United States: EEOC And FTC Release Guidance On Background Checks

Last Updated: March 21 2014
Article by Jordan Kaplan

In a combined effort to increase employer awareness of federal regulations relating to background checks, on March 10, the U.S. Equal Employment Opportunity Commission (EEOC) and the Federal Trade Commission (FTC) issued joint informal guidance concerning common issues that employers face. The agencies published two technical assistance documents that explain how the agencies' respective laws apply to background checks performed for  employment purposes. One document is specifically for employers, and the other is for job applicants and employees. Below is a summary of the guidance provided to employers. A link to the employer guidance can also be found here. In their guidance, the EEOC and FTC advised employers to consider the following factors when obtaining background information from a job applicant or current employee: 

  • Make sure that all applicants and employees are treated equally. It is illegal to check the background of employees or applicants when a decision is based on a person's race, national origin, color, sex, religion, disability, genetic information (including family medical history) or age.*
  • Do not try to obtain an applicant's or employee's genetic information, including family medical history. Even if you have this information, the EEOC stresses that it should not be used to make an employment decision.
  • Do not ask any medical questions before a conditional job offer has been made.
  • If the employee has already started his or her job, do not ask medical questions unless the employer has objective evidence that the employee is unable to do the job or is a safety risk due to the medical condition.
  • If you obtain background information (for example, a credit or criminal background report) from a company in the business of compiling background information, the Fair Credit Reporting Act (FCRA) requires several additional steps: 
    • Tell the applicant or employee in writing that you may use this information for employment decisions. This notice must be in writing and in a stand-alone format. The notice cannot be in an employment application; 
    • If you are asking a company to provide an "investigative report" – a report based on personal interviews concerning a person's character, general reputation, personal characteristics and lifestyle – you must also tell the applicant or employee of his or her right to a description of the nature and scope of the investigation;
    • Get the applicant's or employee's written permission to do the background check; and
    • Certify to the company from which you are getting the report that you: notified the applicant and got his or her permission to get a background report; complied with all FCRA requirements; and won't discriminate against the applicant or employee or otherwise misuse the information.

After an employer receives background checks on applicants and employees, the employer should remember the following:

  • Ensure that the same standards are applied to everyone, regardless of their race, national origin, color, sex, religion, disability, genetic information or age.
  • Take special care when basing employment decisions on background issues that are common among people of certain races, colors, national origin, sexes or religions, people with disabilities or people 40 years and older. For example, the guidelines suggest that employers should not use a policy or practice that excludes people with certain criminal records if the policy or practice significantly disadvantages individuals of a certain race or national origin and does not accurately predict who will be a responsible, reliable or safe employee.
  • At any time before taking adverse action against an employee, an employer must provide the employee with a copy of the consumer report it relied upon to make the decision and a copy of "A Summary of Your Rights Under the Fair Credit Reporting Act."
  • After taking adverse employment action, inform the employee (orally, in writing or electronically): that the report was the basis for the employer's decision and provide the name, address and phone number of the consumer reporting agency that furnished the report; that the company selling the report did not make the hiring decision and can't give specific reasons for it; and inform the employee that he or she has the right to dispute the accuracy or completeness of the report and may obtain an additional free report from that reporting company within 60 days.

Finally, when the employer wishes to dispose of background information, the employer must comply with the EEOC and FTC regulations. Under the EEOC rules, the employer must keep personnel or employment records for the later of one year after the records were made or after personnel action was taken. If the employee files a charge of discrimination, the employer must keep all records until the case is concluded. Under FTC rules, after satisfying applicable recordkeeping requirements, an employer must dispose of all reports securely by shredding all background reports. Employers with questions relating to application of this law should contact experienced employment counsel before making any determinations.

*Please note that the "protected classifications" noted here are those provided for under federal law. Employers should consult counsel and ensure that they also follow applicable state and local law as well with respect to anti-discrimination practices.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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