Background Checks: What Employers Need to Know

If employers use background checks in making personnel decisions, they must serve with the Fair Credit Reporting Act and laws that protect people from discrimination. The FTC and EEOC have tips for businesses on the lawful use of background information.

A joint publication of the Equal Employment Chance Commission and the Federal Trade Commission

When making personnel decisions — including hiring, retention, promotion, and reassignment — employers sometimes want to consider the backgrounds of applicants and employees. For example, some employers might attempt to find out about the person’s work history, education, criminal record, financial history, medical history, or use of social media. Except for certain limitations related to medical and genetic information (see below), it’s not illegal for an employer to ask questions about an applicant’s or employee’s background, or to require a background check.

However, any time you use an applicant’s or employee’s background information to make an employment decision, regardless of how you got the information, you must conform with federal laws that protect applicants and employees from discrimination. That includes discrimination based on race, color, national origin, hookup, or religion; disability; genetic information (including family medical history); and age (40 or older). These laws are enforced by the Equal Employment Chance Commission (EEOC).

In addition, when you run background checks through a company in the business of compiling background information, you must conform with the Fair Credit Reporting Act (FCRA). The Federal Trade Commission (FTC) enforces the FCRA. This publication explains how to serve with both the federal nondiscrimination laws and the FCRA. It’s also a good idea to review the laws of your state and municipality regarding background reports or information because some states and municipalities regulate the use of that information for employment purposes.

Before You Get Background Information

In all cases, make sure that you’re treating everyone identically. It’s illegal to check the background of applicants and employees when that decision is based on a person’s race, national origin, color, lovemaking, religion, disability, genetic information (including family medical history), or age (40 or older). For example, asking only people of a certain race about their financial histories or criminal records is evidence of discrimination.

Except in uncommon circumstances, don’t attempt to get an applicant’s or employee’s genetic information, which includes family medical history. Even if you have that information, don’t use it to make an employment decision. (For more information about this law, see the EEOC’s publications explaining the Genetic Information Nondiscrimination Act, or GINA.) Don’t ask any medical questions before a conditional job suggest has been made. If the person has already began the job, don’t ask medical questions unless you have objective evidence that he or she is incapable to do the job or poses a safety risk because of a medical condition.

If you get background information (for example, a credit or criminal background report) from a company in the business of compiling background information, there are extra procedures the FCRA requires beforehand:

• Tell the applicant or employee you might use the information for decisions about his or her employment. This notice must be in writing and in a stand-alone format. The notice can’t be in an employment application. You can include some minor extra information in the notice (like a brief description of the nature of consumer reports), but only if it doesn’t confuse or detract from the notice.
• If you are asking a company to provide an “investigative report” – a report based on private interviews concerning a person’s character, general reputation, individual 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. This can be part of the document you use to notify the person that you will get the report. If you want the authorization to permit you to get background reports via the person’s employment, make sure you say so clearly and conspicuously.
• Certify to the company from which you are getting the report that you:
  • notified the applicant and got their permission to get a background report;
  • complied with all of the FCRA requirements; and
  • don’t discriminate against the applicant or employee, or otherwise misuse the information in disturbance of federal or state equal chance laws or regulations.

Using Background Information

Any background information you receive from any source must not be used to discriminate in disturbance of federal law. This means that you should:

• Apply the same standards to everyone, regardless of their race, national origin, color, lovemaking, religion, disability, genetic information (including family medical history), or age (40 or older). For example, if you don’t reject applicants of one ethnicity with certain financial histories or criminal records, you can’t reject applicants of other ethnicities because they have the same or similar financial histories or criminal records.
• Take special care when basing employment decisions on background problems that may be more common among people of a certain race, color, national origin, hookup, or religion; among people who have a disability; or among people age forty or older. For example, 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 particular race, national origin, or another protected characteristic, and does not accurately predict who will be a responsible, reliable, or safe employee. In legal terms, the policy or practice has a “disparate impact” and is not “job related and consistent with business necessity.”
• Be ready to make exceptions for problems exposed during a background check that were caused by a disability. For example, if you are inclined not to hire a person because of a problem caused by a disability, you should permit the person to demonstrate his or her capability to do the job – despite the negative background information – unless doing so would cause significant financial or operational difficulty.

When taking an adverse act (for example, not hiring an applicant or firing an employee) based on background information obtained through a company in the business of compiling background information, the FCRA has extra requirements:

• Before you take an adverse employment act, you must give the applicant or employee:
  • a notice that includes a copy of the consumer report you relied on to make your decision; and
  • a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act,” which you should have received from the company that sold you the report.

By providing the person the notice in advance, the person has an chance to review the report and explain any negative information.

• After you take an adverse employment activity, you must tell the applicant or employee (orally, in writing, or electronically):
  • that he or she was rejected because of information in the report;
  • the name, address, and phone number of the company that sold the report;
  • that the company selling the report didn’t make the hiring decision, and can’t give specific reasons for it; and
  • that he or she has a right to dispute the accuracy or completeness of the report, and to get an extra free report from the reporting company within sixty days.

Disposing of Background Information

Any personnel or employment records you make or keep (including all application forms, regardless of whether the applicant was hired, and other records related to hiring) must be preserved for one year after the records were made, or after a personnel activity was taken, whichever comes later. (The EEOC extends this requirement to two years for educational institutions and for state and local governments. The Department of Labor also extends this requirement to two years for federal contractors that have at least one hundred fifty employees and a government contract of at least $150,000.) If the applicant or employee files a charge of discrimination, you must maintain the records until the case is concluded.

Once you’ve pleased all applicable recordkeeping requirements, you may dispose of any background reports you received. However, the law requires that you dispose of the reports – and any information gathered from them – securely. That can include searing, pulverizing, or shredding paper documents and disposing of electronic information so that it can’t be read or reconstructed. For more information, see Disposing of Consumer Report Information? Rule Tells How.

Further Information

To find out more about federal antidiscrimination laws, visit www.eeoc.gov, or call the EEOC toll-free, 800-669-4000 (voice); TTY: 800-669-6820. The EEOC is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, hookup (including pregnancy), national origin, age (40 or older), disability, or genetic information. The EEOC investigates, conciliates, and mediates charges of employment discrimination, and also files lawsuits in the public interest. For specific information on:

Whether arrest and conviction records act as an automatic bar to all employment: see Reentry Myth Buster: On Hiring/Criminal Records Guidance.

To find out more about federal laws relating to background reports, visit www.business.ftc.gov, or call the FTC toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. For specific information on employment background reports, see:

The FTC works to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to businesses to help them obey with the law.

Background Checks: What Employers Need to Know, Federal Trade Commission

Background Checks: What Employers Need to Know

If employers use background checks in making personnel decisions, they must obey with the Fair Credit Reporting Act and laws that protect people from discrimination. The FTC and EEOC have tips for businesses on the lawful use of background information.

A joint publication of the Equal Employment Chance Commission and the Federal Trade Commission

When making personnel decisions — including hiring, retention, promotion, and reassignment — employers sometimes want to consider the backgrounds of applicants and employees. For example, some employers might attempt to find out about the person’s work history, education, criminal record, financial history, medical history, or use of social media. Except for certain limitations related to medical and genetic information (see below), it’s not illegal for an employer to ask questions about an applicant’s or employee’s background, or to require a background check.

However, any time you use an applicant’s or employee’s background information to make an employment decision, regardless of how you got the information, you must conform with federal laws that protect applicants and employees from discrimination. That includes discrimination based on race, color, national origin, lovemaking, or religion; disability; genetic information (including family medical history); and age (40 or older). These laws are enforced by the Equal Employment Chance Commission (EEOC).

In addition, when you run background checks through a company in the business of compiling background information, you must conform with the Fair Credit Reporting Act (FCRA). The Federal Trade Commission (FTC) enforces the FCRA. This publication explains how to obey with both the federal nondiscrimination laws and the FCRA. It’s also a good idea to review the laws of your state and municipality regarding background reports or information because some states and municipalities regulate the use of that information for employment purposes.

Before You Get Background Information

In all cases, make sure that you’re treating everyone identically. It’s illegal to check the background of applicants and employees when that decision is based on a person’s race, national origin, color, lovemaking, religion, disability, genetic information (including family medical history), or age (40 or older). For example, asking only people of a certain race about their financial histories or criminal records is evidence of discrimination.

Except in uncommon circumstances, don’t attempt to get an applicant’s or employee’s genetic information, which includes family medical history. Even if you have that information, don’t use it to make an employment decision. (For more information about this law, see the EEOC’s publications explaining the Genetic Information Nondiscrimination Act, or GINA.) Don’t ask any medical questions before a conditional job suggest has been made. If the person has already embarked the job, don’t ask medical questions unless you have objective evidence that he or she is incapable to do the job or poses a safety risk because of a medical condition.

If you get background information (for example, a credit or criminal background report) from a company in the business of compiling background information, there are extra procedures the FCRA requires beforehand:

• Tell the applicant or employee you might use the information for decisions about his or her employment. This notice must be in writing and in a stand-alone format. The notice can’t be in an employment application. You can include some minor extra information in the notice (like a brief description of the nature of consumer reports), but only if it doesn’t confuse or detract from the notice.
• If you are asking a company to provide an “investigative report” – a report based on private interviews concerning a person’s character, general reputation, individual 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. This can be part of the document you use to notify the person that you will get the report. If you want the authorization to permit you to get background reports via the person’s employment, make sure you say so clearly and conspicuously.
• Certify to the company from which you are getting the report that you:
  • notified the applicant and got their permission to get a background report;
  • complied with all of the FCRA requirements; and
  • don’t discriminate against the applicant or employee, or otherwise misuse the information in disturbance of federal or state equal chance laws or regulations.

Using Background Information

Any background information you receive from any source must not be used to discriminate in disturbance of federal law. This means that you should:

• Apply the same standards to everyone, regardless of their race, national origin, color, hookup, religion, disability, genetic information (including family medical history), or age (40 or older). For example, if you don’t reject applicants of one ethnicity with certain financial histories or criminal records, you can’t reject applicants of other ethnicities because they have the same or similar financial histories or criminal records.
• Take special care when basing employment decisions on background problems that may be more common among people of a certain race, color, national origin, hookup, or religion; among people who have a disability; or among people age forty or older. For example, 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 particular race, national origin, or another protected characteristic, and does not accurately predict who will be a responsible, reliable, or safe employee. In legal terms, the policy or practice has a “disparate impact” and is not “job related and consistent with business necessity.”
• Be ready to make exceptions for problems exposed during a background check that were caused by a disability. For example, if you are inclined not to hire a person because of a problem caused by a disability, you should permit the person to demonstrate his or her capability to do the job – despite the negative background information – unless doing so would cause significant financial or operational difficulty.

When taking an adverse act (for example, not hiring an applicant or firing an employee) based on background information obtained through a company in the business of compiling background information, the FCRA has extra requirements:

• Before you take an adverse employment act, you must give the applicant or employee:
  • a notice that includes a copy of the consumer report you relied on to make your decision; and
  • a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act,” which you should have received from the company that sold you the report.

By providing the person the notice in advance, the person has an chance to review the report and explain any negative information.

• After you take an adverse employment act, you must tell the applicant or employee (orally, in writing, or electronically):
  • that he or she was rejected because of information in the report;
  • the name, address, and phone number of the company that sold the report;
  • that the company selling the report didn’t make the hiring decision, and can’t give specific reasons for it; and
  • that he or she has a right to dispute the accuracy or completeness of the report, and to get an extra free report from the reporting company within sixty days.

Disposing of Background Information

Any personnel or employment records you make or keep (including all application forms, regardless of whether the applicant was hired, and other records related to hiring) must be preserved for one year after the records were made, or after a personnel act was taken, whichever comes later. (The EEOC extends this requirement to two years for educational institutions and for state and local governments. The Department of Labor also extends this requirement to two years for federal contractors that have at least one hundred fifty employees and a government contract of at least $150,000.) If the applicant or employee files a charge of discrimination, you must maintain the records until the case is concluded.

Once you’ve sated all applicable recordkeeping requirements, you may dispose of any background reports you received. However, the law requires that you dispose of the reports – and any information gathered from them – securely. That can include searing, pulverizing, or shredding paper documents and disposing of electronic information so that it can’t be read or reconstructed. For more information, see Disposing of Consumer Report Information? Rule Tells How.

Further Information

To find out more about federal antidiscrimination laws, visit www.eeoc.gov, or call the EEOC toll-free, 800-669-4000 (voice); TTY: 800-669-6820. The EEOC is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, hookup (including pregnancy), national origin, age (40 or older), disability, or genetic information. The EEOC investigates, conciliates, and mediates charges of employment discrimination, and also files lawsuits in the public interest. For specific information on:

Whether arrest and conviction records act as an automatic bar to all employment: see Reentry Myth Buster: On Hiring/Criminal Records Guidance.

To find out more about federal laws relating to background reports, visit www.business.ftc.gov, or call the FTC toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. For specific information on employment background reports, see:

The FTC works to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to businesses to help them serve with the law.

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