Background screening has become a standard hiring practice for most industries in recent years. Approximately 92% of employers say that they include them as part of their hiring process. After all, using pre-employment background checks has been shown to improve quality of hires, operational safety, and decrease employer liability.
However, these background checks can also lead to costly compliance violations without taking proper precautions. Pre-employment background screening must comply with the Fair Credit Reporting Act (FCRA), federal EEOC rules, state laws and city-level ordinances, among other changing regulations. Let’s breakdown each of the key factors for achieving compliance, so your HR team is fully prepared.
Fair Credit Reporting Act (FCRA)
The Fair Credit Reporting Act (FCRA) regulates federal background checks and requires employers to provide notices and obtain permissions from potential hires before conducting pre-employment checks. Over the past decade, the FCRA has levied more than $174 million in class-action settlements alone.
To ensure your organization is carrying out background screens compliantly, start by following this process dictated by the Fair Credit Reporting Act (FCRA):
- Obtain written consent from applicants before conducting their background check.
- Disclose that a background check is being performed in a separate, stand-alone document.
- Allow time for applicant to respond to any adverse actions. (Five days is the suggested time frame.)
- Provide a post-adverse action notice to the individual, which includes the name and contact information of the consumer reporting agency, an explanation that the reporting agency is not responsible for adverse action decisions, and how to proceed if the candidate wishes to protest the decision.
Failure to fulfill these steps will affect your ability to take adverse action based on your pre-employment screening reports. Without properly executing this process, you could face costly litigation by applicants, or federal and state fines. It should also be noted that employers are required to properly dispose of information obtained. For more insight, check out our webinar, “Background Checks: How to Stay Compliant in the Onslaught of Legal Changes and Updates.”
Federal EEOC Rules
The use of a candidate’s criminal history in hiring falls under the Equal Employment Opportunity Commission (EEOC) and enforces specific standards for the use of arrest or conviction records in employment decision-making. The main idea here is that denial of employment for an arrest record should be based on individual assessment by considering the applicant, the nature of the criminal offense(s), and how these offenses relate to the job itself - not solely on the results of a background check.
State Laws that Impact Background Screening
Each state that you conduct business in has their own requirements for background screening and data regulations, including privacy and equal opportunity laws. It’s important to reference all additional requirements that affect your business, especially for multi-state operations.
Some laws which may affect your state(s), include:
- Ban-the-box laws: These laws restrict employers from inquiring about criminal history in the screening process, or delay the check until after a conditional job offer has been made. 35 states and over 150 cities have passed these laws!
- Salary history bans: These prohibit recruiters from asking candidates about past compensation as part of their pre-employment screening. Check out our full list of salary history ban states here.
- Marijuana laws: These pre-employment guidelines protect candidates against unfair rejection based on positive marijuana drug screening.
For a deeper dive into these state laws, visit the EEOC website and your state’s individual labor sites.
Easy Hiring with EPAY Systems
EPAY’s all-in-one Human Capital Management platform helps employers conduct careful, compliant pre-employment background checks by easily integrating with the preferred background check provider, Checkr. Our Applicant Tracking solution allows HR professionals to:
- request pre-employment background checks (which sync with whichever 3rd party background checker of your choice)
- track the progress of applicant forms
- maintain the highest level of cyber-security to protect all data exchanged between with applicants.
With EPAY’s powerful onboarding capabilities, you’ll also be able to convert your applicant’s signed forms, cleared background checks, and other onboarding documents into employee records with the easy click of a button! Ready for a full demonstration? Register for a live demo today.