Background Checks – What Every Employer Should Know

February 16, 2018
Publication
MRA Edge
Reference & Background Investigations
Recruiting & Hiring

When making employment decisions—including hiring, retention, promotion, and reassignment—employers often want to consider the backgrounds of applicants and employees. However, any time you use background information to make an employment decision, you must comply with federal laws that protect applicants and employees from discrimination.

First, the Equal Employment Opportunity Commission (EEOC) oversees employment-based background checks to prohibit unlawful discrimination, based on race, color, national origin, sex, religion, disability, genetic information, and age.

In addition, when an employer runs background checks through a third-party vendor, that employer must comply with the Fair Credit Reporting Act (FCRA). The FCRA states specific requirements that must be followed or monetary penalties will apply. For example, covered employers who deny employment to an applicant based on the background check must follow precise adverse action steps. Adverse action under the FCRA is an area many employers do not follow and is a hot topic for lawsuits in the industry. MRA has a FCRA compliance flowchart to assist employers.

Finally, employers must be aware of the laws of their state and municipality regarding background reports because some regulate the use of that information for employment purposes.

The following lays out the three key components to any background check policy and procedure:

  1. Develop a Process
    When putting together a process for conducting criminal background checks, ask yourself the following questions:
    • Are applicants/employees informed in writing that a criminal background check will be conducted?
    • Are applicants/employees asked to sign a consent or release in connection with criminal background checks?
    • Are applicants/employees informed that an arrest or a record of conviction will not necessarily result in denial of employment?
    • Has the person who will conduct the check been trained in the proper process—the specific agency or vendor to contact and fees to be paid?
  2. Implement the Process
    When following through on the process, it is a best practice to conduct it through a third-party vendor, such as MRA. When doing so, ensure the following criteria have been met:
    • If the employer is covered by federal or state laws that require or limit criminal history checks, is the check being conducted in compliance with those laws, including relevant time frames?
    • Have notice and consent requirements been met?
    • Is the process being conducted in a nondiscriminatory fashion (i.e., is the same procedure followed for all applicants for a given job or class of jobs)? Example of positions where background checks are most often conducted:
      • Contact with the public
      • Working with vulnerable individuals
      • Handling money or highly valued product
      • Use of a dangerous instrument
      • Work involving the public trust
      • Driving
    • Is a union involved? It’s possible that a collective bargaining agreement may limit the use of criminal background checks.
    • Is the information obtained in the criminal background check treated as confidential and disclosed only on a need-to-know basis?
  3. Make a Determination
    Once information has been obtained, an employment decision needs to be made.

If a consumer report has revealed a criminal conviction, then an employer must do an individual assessment on a case-by-case basis or a "Green factors" analysis. The term "Green factors" came from the Green v. Missouri Pacific Railroad decision, where the court found "a complete bar on employment based on any criminal activity, other than a traffic violation, unlawful under Title VII." The factors are:

  • The nature and gravity of the offense or conduct: This criterion includes obvious factors, like the seriousness of armed robbery compared with a minor drug offense, and also the pattern and persistency of convictions.
  • The time that has passed since the offense and/or completion of the sentence: This criterion focuses on context and not a rigid formula. A single conviction many years in the past is not the same as a recent conviction.
  • The nature of the job held or sought: If a job creates an opportunity for a specific type of crime (e.g., retail theft), excluding someone with a related conviction (e.g., shoplifting) in the recent past may be reasonable.

Per EEOC guidance, an individualized assessment may consider a wide range of factors in addition to the basic "Green" criteria. Some possible factors include:

  • The number of offenses the applicant has been convicted of.
  • Evidence of rehabilitation, such as education or training.
  • The work history of the applicant, including whether he or she has been successfully employed in similar positions.
  • The relevance and character of an applicant’s references.

An individualized assessment should allow an applicant or employee to explain the circumstances surrounding the crime and why the conviction should not exclude him or her from employment.

Dialogue between the employer and the applicant or employee is clearly preferred by the EEOC over the "Green" factors alone.

Be able to support your employment decision by explaining the answers to these questions:

  • If the underlying criminal conduct from an arrest record is considered, does that underlying conduct make the person unfit for the position?
  • If it appears that the applicant engaged in the conduct for which he or she was arrested, is that conduct job-related?
  • If conviction records are considered, does the number, nature, and recentness of the convictions indicate that the applicant is unsuitable for the position?
  • Can a "business necessity" for making the employment decision based on the conviction records be shown?

Other Considerations:
Here are some additional items to consider when reviewing your current background check policy and practices.

  • EEOC guidance states that, in all cases, you should be treating everyone equally. For example, asking only people of a certain race about their financial histories or criminal records would be considered evidence of discrimination.
  • State laws may limit what type of information an employer may request before an offer is made, i.e., sealed or expunged records; arrests that did not lead to convictions; or certain offenses or those of a certain age.
  • In some states, employers have public access to a court record database. In Wisconsin, for example, that database is known as the Consolidated Court Automation Program (CCAP) or Wisconsin Circuit Court Access (WCCA). Wisconsin employers using that system need to be aware that they still must comply with the Wisconsin Fair Employment Act and may not refuse to hire an applicant (or to terminate or otherwise take an adverse action against an employee) on the basis of an arrest or conviction record, unless it is substantially related to the job. Proceed with caution. MRA strongly recommends you do not use the information provided (or lack thereof) in the CCAP as the basis for your employment decisions.
  • In recent years, many states—including Minnesota and Illinois—and countless municipalities have enacted so-called "ban-the-box" laws. These laws vary in size and shape, but generally require employers to wait until the conditional offer stage to seek criminal history information from job applicants.

    MRA has a ban-the-box checklist for employers in Minnesota and Illinois to ensure they do not make criminal inquiries too early in the process.

When Should Background Checks Be Done?
Federal law does not prohibit employers from conducting background checks before an offer of employment is made. However, the best practice is to conduct a background check as late in the hiring process as possible; preferably post-offer and pre-employment. Think through the following before conducting a pre-offer check:

  • If you conduct the background check before denying someone a job offer, that person may allege that you failed to offer him or her a job, not because he or she wasn’t qualified, but because of a discriminatory reason related to something you discovered through the background check.
  • If you feel that you need to conduct pre-offer background checks for certain positions, and not others, then make it clear in your policy why some positions require pre-offer checks while other positions do not. If you have any questions about the legal risks of conducting pre-offer background checks, you should consult your legal counsel.

If an organization would like to talk through their current pre-employment screening processes, MRA can help! In addition, members who use our easy online platform for Reference and Background Check Services can be at ease knowing that we partner with an employment law attorney to continuously update our practices and forms.

Sources: Michael Hyatt, HR Government Affairs Director, MRA - The Management Association; Employer's Guide to Workplace Privacy, CCH/Wolters Kluwer; Scott Paler, Partner, Chair of Labor and Employment Practice Group, DeWitt Ross & Stevens S.C.

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