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Background Checks: What Employers Need to Know Pt 2

April 1, 2014

Last week, we discussed several issues that employers needed to be aware of before using background checks in their hiring process. This week, we will expand on that information. (This information was taken from a joint publication of the Equal Employment Opportunity Commission and the Federal Trade Commission.)

Using Background Information

equalityEEOC
Any background information you receive from any source must not be used to discriminate in violation of federal law. This means that you should:

– Apply the same standards to everyone, regardless of their race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older). For example, if you don’t reject applicants of one ethnicity with certain financial histories or criminal records, you can’t reject applicants of other ethnicities because they have the same or similar financial histories or criminal records.

– Take special care when basing employment decisions on background problems that may be more common among people of a certain race, color, national origin, sex, or religion; among people who have a disability; or among people age 40 or older. For example, employers should not use a policy or practice that excludes people with certain criminal records if the policy or practice significantly disadvantages individuals of a particular race, national origin, or another protected characteristic, and does not accurately predict who will be a responsible, reliable, or safe employee. In legal terms, the policy or practice has a “disparate impact” and is not “job related and consistent with business necessity.”

– Be prepared to make exceptions for problems revealed during a background check that were caused by a disability. For example, if you are inclined not to hire a person because of a problem caused by a disability, you should allow the person to demonstrate his or her ability to do the job – despite the negative background information – unless doing so would cause significant financial or operational difficulty.

FTCyes or no button

When taking an adverse action (for example, not hiring an applicant or firing an employee) based on background information obtained through a company in the business of compiling background information, the FCRA has additional requirements:

– Before you take an adverse employment action, you must give the applicant or employee:
a notice that includes a copy of the consumer report you relied on to make your decision; and
a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act,” which you should have received from the company that sold you the report.

– By giving the person the notice in advance, the person has an opportunity to review the report and explain any negative information.

– After you take an adverse employment action, you must tell the applicant or employee (orally, in writing, or electronically):
that he or she was rejected because of information in the report;
the name, address, and phone number of the company that sold the report;
that the company selling the report didn’t make the hiring decision, and can’t give specific reasons for it; and
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.

Disposing of Background Information

EEOC
Any personnel or employment records you make or keep (including all application forms, regardless of whether the applicant was hired, and other records related to hiring) must be preserved for one year after the records were made, or after a personnel action was taken, whichever comes later. (The EEOC extends this requirement to two years for educational institutions and for state and local governments. The Department of Labor also extends this requirement to two years for federal contractors that have at least 150 employees and a government contract of at least $150,000.) If the applicant or employee files a charge of discrimination, you must maintain the records until the case is concluded.

FTC
Once you’ve satisfied all applicable recordkeeping requirements, you may dispose of any background reports you received. However, the law requires that you dispose of the reports – and any information gathered from them – securely. That can include burning, pulverizing, or shredding paper documents and disposing of electronic information so that it can’t be read or reconstructed. For more information, see “Disposing of Consumer Report Information? Rule Tells How”

~~Susan McCullah is the Marketing Project Manager/ Background Screening Division for Data Facts, Inc, a 25 year old Memphis based company. Data Facts Inc -an NAPBS accredited company- is a leading provider of employment screening solutions. Check out our website for a complete explanation of our services.

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