Pros and Cons: Assessing the Benefits and Risks of Background Checks

Background checks into applicants’ criminal and credit history increasingly are problematic, especially given recent state and federal legislation. Employers should weigh the possible benefits to running an applicant’s background check against the potential risks. This checklist guides employers who choose to continue the practice.

Credit Check Considerations

Given the questionable value of information obtained from a credit check, the unfairness of penalizing applicants for economic hardship and concerns about privacy, legislators in the states of California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington restrict the use of credit reports in making employment decisions. Additionally, the federal Fair Credit Reporting Act requires applicants be given a clear description of their rights under the act as well as a copy of the credit report.

Criminal History Questions

At least 29 states and over 150 cities and counties passed laws that intend to provide persons with criminal records a fair chance. Known as “ban the box,” referring to the checkbox on many applications that asks whether the applicant has a criminal record, the legislation requires employers to wait to ask about an applicant’s criminal background until after finding that she meets the initial qualifications for the position. The Equal Employment Opportunity Commission suggests employers use caution when using criminal records to make employment decisions, since doing so might be considered discrimination.

Consumer Report Protections

Background checks run by employers are considered consumer reports, and as such are subject to the Fair and Accurate Credit Transactions Act and state privacy laws, which require the data be protected from unauthorized access. The data also must be properly stored or destroyed. Additionally, an applicant’s written permission is required before running the reports. If you base your hiring decision on any information found in the reports, then you must inform that job seeker.

Compliance Checklist

If you decide that credit or criminal history checks are relevant to the job and you choose to continue obtaining such reports, then first learn the state and local legal requirements related to background screening. Answering the following questions can help guide your policy:

  • Do you provide job seekers a written description of their rights under the Fair Credit Reporting Act?
  • Do you provide all applicants a copy of their credit report?
  • Does your criminal background check criteria follow Equal Employment Opportunity Commission guidance that requests consideration of the nature of the offense and time passed?
  • Do you secure the data you collect during the hiring process and protect it from unauthorized use?
  • Do you properly dispose of information gathered about the job seekers you did not hire?
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