In a first-time collaborative effort, the Equal Employment Opportunity Commission (EEOC) and the Federal Trade Commission (FTC) co-published guidance on March 10, 2014, addressing  legal requirements in using background checks for employment purposes. There are separate publications for employers and for employees and job applicants, with the latter providing information about where readers can go for help if they believe an employer violates the law. This guidance is available on the EEOC website. Some key points are as follows:

  • Background checks must be conducted and applied evenhandedly, without regard to protected status such as race, religion, sex, national origin, disability or age (40 or older).  Selective checks made on an individualized basis create risk of discrimination claims, and screening criteria should be consistent among candidates. Beware of screening criteria that would significantly disadvantage individuals in a protected class, such as disqualifying candidates for Information Technology positions who received their college degrees more than 20 years ago.
  • Employers may not make medical inquiries before extending a conditional job offer and even then are generally prohibited from making inquiries about the applicant's or employee's family medical or genetic history.
  • Employers may need to allow exceptions for problems revealed during a background check that were caused by a disability, such as a credit history that shows substantial medical bills with some delayed payments.
  • Employers who obtain background information such as criminal history from companies that are in the business of compiling background information must follow certain procedures, including:
    • Telling the applicant or employee, in writing and in a stand-alone format (i.e., separate from other disclosures and not part of the employment application) that the organization might use the information in making decisions about his or her employment.
    • Telling the applicant or employee of his or her right to a description of the nature and scope of the investigation.
    • Getting the applicant or employee's written permission before doing the background check.
    • Before taking any adverse action based on the result of the background check (such as disqualifying an applicant from further consideration), notifying the applicant or employee of the potential action and providing a copy of the background check (the "consumer report") relied upon in making the decision as well as a copy of the FTC's summary of rights under the Fair Credit Reporting Act.
    • After taking any such adverse action, telling the applicant or employee that (a) he or she was rejected because of information in the report; (b) the contact information for the company that provided the report; (c) that the company that provided the report did not make the employment decision and cannot give reasons for the decision; and (d) that he or she has the right to dispute the accuracy or completeness of the report with the reporting company, and to get an additional free copy of the report from the reporting company within 60 days.
  • Background check information must be retained for at least one year (two years for educational institutions, state and local governments, and certain federal contractors), or until the case is concluded if the applicant or employee files a charge of discrimination.
  • Do not toss background check information in the wastebasket once the retention period has expired — the law governing disposal of consumer report information requires that it be disposed of securely, such as by burning, pulverizing or shredding for paper records and eradication in a manner that prohibits later reading or reconstruction for electronic records.

In addition to the multiple federal law requirements related to background checks, employers must also be aware of and comply with a wide variety of state and local requirements governing background checks. More and more jurisdictions are implementing laws and regulations requiring disclosures to include specific language and limiting or prohibiting inquiries into certain types of criminal records and about older offenses.