaking, businesses can demand drug testing of potential hires and current workers at any time. Even though marijuana has been authorized for medicinal and/or recreational use in many places, this does not imply that employers cannot conduct drug tests or make judgments based on the results of such tests. Consider New York’s statute that allows the use of medicinal marijuana. While this legislation generally protects employees’ ability to consume recreational marijuana, it does provide exceptions for a few situations.

For example, New York law acknowledges that federal and state restrictions may necessitate the exclusion of applicants or the termination of workers who test positive for marijuana usage. These rules are not superseded by New York law. To add insult to injury, businesses can legally fire workers for using marijuana if they are inebriated on the job or if it prevents them from providing a safe and healthy workplace. In other places where marijuana legalization is an issue, businesses are given a similar pass.

Other Compliance Considerations

Regulation and compliance with regard to background checks might also differ based on factors such as geography and kind of business.


Some of the most important rules that businesses must follow in regard to background checks are codified at the federal level, while others are established at the state or even municipal level. For instance, ban-the-box legislation is often not enacted at the federal level but rather at the state or municipal one. Similar limits apply to other forms of background checks such as credit checks, criminal records checks, and more.

Employers should always seek the advice of an employment attorney who is well-versed in the specifics of background check compliance requirements under local and state law for these and other reasons. Employers who consult with an attorney have a better understanding of the need for written rules and procedures and a clearer plan for conducting background checks.


Background checks are typically impacted by industry-specific laws and regulations that govern the recruiting process. The United States Department of Transportation and the Federal Motor Carrier Safety Administration both require applicants for jobs involving transportation (whether passenger or freight) to pass a criminal background check. Among these include a clean driving record, the ability to pass a drug test, and a complete physical.

Background checks are mandated by law in a wide variety of businesses, including healthcare, education, construction, and even cannabis. Once again, it’s recommended that businesses seek the advice of legal counsel when trying to make sense of the myriad of rules they’re expected to follow.

Summary of Why Criminal Records Checks Are Necessary

Employers should always investigate applicants’ histories before hiring them. In addition to ensuring the safety of their organizations, background checks help companies select the most qualified candidates for open positions. Employers may learn about a candidate’s past convictions, work experience, and education level thanks to background checks.

They can assist businesses in making educated hiring selections by providing detailed information about candidates. Employment screenings for criminal records also contribute to a secure and safe workplace.