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Knowledge Center Items The Use of Background Checks in Employee Hires

The Use of Background Checks in Employee Hires

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Organizations are consistently using background checks to improve the quality of their hires. Yet employers must be aware of the various laws governing access and use of background checks for hiring decisions so that they don’t open themselves to employment practices liability exposures and lawsuits. The following considerations are critical when undertaking employee background checks.

Credit Reports: An employer under the Fair Credit Reporting Act (FCRA) must obtain an employee’s written consent prior to seeking his or her credit report. If the employer chooses not to hire or promote an individual based on information in the credit report, a copy of the report must be provided to the candidate or employee and the the applicant can challenge the FCRA report.

Criminal Records: The laws under which an applicant’s criminal history can be checked in making hiring decisions varies from state to state and from one city to the next. Currently, there are more than 150 cities and counties and a total of 26 states nationwide that have adopted what is widely known as “ban the box”. Ban the box refers to the check box on employment applications asking whether the candidate has ever been convicted of a crime. Ban-the-box laws require hiring managers to put off asking about a candidate’s criminal history until after an interview has been conducted or a provisional job offer has been extended.

The majority of ban-the-box laws apply only to public employers, but blanket ban-the-box laws impacting all sectors are on the rise. Many advocates embrace private-sector ban-the-box laws as the “next step in the evolution of these policies,” according to the National Employment Law Project (NELP), a worker advocacy organization.

There are also various city and county ban-the-box laws around the country that apply to private employers, which means that companies doing business in multiple jurisdictions have to consider the law and policy of each location, possibly having different processes depending on where they’re located.

Lie Detector Tests: The Employee Polygraph Protection Act prohibits most private employers from using lie detector tests, either for pre-employment screening or during the course of employment. The law includes a list of exceptions that apply to businesses that provide armored car services, alarm or guard services, or those that manufacture, distribute, or dispense pharmaceuticals.

Medical Records: Under the Americans with Disability Act (ADA), employers are prohibited from discriminating based on a physical or mental impairment or requesting an employee’s medical records. Businesses can, however, inquire about an applicant’s ability to perform specific job duties. Some states also have stronger laws protecting the confidentiality of medical records.

It’s important to obtain legal counsel to review the legality of when employee background checks are permitted for employers, as is having a sound Employment Practices Liability Insurance (EPLI) policy in place. RPS provides EPLI insurance and can assist you in securing coverage for your clients.

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