Be Well Advised When Executing Employment Background Checks

Attracting the most qualified candidates for the job you’re looking to fill can be time consuming. After you’ve culled through the resumes and conducted interviews with the most promising prospects, you’re ready to make an offer.

Only after you’ve made a conditional offer to an applicant should you execute the next step — the background check or screening.

These checks can be a useful tool in the hiring process in that they provide a preventive measure to help reduce employee issues, and they can identify persons who may be prone to various workplace crimes and acts of violence.

When conducted by a third-party background-check firm, the screenings are referred to as consumer reports and are regulated by the federal Fair Credit Reporting Act and enforced by the Federal Trade Commission.

According to the FCRA, the regulations help protect both employers and job seekers by ensuring the “accuracy, fairness, and privacy of the information contained in the files of consumer-reporting agencies.”

Employers need to comply with the background-check laws in their respective jurisdictions, including fair-hiring practices, such as ban-the-box laws.

Companies typically use a third party to conduct the background checks, says Michael Trachtman, a founder and shareholder at Powell Trachtman P.C. Attorneys at Law in King of Prussia, Pennsylvania, with an office in Harrisburg.

Trachtman is also general counsel to the MidAtlantic Employers’ Association, a trade organization of over 500 companies. He says there are layers of regulations at both the state and federal levels, and as a result, stringent procedural requirements are imposed that cannot be ignored by employers and reporting agencies while conducting background checks.

To comply with the assorted regulations and steer clear of discrimination claims, he says many jurisdictions integrate the best practices set forth in the 2012 U.S. Equal Employment Opportunity Commission guidance on the use of arrest and conviction records in hiring decisions.

The guidance was drafted to give a fairer shot to the growing number of U.S. adults with criminal records who are attempting reentry into the workforce and would benefit from an ease in hiring barriers and fair-hiring practices.

Trachtman also recommends the EEOC/FTC publication on background checks, which can be found at www.eeoc.gov/eeoc/publications/background_checks_employers.cfm.

Ban-the-box is an example of a more recent fair hiring practice that was initiated to give those with a criminal record a fairer chance to compete for a job based on their qualifications, without the blemish of a conviction front and center on the application form.

It’s a pivotal component of a national campaign that calls for removal of the question and check box, “Have you been convicted by a court?” from employment applications.

Trachtman says ban-the-box helps decrease the negative impact on particular nationalities, racial groups, and minorities as they seek employment despite a criminal record. Nationwide, as of March 2018, more than 150 cities and counties, including some in Pennsylvania, as well as 31 states, have ban-the-box laws that restrict employers from asking job applicants about their criminal history until later on in the hiring process.

Due to the range of FCRA obligations placed on employers and reporting agencies and the fact that laws and requirements can vary from state to state and city to city, Trachtman says, “The reporting agency you choose to do the background check must be reputable and know what it’s doing.”

Likewise, the employer must certify to the reporting agency they’ve enlisted that they will also comply with the law from their end.

For example, there must be written authorization from the applicant to conduct the report.

“The background check is a timing issue,” Trachtman says, “and unless a conditional offer of employment has been made, the employer cannot make any inquiries regarding criminal history, even in the interview.”

This way, the applicant has the chance to favorably impress a potential employer before a full history is disclosed that may or may not unfairly influence the hiring decision.

Consumer reports obtained for background-check purposes can be more than just credit reports or checks of criminal history. They may also assess an individual’s character based upon general reputation, personal characteristics, and mode of living.

An investigative consumer report is obtained through personal interviews with neighbors, friends, or associates. Trachtman says if the reporting agency searches for more than the individual initially authorized, such as personal interviews with the applicant’s neighbors, the individual must be informed in writing as to the nature and scope of the investigation.

Employers must also be aware of the specific regulations that determine what can be done with the information that’s revealed in the report. Trachtman says the employer must provide the individual with the requisite form in which the findings are presented. The individual is then afforded the opportunity to dispute the results if they so choose.

This option is in place because criminal and other records may be erroneous, inaccurate, or outdated.

A reason for either denying employment, a raise, or a promotion or for firing an employee based on consumer report findings by a third party is referred to as an adverse action. A statement and a copy of the findings must be given to the applicant in the instance of adverse action.

Should an applicant receive written notification that an adverse action is pending, that is, the background search resulted in findings that could lead to a denial of employment, the individual must be given a reasonable amount of time to respond and/or dispute the findings with the third party that conducted the search.

In a dispute, according to Pennsylvania law, the agency must then conduct a sufficient investigation. Should the inquiry reveal that the initial report was erroneous or incomplete, the reporting agency must notify the applicant as well as any other parties with whom the initial findings were shared.

Should the background check reveal a conviction, an employer must weigh the relevance of the conviction before denying employment.

For states and cities with ban-the-box laws, employers may deny an applicant based on a criminal record only if the individual poses an unacceptable risk to the business or to other employees.

Accordingly, Trachtman says a fair assessment should be made to determine whether or not the criminal record increases the risk of something going wrong if the individual is hired.

Trachtman describes this as a “difficult area” and says that in Pennsylvania there is a separate statute prohibiting an employer from using background-check information to deny employment to an individual unless the information deals with suitability of the individual for the job.

For example, if an individual is denied a janitorial position due to findings that attest he or she stole a small amount of money, it may not necessarily be used against the decision to hire for this job category.

On the other hand, if a CFO applicant had been convicted of embezzlement, that conviction could be directly related to suitable denial of employment.

Similarly, Trachtman explains that an individual with an assault record may not be deemed a good hire for a delivery driver position.

Because the standards can be vague or confusing, he says it’s a good idea to seek counsel when there may be an inconsistency between the FCRA guidelines and an applicable state law.

“The upshot,” Trachtman says, “is to look at the individual circumstances and ask to what extent does the offense relate to the job category.”

In Pennsylvania, if an individual is rejected from employment due to the report’s contents, the employer must send the decision to the individual in writing along with a copy of the background report issued by the reporting agency.

When striving to comply with the laws regarding employment background checks, Trachtman offers the following guidance:

“Deal with a reputable reporting company; deal with counsel; recognize there are requirements; know when and how you can use forms and notices; and lastly, be well advised. You don’t know what you don’t know, and ignorance of the law is not an excuse.” BW