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Conducting background checks is an important step organizations can take to identify the stron­gest candidates and mitigate risk when making em­ployment decisions. Before conducting background checks, you should be aware of important federal statutes so you can avoid costly legal action that could result in fines, damages, and attorneys’ fees.

Title VII prohibits employment practices that have a disparate impact on protected classes. Because racial minorities are convicted of crimes on a dispropor­tionate basis compared to nonminorities, the Equal Employment Opportunity Commission (EEOC) has determined that employers can consider past criminal convictions only when the crime is directly related to the duties of the position in question. For instance, an employer might deny a daycare teacher position to an individual with a conviction for child neglect.

EEOC guidance

In 2012, the EEOC published an extensive guide on background checks in which it stated that it looks unfavorably upon company policies that automati­cally disqualify applicants for certain positions based on certain types of criminal convictions. However, that doesn’t apply when federal laws prohibit employ­ment of individuals convicted of specific crimes in certain childcare, banking, and port positions.

When deciding if a conviction should disqualify an applicant for the job, look at the following factors:

• The nature and gravity of the criminal offense;
• The amount of time that has elapsed since the conviction and/or completion of the criminal sen­tence; and
• The overall nature and specific duties of the position.

Based on EEOC guidelines, it’s also considered a best practice to refrain from asking applicants about their criminal histories on the initial job application. In response to a campaign called “ban the box,” several states (but not Arizona) have recently enacted laws prohibiting criminal history questions on applications for state jobs, and a handful of states have passed laws banning the practice on applications for private-sector jobs as well. It’s advisable to wait until an applicant has been identified as a finalist for a position.

The EEOC’s guidelines also strongly urge em­ployers to notify an applicant of potentially disquali­fying convictions on his record and give the individ­ual an opportunity to submit additional information about the offense to demonstrate that the conviction shouldn’t be the basis for an adverse decision.

Credit checks

The Fair Credit Reporting Act (FCRA) also reg­ulates the use of background checks. The FCRA re­quires you to let an employee or a job applicant know in advance that you plan to conduct a criminal and/or consumer credit check. The notice must be contained in a separate document from the job application. You also must secure explicit permission from the individ­ual to conduct the check.

To obtain a consumer credit report, you must dem­onstrate to the credit reporting agency that you have the necessary certifications to access the information and that your company’s actions are in compliance with FCRA requirements. If you wish to disqualify an individual from consideration for a job based on infor­mation found in a consumer credit report, you must follow a two-step process:

1. Notify the individual in writing that the com­pany is considering making an adverse decision based on information in the report. You also must provide the name and contact information of the credit reporting agency from which you obtained the report and allow the individual time to review the report and challenge the information based on incomplete or inaccurate details.
2. Issue a second written notice that you have made an adverse decision based on the report.

Bottom line

Title VII and the FCRA are federal laws. It’s also important for employers to be aware of and seek counsel on state laws that may impose additional legal requirements on your organization.