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Employment Practices: Federal Agencies Offer Guidance on Background Checks


Employment Practices Federal Agencies Offer Guidance on Background ChecksEEOC and FTC Issue Informal Guidance on Background Checks for Job Applicants

In March, the Equal Employment Opportunity Commission (EEOC) and the Federal Trade Commission (FTC) released two short guides explaining how both agencies’ respective laws apply to background checks performed for employment purposes. One guide is available for employers, the other for employees.

“The laws enforced by the EEOC and the FTC intersect on the issue of employment background checks, so this was a unique opportunity for the agencies to work together to provide user-friendly technical assistance to our stakeholders,” said EEOC Legal Counsel Peggy Mastroianni. “The number-one goal here is to ensure that people on both sides of the desk understand their rights and responsibilities.”

Both agencies, according to an EEOC press release, emphasize that employers need written permission from job applicants before obtaining background reports about them from companies in the business of compiling background information. Moreover, they reiterate that it’s illegal to discriminate based on a person’s race, color, national origin, sex, religion, age (40 or older), disability, or genetic information, including family medical history, when requesting or using background information for employment, regardless of where the information was obtained.  The federal agencies at the same time want “job applicants to know that it’s not illegal for potential employers to ask about their background, as long as the employer does not unlawfully discriminate. However, when people are turned down for a job or denied a promotion based on information in their background reports, they have the right to review the reports for accuracy.”

In their guidance to employers, the EEOC and FTC advised employers to consider the following factors when obtaining background information from a job applicant or current employee:

  • Make sure you treat all applicants and employees equally. It’s illegal to check the background of applicants and employees when that decision is based on a person’s race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older).
  • Do not try to obtain an applicant’s or employee’s genetic information, including family medical history.
  • Do not ask any medical questions before a conditional job offer has been made.
    If the employee has already started his or her job, do not ask medical questions unless the employer has objective evidence that the employee is unable to do the job or is a safety risk due to the medical condition.
  • If you obtain background information (such as a credit report), the Fair Credit Reporting Act (FCRA) requires several additional steps:
    • Tell the applicant or employee in writing that you may use this information for employment decisions. This notice must be in writing and in a stand-alone format. The notice cannot be in an employment application;
    • If you are asking a company to provide an “investigative report” a report based on personal interviews concerning a person’s character, general reputation, personal characteristics and lifestyle you must also tell the applicant or employee of his or her right to a description of the nature and scope of the investigation;
    • Get the applicant’s or employee’s written permission to do the background check; and
    • Certify to the company from which you are getting the report that you: notified the applicant and got his or her permission to get a background report; complied with all FCRA requirements; and won’t discriminate against the applicant or employee or otherwise misuse the information.

After an employer receives background checks on applicants and employees, the employer should remember the following:

  • Ensure that the same standards are applied to everyone, regardless of their race, national origin, color, sex, religion, disability, genetic information or age.
  • At any time before taking adverse action against an employee, an employer must provide the employee with a copy of the consumer report it relied upon to make the decision and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act.”
  • After taking adverse employment action, you must tell the employee (orally, in writing or electronically): (1) that he or she was rejected because of information in the report; (2) the name, address, and phone number of the company that sold the report; (3) that the company selling the report did not make the hiring decision, and can’t give specific reasons for it; and (4) that he or she has a right to dispute the accuracy or completeness of the report, and to get an additional free report from the reporting company within 60 days.

In disposing background information, under the EEOC rules, the employer must keep personnel or employment records for the later of one year after the records were made or after personnel action was taken. If the employee files a charge of discrimination, the employer must keep all records until the case is concluded. Under FTC rules, after satisfying applicable recordkeeping requirements, an employer must dispose of all reports securely by shredding all background reports.

Employers should review the new guides and make sure that their practices and policies are in compliance with federal law. Additionally, be aware that there are a host of other state and local requirements that may be applicable to running a background check and taking an adverse action based on the results. If there is any doubt, be sure to consult an experienced attorney in these matters. Additionally, to further protect against the risks involved with employment practices issues, ensure that you have the appropriate insurance coverage in place. Employment Practices Liability Insurance (EPLI) steps in when allegations are made claiming discrimination, sexual harassment, wrongful termination, and other workplace issues. Axis Insurance Services specializes in EPLI and can help secure the insurance coverage needed. Give us a call at: (877) 787-5258.

Sources: EEOC, MONDAQ Business Briefing

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Blogged on: April 8, 2014 by Mike Smith
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