Question: What does Edward Snowden (N.S.A.’s infamous document leaker) have in common with Aaron Alexis (who shot 12 people at the Washington Navy Yard last fall)?

Answer: Their employers’ background check said it would be just fine to hire each.

In January, the U.S. Department of Justice accused the background checking firm of taking shortcuts in 40% of the checks it performed for the U.S. government. Criminal background checks are complicated by the lack of centralized records while credit history systems are plagued with inaccuracies. Indeed, according to the Federal Trade Commission, 21% of all credit reporting agency (“CRA”) reports contain inaccuracies. Complicating these inherent difficulties, there are legal pitfalls to running one-size-fits-all background checks that further muddle the cost-benefit analysis of these checks. While the one-size-fits-all approach worked for the Greek mythological character Procrustes, it may not for employers’ background check policies.

First, employers are exposed to liability under the Fair Credit Reporting Act if there are flaws in the authorization forms the employer and its CRA utilize. See Reardon v. Closetmaid Corp., 2011 WL 1628041 (W.D. Penn. Apr. 27, 2011) (certifying class action of employees and prospective employees presented with FCRA authorization forms that were not stand-alone documents). In addition, employers that rely on the CRA’s report in rejecting job applicants are liable for rejecting the applicant without providing enough time for the applicant to dispute the report. Beverly v. Wal-Mart Stores, Inc., 2008 WL 149032 at *3 (E.D. Va. Jan. 11, 2008) (denying employer’s summary judgment motion where its third party background checker rejected an applicant on the employer’s behalf without giving the applicant sufficient time to contest the erroneous criminal history report on which the rejection was based).

Second, state and local human rights laws threaten lawsuits stemming from background checks. So-called “ban the box” laws prohibit employers from asking individuals about their conviction histories on job applications. Ten states and about 50 cities and counties have some form of ban the box laws, and while many apply only to government employers, the laws in Hawaii, Massachusetts, Minnesota and Rhode Island explicitly apply to private employers. Plus, New York law prohibits refusing to hire an applicant based on his or her criminal background unless (a) that background is directly related to the position applied for; or (b) hiring the applicant would pose an unreasonable safety risk.

Finally, the EEOC is aggressively pursuing employers on the theory that either criminal history or credit history disparately impact minorities. So far, the courts have been unimpressed with the EEOC’s statistical arguments. E.E.O.C. v. Freeman, 961 F.Supp.2d 783, F.Supp.2d 783, 803 (D. Md. 2013) (granting summary judgment of EEOC’s disparate impact claim based on criminal background checks because the EEOC did not meet its burden to present appropriate statistics) (appeal pending); see also E.E.O.C. v. Kaplan Higher Educ. Corp., No. 13-3408, 2014 WL 1378197 (6th Cir. Apr. 9, 2014) (affirming summary judgment for employer on alleged disparate impact in credit background checks because the EEOC’s expert testimony was based on “a homemade methodology”).

What are the practical solutions?

  • Know what laws apply that may require background checks. In some cases, criminal history checks are mandatory (e.g., 18 U.S.C. §1033 forbids hiring individuals convicted of a felony for positions in the “business of insurance”).
  • Don’t ask about or attempt to investigate arrest records. The EEOC’s Enforcement Guidance points out arrests are not proof of criminal conduct, and a number of state statutes (e.g., the Illinois Human Rights Act) agree.
  • Decide position – by – position whether a background check is necessary and precisely what you need to check for that particular position. The Procrustean bed (“one size fits all”) approach should stay in Greek mythology.
  • If background checks are used, follow the FCRA protocols scrupulously.