Why it matters: In an effort to “explain the rights and responsibilities of the people on both sides of the desk,” the Equal Employment Opportunity Commission and the Federal Trade Commission copublished guides on employment background checks for both employers and employees. “Background Checks: What Employers Need to Know” discusses the regulatory and enforcement perspective of each agency, with the FTC focused on compliance with the Fair Credit Reporting Act, while the EEOC emphasized the need to comply with antidiscrimination laws like Title VII when using background information to make a hiring decision. As employers consider using information like credit history or criminal background checks for employment-related decisions – and the EEOC takes action against employers for allegedly using them illegally – employers would be well advised to review the new guidance.

Detailed Discussion

The EEOC and FTC jointly released two new documents: “Background Checks: What Employers Need to Know” and “Background Checks: What Job Applicants and Employees Need to Know.”

The employer guidance begins with a basic premise: absent certain exceptions (like medical and genetic information), employers may legally ask questions about an applicant’s or employee’s background or require a background check.

While research about education, financial history, or social media use may be legal, the agencies reminded employers that federal antidiscrimination law must be observed. “That includes discrimination based on race, color, national origin, sex, or religion; disability; genetic information (including family medical history); and age (40 or older),” the guidance explained, with enforcement of such laws falling under the EEOC’s purview.

Oversight by the FTC kicks in when an employer runs a background check through a company in the business of compiling background information, triggering the FCRA.

The agencies broke down the issue into three different time periods: before background information is collected, the use of such data, and how to safely dispose of it.

Prior to collecting background information, ensure that the request isn’t being made only to a certain race or those over a certain age, potentially triggering antidiscrimination laws, the EEOC said. And do not request genetic information or ask questions about medical history, which would trigger the protections of the Genetic Information Nondiscrimination Act (GINA).

If an employer intends to conduct a criminal or credit background check using a company in the business of compiling the necessary data, the FTC noted that the FCRA requires additional procedures. Most importantly, inform the applicant or employee about the potential to use such information in writing and preferably in a stand-alone format (not tucked away in an employment application) and get the individual’s written permission.

Once the information is in hand, “apply the same standards to everyone,” the EEOC said, adding a warning to avoid potential disparate impact claims by taking “special care when basing employment decisions on background problems that may be more common among people” of a certain protected class, like race. The agency also suggested that employers should “be prepared to make exceptions for problems revealed during a background check that were caused by a disability,” and allow an individual to demonstrate his or her ability to do the job.

The FCRA imposes additional requirements if an employer takes adverse action based on background information obtained via a company, the FTC noted, like providing the applicant or employee a copy of the report and a pamphlet explaining the individual’s rights under the statute, such as the ability to dispute the accuracy or completeness of the report.

Finally, both agencies noted that the disposal of background information also requires action on the part of employers. Records must be preserved for at least a one-year period, the EEOC said, while the FTC cautioned that when disposal occurs, it must be undertaken securely. Options include “burning, pulverizing, or shredding paper documents and disposing of electronic information” so that it cannot be read or reconstructed.

To read “Background Checks: What Employers Need to Know,” click here.