credit report

Using Background Checks and Credit Reports to Screen Job Applicants

Background checks and credit reports are useful tools for vetting employee prospects. However, employers must beware of potential pitfalls when using these consumer reports in the hiring process, as there are several laws that restrict their use.

What to Do before Gathering Background Information

Before performing a background check on a job applicant, employers must be sure to abide by the policies established by the Equal Employment Opportunity Commission (EEOC) as well as those found in the Fair Credit Reporting Act (FCRA). It is illegal to conduct a background check that is motivated by the applicant’s status as part of a protected class (race, religion, etc.).
Additionally, the FCRA requires that you follow a few procedures if you plan on gathering information from a company which specializes in compiling background information. These include:

  • Notifying the applicant in writing that you may use the information to make a hiring decision
  • Getting the applicant’s permission in writing to obtain a background check
  • If you are requesting an ‘investigative report,’ the applicant has the right to know the scope of the report
  • Lastly, you have to notify the company creating the report that you have complied with the requirements established by the FCRA, informed the applicant, and received permission for the background check, and that you will not discriminate against the applicant or in any way misuse the information

Restrictions for Using Background Information

The EEOC protects applicants from being discriminated against based on information found in a background check. This means that you must apply the same policies to any applicant without regard to their sex, age, gender, race, national origin, religion, disability, or genetic information. You also must consider that certain information found in a background check may not be directly related to one of these factors, but may be more common among members of a protected class.

The FCRA also requires you to abide by certain policies when using a background check to make an employment decision. First, before choosing not to hire an applicant due to certain information, you must provide them a copy of the information in the report and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act.” This step allows applicants to explain themselves in the event that any negative information comes up.

Additionally, if you do make an adverse hiring decision, you have to inform the applicant that the decision was made due to information contained in the report, the contact information of the reporting company, and state that the company which compiled the report did not make the hiring decision, and the applicant can dispute the information found in the report within the next 60 days.

Disposing of and Storing Information

As required by the EEOC, you must store all personnel and employment records that you make or receive for at least a year after they were created or after you made your hiring decision – whichever event happens later. If a job applicant accuses you of discriminating against them, you must maintain the records until the case is resolved.
Once you have complied with any requirements for keeping the records, you can dispose of them, but it has to be securely. This could include shredding the reports or any similar action which makes them unreadable and unable to be reconstructed.

Employment Attorneys in Minnesota

To be sure that you are always abiding by state and federal regulations, you should consult with an experienced attorney. The attorneys at Collins, Buckley, Sauntry, & Haugh, P.L.L.P., are experienced in dealing with employment law matters in Minnesota. Feel free to contact us online or call 561-227-0611 with any questions or concerns.

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