• Background Checks: What are the rules?

    Background Checks: What are the rules? Posted on Tuesday, March 24, 2015 in Hiring

    What background check laws or standards do I need to follow when conducting background screens?


    The FCRA is clear that background information used as part of an employment decision must come from a “consumer reporting agency” (CRA) and the information about a candidate can only cover the past seven years in certain circumstances. Internet searches using search engines or social media, whether paid or unpaid, may include relevant personal information that you would like to use but is actually illegal to consider for hiring purposes. Instead the FCRA stipulates that employers get background information for employment purposes from a consumer reporting agency that regularly prepares consumer reports for a fee. A search of a person’s name through an Internet search engine does not generally meet this definition.


    The FCRA was enacted to protect consumers in the consumer reporting process by regulating the report, the consumer reporting agency, and the employers/ end-users of the consumer reports. The FCRA requires employers to follow certain procedures when it uses a consumer reporting agency to obtain a consumer report. Such procedures can be divided into two categories: Report Ordering Procedures that employers must follow before ordering a consumer report, and Adverse Action Procedures that employers must follow if they intend to use any the information, in whole or in part, from the consumer report to take an adverse action (aka make the decision to not hire an individual based on data found in their background report).


    For a full copy of the FCRA, visit the Federal Trade Commission (FTC) site.

    Additional information regarding compliance standards for pre-employment background screening is also available from the FTC.



    We cannot offer legal advice, but you can and should have legal counsel review your proposed screening processes to consider and ensure that you are complying with federal, state, and local law.


    What is the governing body that determines what I can and cannot do when conducting an employment related background check?


    The Consumer Financial Protection Bureau (CFPB) has rulemaking authority under the Fair Credit Reporting Act, while the Federal Trade Commission (FTC) enforces the FCRA. These are the two government agencies responsible for the FCRA.


    Under FCRA background check regulations, what information must be excluded from background reports?


    Employers should be aware that the FCRA (as well as state law) places limitations on information that can be reported by a background screening company. To comply with employment law, consumer reporting agencies cannot include the following items in a consumer report:

    •    Bankruptcy cases that predate the report by more than 10 years.

    •    Civil suits, civil judgments, and records of arrest that predate the report by more than seven years.

    •    Paid tax liens that predate the report by more than seven years.

    •    Accounts placed for collection or charged to profit and loss that predate the report by more than seven years.

    •    Any other adverse information, other than records of convictions that predate the report by more than seven years.

    For employees reasonably expected to earn $75,000 or more per year, the above time limits do not apply. Employers should also be aware that in addition to the limitations found in the FCRA, a number of states place limitations on what information may be reported by background screening companies. Information commonly prohibited includes arrest records, convictions that precede the report by a specified numbers of years, dismissed cases, and discharged cases.










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