The Background Check Checklist: Avoiding Pitfalls in Screening Process

By Samantha Southall

There was a time when employment background checks were reserved for those entering very specific careers; government jobs with access to sensitive information, those working closely with children or finances and a handful of other public-facing corporate positions.

But in the last two decades, technology has made conducting background checks faster, cheaper and more convenient for employers. According to data from the Society of Human Resource Management, 73 percent of employers use criminal background checks on employees.

4 “musts” before running background checks

Job applicants applying for almost any level of position in nearly every industry are far more likely to have to pass a background check as a pre-requisite for employment. For example, employers in the transportation, health care and retail industries often use background screening services of consumer reporting agencies.

Under the Fair Credit Reporting Act (FCRA), employers have a right to conduct background checks, but in doing so, they must be careful to avoid some common pitfalls that can turn a useful hiring tool into a legal nightmare.

The risks are real. A background check that doesn’t follow proper procedure can lead to lawsuits on behalf of the prospective employee. Meanwhile, not conducting a background check at all could expose employers to negligent hiring lawsuits if the employee becomes a problem in the workplace.

Here’s a checklist of four (4) “musts” every employer should ensure before running any background checks.

1. Get background on your background screener

The applicant has many legal protections in place when it comes to background checks. It’s up to the employer to protect themselves from the aforementioned pitfalls by doing some due diligence before determining which consumer reporting agency to use.

Checking for membership in an industry governing body, such as the National Association of Professional Background Screeners (NAPBS) is a good place to start. While not an ironclad guarantee, membership in groups such as NAPBS is one indication that an employment screening agency is up-to-date on industry best practices and evolving legislation.

Much like you hope to avoid hiring a candidate with skeletons in his or her closet, you wouldn’t want to enter into a contract with a screening agency that has a less-than-stellar track record.

2. Give background before the background check

Before an employer ever conducts a background check, they must let the applicant know that they’re going to do so. Additionally, they must also receive written permission from the prospective employee to be able to proceed.

Asking for this permission can be done at almost any point in the hiring process, except for the employee application. The permission document must be an entirely separate and stand-alone form. This document should make very clear that the results of the background check could be used in the ultimate hiring decision.

One other consideration for employers before conducting the background check is to make sure they are treating applicants equally and fairly. To ensure this, employers should outline at what point in the hiring process they will conduct the background checks and make sure that all of the candidates in consideration at that point are subject to one.

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3. Before making a decision, check the background

Employers are entitled to use the results of background checks for employment decisions, unless doing do so has a disparate impact on other applicants or the red flag shouldn’t impact their ability to do the job successfully.

If the results contain information that, to any degree, will negatively affect the employment opportunities of the applicant (or employee), the employer must provide a pre-adverse action notice, a copy of the report and a summary of the applicant’s rights under the FCRA, which is drafted by the Consumer Financial Protection Bureau (CFPB). An employer must provide a pre-adverse action notice any time they make an employment-related decision, whether it’s in the context of initial employment, a promotion or consideration of a job transfer.

This notice allows the applicant to dispute any negative information in the report. Therefore, the employer should allow the applicant a reasonable amount of time to dispute the information in the notice before making a final decision. What constitutes a reasonable amount of time depends on the particular facts and circumstances.

4. Check that you’ve given background on your decision

If the applicant doesn’t dispute the information or the results are correct, the employer can then reject that applicant, but they’re not off the hook yet.

The employer must still provide a notice to the applicant of the adverse action, as well as information on the consumer reporting agency that did the search and a notice of the applicant’s right to both a free copy of the consumer report and to dispute the accuracy or completeness of the information within the report.

Failure to comply with any of these steps exposes the employer not only to expensive and disruptive litigation, in which a plaintiff has the potential to recover actual damages, punitive damages, costs and attorneys’ fees, but also to scrutiny by the Federal Trade Commission and the CFPB.This reinforces the point made earlier that the employer must be thorough when determining which screening agency to utilize.

A tool to help hire the right individual

While there are some potential snares to navigate, background checks can provide great insight into potential hires and, more often than not, are a seamless way to reinforce the impressions a candidate made via resume or interview, good or bad.

By becoming familiar with and adhering to the in-depth insight outlined in the Fair Credit Reporting Act, employers can ensure not only that they are avoiding unnecessary risks throughout the process, but also are hiring the right individuals for their organization.

Samantha Southall is a Shareholder at the law firm Buchanan Ingersoll & Rooney PC. She focuses her practice on complex civil litigation and counsels clients on a variety of legal matters, including contractual disputes, restrictive covenants and other business tort claims. Contact her at Samantha.southall@bipc.com

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