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What Employers Need to Know About Background Checks

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Paul R. Bedard, EsquirePaul R. Bedard, Esquire

A company is only as good as the people it employs. Character and integrity should rank highly among the list of personal attributes that employers seek when selecting employees. To quote the great Warren Buffet, "Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence and energy. And, if you don't have the first, the other two will kill you."

One of the ways employers work to ensure that employees of integrity are joining their ranks is by reviewing the backgrounds of their prospective hires. This might include a person's education, work history, credit history, social media presence and criminal record. However, federal laws and varying state and local laws protecting applicants and employees from discrimination must be adhered to. Given the financial impact attached to legal violations, this article is not intended as legal advice. Please consider the following comments as an educational guide, and please consult an attorney for specific direction.

The Equal Employment Opportunity Commission (EEOC) enforces the federal laws that protect applicants and employees from discrimination including discrimination based on race, color, national origin, sex, religion, disability, genetic information and age. The Federal Trade Commission enforces the Fair Credit Reporting Act (FCRA), a federal law which must be followed when running background checks through any company engaged in the business of compiling background information. States and many municipalities have additional laws regulating the use of background information for employment purposes.

Although it should seem obvious, all background inquires must be treated equally. For instance, inquiring regarding criminal records or credit histories strictly for people over a certain age or only for those of a certain race is discriminatory. When receiving background information from a company in the business of compiling such information, the FCRA requires written notification to the applicant or employee in a stand-alone format informing the person that the organization may use the background information for employment-related decisions. The person's written permission must be obtained to conduct the background check, and if sought by the employer, must include authorization to perform updated background checks throughout the employment relationship. Notice and authorization must be worded clearly and conspicuously.

Employers must be aware of unintended consequences, outcomes that may stem from otherwise facially neutral practices that result in a disparate impact. For example, if, despite treating all cases equally, a criminal or credit history background check disproportionately affects individuals of a certain age, race or other protected classification, yet does not accurately predict who will be the type of hire being sought, this could give rise to a claim of employment discrimination due to the disparate impact created.

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