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Background Checks? That is the Question

Has your company decided yet whether it will conduct criminal background or credit checks? If you are already using that tool as part of your job screening process, are you keeping up with legal developments in every city, county or state where you do business to verify whether “ban the box” laws are being considered? Is your company a government contractor? If so, are you aware that 100 members of the U.S. Congress support legislation to apply “ban the box” to government contractors?

The background check landscape continues to evolve and change. There is intense scrutiny at the state and local level, as well as in Congress, at the U.S. Equal Employment Opportunity Commission (EEOC) and the Federal Trade Commission, which enforces the Fair Credit Reporting Act (FCRA) and the very strict notice and documentation requirements in that law. As we have written before, staying on top of the legal requirements and restrictions, and the variations among them, can be daunting. For example, the District of Columbia and two neighboring Maryland counties implemented criminal background check legislation in the last six months. While the laws share many similarities, each identifies the number of employees required to be a covered “employer” differently: 11 or more in D.C.; 15 or more in one Maryland county; and 25 or more in the other. The D.C. law also requires that a company have a “legitimate reason” to rescind a job offer and mandates that the company consider six specific factors in order to make that determination. Confusing enough?

Once you decide to utilize background checks, the FCRA imposes very strict requirements, including about how to disclose to an employee or job applicant that the employer will obtain a consumer report, and how to obtain the person’s consent to perform the background check. The rigid FCRA requirements have become fertile ground for litigation, including class actions seeking statutory penalties of $1,000 per violation of the disclosure and consent provisions of the statute.

How do you navigate these treacherous waters? If you decide to incorporate criminal background or credit checks in your job application process, we recommend several steps to help minimize your risk.

  1. Consider deleting any question about criminal convictions from your job application. While “ban the box” prohibitions are not universal, deleting the question at the initial stage of the application process may be the easiest course of action. You will admittedly be giving up receiving certain information you are used to reviewing, but again it may be easiest in light of continuing changes to these laws. You can ask later in the process, in accordance with applicable laws.

  2. Check and double-check your FCRA disclosure and consent forms. Eliminate extraneous language from disclosure documents, such as to combine the disclosure with a release. That would be an automatic violation of the statute.

  3. Develop clear guidance about how to use the results of a background check and whether to withdraw a job offer based on those results. Key issues include how to evaluate the particular duties and responsibilities for the job you are hiring for, and how, if at all, the specific criminal conviction or credit report information relates to those duties and responsibilities. Document the decision and thought process about why the background check information was important to the decision.

  4. Perform due diligence about your background check vendor. For example, recent class action filings alleged that vendor background checks included information that is prohibited by the FCRA, including criminal activity that was more than seven years old, and that the hiring employer relied on it.

  5. Give the applicant a reasonable period of time to review and challenge the background check results before you withdraw the offer. Provide pre-adverse action letters.

Background checks can be used effectively to screen for information that you, as a responsible employer, will want to know about a job candidate. If you elect to take advantage of the benefits they provide, be aware of and take steps to avoid the potential problems and hot spots that go with the territory.

© 2023 Foley & Lardner LLPNational Law Review, Volume V, Number 173

About this Author

Paul Monsees, Insurance Attorney, Foley Law Firm

Paul R. Monsees is a partner and litigation lawyer with Foley & Lardner LLP. He has extensive experience analyzing, litigating and resolving complex commercial disputes including to represent clients in matters concerning insurance and reinsurance relationships, employment discrimination and related issues, internal investigations, breaches of fiduciary duty, corporate and law firm successor liability, misappropriation of trade secrets, breach of non-disclosure and non-solicitation agreements, data breach issues, breach of medical practice management contracts,...