Jul 30, 2024

Compliant Background Checks

Nearly all U.S. companies use background checks as a screening tool when hiring or promoting employees. But not all companies are compliant with applicable laws about the checks. Read through to learn how to do background checks right.

According to the National Association of Background Screeners, 95% of U.S. employers use background checks when hiring employees. Background checks cannot look at medical history or genetic information, but they are legal for assessing a person's work history, education, criminal record, financial history or social media use.

However, employers must comply with certain legal requirements regarding background checks.

• To remain in compliance with Federal Trade Commission regulations, employers must get written permission from the applicant or employee before running a background check.
• Equal Employment Opportunity Commission regulations state that when using background checks, employers may not discriminate on the basis of race, color, national origin, sex, religion, age (if 40 or older), disability or genetic information.
• Before deciding not to hire, keep or promote an applicant or employee because of something found during the background check, employers must provide the person with a copy of the report and a “Summary of Rights” detailing the applicant's or employee's rights under the Fair Credit Reporting Act.

Companies must also comply with state law and in some cases international law.

• Some states limit the lookback period for criminal checks to seven years, while other states have longer lookback periods. Some states additionally have “ban the box” laws that make it illegal for employers to ask about criminal history on job applications.
• Countries other than the U.S. have their own laws, so companies operating in foreign countries, or having remote workers who reside in foreign countries, need to be aware of those laws.
• Recently companies have been moving away from routinely testing for marijuana use. Additionally, some states that have legalized marijuana for medical and recreational use have made it illegal to screen for marijuana except in regulated industries (such as transportation, nuclear energy and military contracting). Note that these laws vary by municipality.
• What records must be stored and how they are stored, also known as record retention laws, vary across different jurisdictions. It's important to be aware of what's applicable to your company.

Reference checks must also comply with the regulations outlined above. Questions such as “In what capacity did you work with our job candidate?” and “What were our applicant's responsibilities?” are fine, as are questions about dates of employment and job title(s). Questions, whether direct or indirect, about a person’s race, national origin, gender or gender identity, sexual orientation, religion or religious affiliations, age or date of birth, marital status, disabilities and health, criminal background, height and weight or genetic information are not allowed.

Because many companies now have employees who work remotely, it's important to determine whether the location of those employees affects the regulations your company must comply with. The location of remote employees may also impact your selection of a background check provider.

Beyond background checks

Over 70% of employers screen applicants' social media. One study reported that 57% of employers interviewed said they'd found something on an applicant’s social media that made them decide to not hire that person. Employers also now often monitor their employees' online reputation or changes in the records for which they initially screened. These both involve ongoing checks. However, social media screening, whether before or after hire, has some risks, including violating the FCRA.

Companies that use noncompete clauses should be aware that the FTC recently issued a final rule banning most new noncompete clauses and making many old noncompete clauses unenforceable. (It remains to be seen what legal challenges the rule may face, particularly in light of the recent overturn of Chevron.) Companies that have nontransparent pay scales should also stay current with changing practices and regulations.

Before you run background checks, you should consult an employment professional so they can be sure you are complying with all relevant laws. Or better yet, give us a call and let us help you do this efficiently and legally.  

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