You’ve Conducted a Background Check… Now What?

Wendy Background Investigation


pre-employment background check

Hiring new employees is a vital component of any successful business. Every company collects some type of background information. From the initial application to the final interview, employers seek to obtain information in order to assess several qualities about a potential hire. Are they competent? Do they have the right skills? Who is the best person for the position? Running a background check can be key to making a good hiring decision!

Conducting a comprehensive background check is a “no-brainer” for some industries, especially those involving public trust, finance or access to highly sensitive and/or confidential information. Background information might consist of a criminal history, credit history, social media history, or any combination thereof.

Background checks are usually conducted by third parties who are independent from the employer. However, once a company receives background information from a third party, several legal considerations immediately come into play. Therefore, knowing what to do with the information obtained from the background check—and how to use it in hiring decisions—is critical. On many levels, this is just as important as taking that first step in obtaining the necessary background information.

Below, we will discuss—in general—how companies should handle information obtained from a background check. This article is not legal advice, and you should refer to an attorney for specific questions.

Evaluating the Results of a Background Check

A pre-employment background check may obtain one or more of the following types of information:

  • Verification of Social Security number and address history
  • Criminal record search in all locations of residence for the past ten years
  • Federal records search (criminal, civil, bankruptcy, and appellate)
  • National sex offender registry check
  • Verification of highest point of education
  • Verification of past employment and employment references
  • Interviews of listed personal references
  • Driving record
  • Credit report
  • Internet and social media review

Depending on the type of position, some of the information found in a background check may or may not be relevant. The easy hire is a person with no issues or concerns—where everything checks out as confirmed, verified, and positive.

The hiring process becomes a little more nuanced when negative results are obtained in a background check. In this instance, the law requires employers to make several disclosures. An attorney will advise you on the proper course of action, but some general situations appear below.

An Applicant with a Criminal Record

Let’s say you have an applicant with outstanding qualifications. They noted on their application that they have no misdemeanors or felonies. However, a criminal check discloses that, in fact, they have a misdemeanor conviction for DWI from two years prior. You decide this might not be the best employee for your company…

STOP.

By law, there are several things you must do to comply with the Fair Credit Reporting Act (FCRA).

Protus3 is offering no legal advice, but in general, the FCRA requires the following steps:

  1. If you decide not to hire a potential employee based upon their background check, you must provide them with a copy of the results. You must also provide them with a copy of a statement of FCRA rights called “A Summary of Your Rights Under the FCRA.” This letter is the pre-adverse action letter, which informs the applicant that you are not going to employ them. (Consult your legal counsel about additional requirements a specific state or city might have.) Employers also have to provide the name and contact information of the reporting agency hired to conduct the investigation. Employers must also state that the reporting agency had no part in making any hiring decisions.
  2. Reasonable time to respond. The FCRA requires that employers give the person time to respond to the pre-adverse letter. Maybe there was a mistake. Maybe they have a reasonable justification for the negative record. In any case, the FCRA does not specify the amount of time, but in general five business days should be sufficient.
  3. (Final) adverse action letter. After a reasonable amount of time, an employer sends a final letter informing the applicant that they are not being hired based on the background investigation report. The letter should be concise, but clear. Again, check with an attorney because different states and cities have different disclosures (i.e. some jurisdictions may require you to state specifically what caused you to make your decision.)
criminal background check

It is important for employers to be aware that almost one-third of Americans have some type of “criminal” record. Therefore, a zero-tolerance policy toward convictions may not be the best course of action. While it might seem a good idea in theory, it may not be applicable in the business world. For example, in North Carolina a person can be convicted of a misdemeanor for littering… or possession of an undersized fish. Hunting or fishing without a license are also misdemeanors. Should one of those convictions prevent an applicant from getting a job?

It is critical that employers evaluate the results closely for each individual applicant, while remaining consistent with the company’s standards and job responsibilities. There may be missed opportunities when employers adopt blanket policies regarding criminal convictions.

An Applicant with a Poor Credit History

Companies do credit history checks for a variety of reasons, and evaluating debt and credit history may provide pertinent information for employers. Employers usually weigh student loan and medical debt differently than consumer debt. Each of these tells its own story. For employers, a credit history check might be necessary on prospective employees for positions with access to sensitive customer information. In addition, employees who need security clearances or who will handle financial or confidential company information are more likely to require a credit history investigation.

Please note that each state has different information that available during a credit history check for employment purposes. You can find your state labor department here.

Employers use credit history information for a variety of reasons. A lot of debt or late payments might indicate an increased risk of outside influence or duress, fraud, theft, disorganization or poor financial judgment.

Most employers do not request credit inquiries as often as criminal histories. However, the response and how you handle them are the same for employers. In general, the same rules and regulations apply for credit histories under the FCRA with regard to notice, opportunity for a response and final adverse letter (see above).

An Applicant’s Social Media

More and more, employers encounter candidates who are involved in social media activities or groups that may negatively affect the company or otherwise indicate a potential hire is not a good fit. Having a third party conduct a social media review is the more prudent approach.

Using a third party to conduct a social media review allows the employer to avoid seeing things that might influence (however subconsciously) their decision making when considering a candidate. This could include race, religion, national origin, sexual orientation, or gender identity—none of which should be considered by an employer during the hiring process. The third party is looking only for evidence of adverse or negative behavior.

Using social media information falls under the same protection as criminal and credit history. The same procedures apply if you obtain negative social media information that disqualifies an applicant for employment. Under the FCRA, applicants must be given notice, an opportunity for a response and a final adverse letter.

Retaining and Disposing of Confidential Information

All information obtained during a background investigation, including credit and personal information, is confidential. Each state imposes laws and regulations governing how to maintain confidentiality and how long a company must retain the information before disposing of it. States may even have specific disposal requirements. Check with an attorney about the regulations in your jurisdiction.