Background checks are a valuable (and often essential) part of the hiring process.  They help employers find good employees and avoid risky hires. Failure to check applicants’ backgrounds can amount to negligence and may create legal liability for employers, particularly when the prospective employee will, if hired, have contact with vulnerable individuals, use dangerous equipment, or have access to sensitive information.

• FCRA and its state equivalents.  The Fair Credit Reporting Act, which we’ve written about before, applies to employers that use outside agencies or third parties to do background checks.  It requires notice to an applicant or employee that a background check will be performed, obtaining consent for the check, and additional notice if negative information obtained in the background check results in a negative action such as refusal to hire or employee discipline. When a background check is performed on a current employee, rather than an applicant, and relates to an investigation of employee misconduct, the FACTA amendment to FCRA gives employers more discretion.  Employers can engage a third party to investigate workplace misconduct without providing advance notice to the employee or being required to obtain prior consent.  State and local laws may also constrain employer background checks.
• FCRA litigation.  Individual and class action lawsuits against employers based on claimed FCRA violations continue, and can result in new interpretations of the law.  The Ninth Circuit recently held that a FCRA rights notice to employees cannot be combined with other notices or agreements. A Florida federal court has allowed a consolidated FCRA action against Amazon to move forward, finding that the plaintiffs have standing to sue based on their allegations of invasion of privacy, information harm, and risk of harm.  UPS has been sued because it allegedly uses background checks to make employment decisions without providing the results to applicants or employees.
• Criminal background check limitations.  The EEOC has long advised against careless use of arrest and conviction records in employment decisions.  In the last decade, a number of states and municipalities have enacted “ban-the-box” legislation limiting the circumstances in which employers can inquire about or consider arrest and conviction records.  This SHRM article, published in 2016, describes the ban-the-box movement, and a current list provided by NELP identifies states with ban-the-box laws.
• Social media use in background checks.  As we have noted in previous posts, background screening done through social media is subject to the constraints of FCRA and anti-discrimination laws.  EEOC commentary makes clear that the agency is alert to, and concerned about, the potential for discrimination that arises when social media access results in consideration of protected class status.  Employers using vendors to screen applicants should remember that they may be held legally liable for screening methods or results that violate the law, regardless of whether or not they knew of the violations.
• References.  Although low-tech, references obtained directly from former employers can be a valuable screening tool.  In seeking references, a prospective employer should ask only job-related questions, ask the same questions about all applicants, and decline or discourage information about protected class status, health or medical background, criminal background, or other non-job-related information.