The federal Fair Credit Reporting Act (15 USC §1681 et seq.) sets a national standard that employers must follow in employment screening.
Does the employee have the right to know when a background check is requested?
Yes. Amendments to the FCRA, in effect September 30, 1997, increase the disclosure and consent requirements of employers who use "consumer reports." Such reports might consist only of a credit check. More extensive reports might include criminal histories, driving records, and interviews with neighbors, friends and associates.
To be covered by the FCRA, the Federal Trade Commission (FTC) says that a report must be prepared by an outside company -- a "consumer reporting agency" or business that "for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in ... assembling ... information on consumers for the purpose of furnishing consumer reports to third parties." (FCRA §603f)
Under the FCRA, the employer must obtain the applicant's written authorization before the background check is conducted. The authorization must be on a document separate from all other documents such as an employment application. In California, at the time an employer obtains permission for a background check, the applicant or employee should also be told that he or she may request a copy of the report. The FCRA, in contrast, says the subject is entitled to a copy of the report if a pre-adverse notice is given.
Under federal law, if the employer uses information from the consumer report for an "adverse action" - that is, denying the job applicant, terminating the employee, rescinding a job offer, or denying a promotion - it must take the following steps, which are explained further in the Federal Trade Commission's web site,
- Before the adverse action is taken, the employer must give the applicant a "pre-adverse action disclosure." This includes a copy of the report and an explanation of the consumer's rights under the FCRA.
- After the adverse action is taken, the individual must be given an "adverse action notice." This document must contain the name, address, and phone number of the employment screening company, a statement that this company did not make the adverse decision, rather that the employer did, and a notice that the individual has the right to dispute the accuracy or completeness of any of the information in the report.
Modified disclosure and adverse action procedures under the FCRA (§604(b)(3)(B)) apply to positions subject to U.S. Department of Transportation (DOT) regulations such as truck drivers. The DOT has independent authority to set qualifications for workers in transportation industries. (49 USC §31502)
It is important to remember, however, that even the restrictions on reporting imposed by the FCRA do not apply to jobs with an annual salary of $75,000 or more a year. (FCRA §605(b)(3).
California law now requires that individuals who are subject to employment screening are able to obtain a copy of the background check whether or not an adverse action has been taken. And applicants have the same rights to notice and consent whether the employer hires an outside company to conduct the investigation or does the background check itself. (California Civil Code §1786). And now in California when an individual requests a copy of their report from the consumer reporting agency, the agency must explain their rights in a document written in both English and Spanish.
What Cannot Be Included in a Background Check Report?
Under the FCRA, a background check report is called a "consumer report." This is the same "official" name given to your credit report, and the same limits on disclosure apply. The FCRA says the following cannot be reported:
- Bankruptcies after 10 years.
- Civil suits, civil judgments, and records of arrest, from date of entry, after seven years.
- Paid tax liens after seven years.
- Accounts placed for collection after seven years.
- Any other negative information (except criminal convictions) after seven years.
The most recent change to the FCRA made criminal convictions reportable indefinitely. California still follows the seven-year rule (CA Civil Code 1786.18) as do some other states. To find the limit for reporting criminal convictions in your state, contact your state employment agency or office of consumer affairs.
Arrest information: Although arrest record information is public record, in California and other states employers cannot seek from any source the arrest record of a potential employee. However, if the arrest resulted in a conviction, or if the applicant is out of jail but pending trial, that information can be used. (California Labor Code §432.7).
In California, an exception exists for the health care industry where any employer who has an interest in hiring a person with access to patients can ask about sex related arrests. And, when an employee may have access to medications, an employer can ask about drug related arrests.
- Criminal history: In California, criminal histories or "rap sheets" compiled by law enforcement agencies are not public record. Only certain employers such as public utilities, law enforcement, security guard firms, and child care facilities have access to this information. (California Penal Code §§11105, 13300) With the advent of computerized court records and arrest information, however, there are private companies that compile virtual "rap sheets."
Employers need to use caution in checking criminal records. Information offered to the public by web-based information brokers is not always accurate or up to date. This violates both federal and California law when reported as such. Also, in California, an employer may not inquire about a marijuana conviction that is more than two years old.
- Workers' compensation: In most states including California, when an employee's claim goes through the state system or the Workers' Compensation Appeals Board (WCAB), the case becomes public record. An employer may only use this information if an injury might interfere with one's ability to perform required duties. Under the federal Americans with Disabilities Act, employers cannot use medical information or the fact an applicant filed a workers' compensation claim to discriminate against applicants. (42 USC §12101).
Employers may access workers' compensation records in many states only after making an offer of employment. Although the employer may not rescind an offer due to a workers' compensation claim, employers sometimes discover that applicants have not revealed previous employers where they had filed claims. In such situations, employers can terminate the new hire because it appears they falsified the application.
- Bankruptcies. Bankruptcies are public record. However, employers cannot discriminate against applicants because they have filed for bankruptcy. (11 USC §525)
These laws were put into place to prevent employers from considering information that is either inaccurate or that shouldnąt be considered in making a hiring decision.
For example, if you were arrested but never convicted, a data base search could reveal the arrest, but the investigator who compiled the information might not delve further into the public records to determine that you were acquitted or the charges were dropped. Reputable employment screening companies always verify negative information obtained from data base searches against the actual public records filed at the courthouse.
Sure-Hire conducts courthouse searches with its Background Check Packages to insure accurate and up to date information.