HR & Employment
Definition
A pre-employment screening process that verifies a candidate's identity, criminal history, employment history, education credentials, and other relevant records before hiring.
A background check is a due-diligence process conducted by employers before making a final hiring decision, used to verify information provided by the candidate and assess potential risks. Depending on the scope, a background check may include criminal history searches at the county, state, and federal levels; identity and Social Security number verification; employment history verification; education and credential verification; professional license verification; credit history (for financially sensitive roles); driving record checks (for positions involving vehicle operation); and drug testing.
Background checks are primarily governed by the Fair Credit Reporting Act (FCRA), a federal law that imposes strict procedural requirements on employers who use third-party consumer reporting agencies to conduct the searches. The FCRA requires employers to obtain written authorization from the candidate before running the check, provide a pre-adverse action notice along with a copy of the report and a summary of rights if the employer is considering taking adverse action based on the results, and wait a reasonable period before issuing a final adverse action notice. Failure to follow these steps precisely is one of the most common sources of FCRA class action lawsuits.
Beyond the FCRA, employers must navigate a patchwork of state and local laws. 'Ban the box' laws — now enacted in over 35 states and 150+ municipalities — prohibit employers from asking about criminal history on initial job applications, restricting when in the hiring process background checks can be conducted. California, New York, and Illinois have particularly comprehensive restrictions on the use of criminal records in hiring decisions. Some states also restrict the use of credit history to positions where it is directly relevant.
The Equal Employment Opportunity Commission (EEOC) guidance requires employers to conduct an individualized assessment before rejecting a candidate based on criminal history — considering the nature of the crime, the time elapsed, and the nature of the job — to avoid disparate impact on protected classes.
Background check compliance is a minefield of federal, state, and local requirements that change frequently. A single missing disclosure, a ban-the-box violation, or an improperly conducted adverse action process can result in a class action FCRA lawsuit covering every candidate the company screened over a multi-year period. These cases have resulted in settlements of millions of dollars for large employers.
An HR professional can design a background check policy that is compliant, consistent, and legally defensible. An employment attorney should review the policy, especially if your business operates across multiple states with varying ban-the-box and criminal history laws. The investment in proper policy design is trivial compared to the litigation costs of getting it wrong.