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TOP TIP: EEOC and FTC Issue Technical Assistance Document on Background Checks.

March 31, 2014

The EEOC and FTC have jointly issued technical assistance documents for employers and employees intended to inform them about compliance with federal antidiscrimination laws and the Fair Credit Reporting Act when background checks are conducted. 

The TAD for employers, “Background Checks – What Employers Need to Know,” notes that background checks, other than those regarding medical or genetic information, are not illegal, but must comply with federal antidiscrimination laws and the Fair Credit Reporting Act. 

The EEOC states that the decision to conduct background checks cannot be based on any protected characteristic, and that the information received as a result of background checks cannot be used in any employment decision to discriminate on the basis of any protected characteristic.  The EEOC further warns that employers should take “special care” when basing employment decisions on background problems that are more common among those with a particular protected characteristic.

The FTC provides a detailed explanation of the actions that employers must take in order to comply with FCRA, if they use a third-party consumer reporting agency.  To summarize briefly, these are as follows:

  • Provide the individual a written, stand-alone notice that background check information may be used for employment decisions.
  • If you obtain an “investigative report,” which involves personal interviews, provide the individual of his right to a description of the nature and scope of the investigation.
  • Obtain written authorization from the individual to do the background check.
  • Certify to the reporting agency that you have complied with FCRA’ s requirements
  • Before taking adverse employment action based on a background check, provide notice to the individual, along with a copy of the report and the federal “Summary of Your Rights Under the Fair Credit Reporting Act” notice.
  • After taking adverse employment action based on a background check, inform the individual that the action was taken because of the information in the report, the contact information for the reporting agency, that the agency did not make the employment decision, and that the individual has the right to contest the accuracy of the report and to get an additional free report from the agency within 60 days.

The TAD also discusses the disposal of background check records.  Under federal antidiscrimination statutes, you must retain such records for one year after the records were made or the personnel action was taken, whichever is later.  (Certain government contractors have a two year requirement).  Under FTC rules, the actual disposal must be done in a secure fashion, which includes burning, pulverizing, or shredding paper documents, and disposing of electronic documents in a manner that they cannot be read or reconstructed.  The FTC provides additional guidance on disposal at http://www.business.ftc.gov/documents/alt152-disposing-consumer-report-information-rule-tells-how.