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Dos and Don'ts for Employee Background Checks

Katharine Paljug
Katharine Paljug

With so much information available online – some of it public and some that is accessible for a fee – looking into an employee's background can be confusing for both businesses and workers.

Are social media profiles fair game? What about credit reports? Can a business require drug testing before making a hiring decision?

It depends, Tricia Meyer, the founder and managing attorney at Meyer Law, told Business News Daily.

"Pre-employment checks may consider information like drug testing, court records, credit records, character references, driving records, education records, etc.," said Meyer. Businesses may periodically check on this information for current employees as well.

The information that is legal for employers to access, however, depends on many factors, including the industry, whether the business is in the public or private sector, and in what state the business is located.

Here's what you need to know about the legality of vetting an employee's background.

Employers are allowed to commission or gather background information on current and potential employees, including criminal background checks. However, the United States Equal Employment Opportunity Commission (EEOC) maintains strict rules governing the procedures employers must follow for background checks and what information they can access.

  • The employee must be notified in writing that the background check is being conducted and may impact their eligibility for employment. This notification must be a stand-alone document separate from the employment application.
  • The employee must provide written consent to the background check.
  • If ongoing background checks are a condition of employment, a business must say so explicitly in its written policies.
  • If any personal interviews are conducted to learn about an employee's reputation, lifestyle or character, the employee has a right – and must be notified of that right – to a description of the nature and extent of these interviews.

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Between social media and online search, employers can access a great deal of information about potential or current employees without needing to employ a traditional background check. If information is publicly available online or easily found with a search engine, employees should expect that businesses can and will find it.

However, many states have rules in place to protect employees' privacy on social media sites.

"Employers are no longer allowed to request an employee's login information for social media accounts," Meyer said, adding that trying to bypass privacy settings is also not allowed. In the past, employers would often try to view accounts by creating a fake profile themselves or asking the social media company for access. "If a candidate has an account set to private, it's important that the employer not bypass their privacy rights."

Unless their medical history directly impacts an employee's' ability to do their job, such as when joining the military, medical history should not be part of a background check. The Americans with Disabilities Act (ADA) limits the medical information that an employer can legally gather during an interview or background check. The ADA makes it illegal for employers to discriminate in hiring decisions based on an applicant’s medical history or disability status. [Read related article: ADA Requirements That May Surprise You]

The Fair Credit Reporting Act requires that an employer obtain written consent before requesting a worker's credit report. The FCRA is a federal law, so this consent is required in all 50 states. Some states, including Illinois, California and Colorado, place additional limits on whether and when an employer can access credit information. Some industries have exemptions, such as the trucking industry.

The FCRA also requires that employers inform workers if the information in their credit file is being used against them. If a business refuses to offer employment based on a credit report, it must give that reason explicitly, along with the name, phone number and address of the credit reporting bureau that provided the information. This allows applicants to correct potential misinformation before a final hiring decision is made.

In some industries, such as manufacturing or nuclear energy, drug testing is a legally required safety measure. Most government jobs require drug testing. Some states limit drug testing to industries where it is required by law, while others require businesses to prove that drug use is a legitimate safety concern that therefore requires employee testing.

"Drug testing is typically up to the discretion of the employer and may be part of a comprehensive background check," said Meyer.

To be valid in court, drug testing policies must be written down, accessible to employees and applied equally and consistently to all current or potential workers.

Potential employees can refuse a drug test as part of a background check. In some states, however, they can be denied employment for that refusal. Current employees can also refuse drug tests, but they can be fired for that refusal if testing requirements are spelled out in the employer's written policies.

In most states, asking an employee about their current or former union status is not a violation of the law. But, warned Meyer, it is almost always inappropriate, and in some states, it could cause legal trouble.

"Some state courts have found that … inquiries regarding union status or membership could be an unfair labor practice by the employer to discriminate in hiring decisions," said Meyer. In general, union activity is considered a protected right and should not be part of a background check.

Salary checks: Illegal in some states

Salary checks have recently come under scrutiny because of their effect on pay equity. Many state laws now limit whether an employer can check the previous salary to encourage equal pay for equal work. If an employer asks about previous salary – which is currently or soon will be illegal in New York City, New Orleans, Philadelphia and all of Massachusetts – a potential employee is not obligated to reply.

Protected information: Illegal

Under Title VII of the Civil Rights Act, certain protected information should never be a part of a hiring decision for both potential and current employees.

Protected information includes age, race, ethnicity, color, sex, religion, national origin, disability, marital status and pregnancy. It is illegal for an employer to ask about these characteristics during a background check, interview or performance review.

Given the information shared online, especially on social media, though, it is possible and likely that a business will accidentally learn about protected characteristics during other parts of a background check. However, it is always illegal for this information to influence employment decisions.

Which laws apply to your business?

Though federal laws apply to all businesses, state laws vary greatly. And if you do business in more than one state, it can become confusing to know which laws apply to your situation.

"The general rule is that the law of the state where the person works will apply over other choices, so if they are being interviewed in the state where the employee will work, that state’s law will govern," said Meyer. "However, it is ultimately dependent on which state has the greatest interest in the situation. For example, if someone did the actual hiring, background check all within a company’s headquartered state, then that state's laws would likely govern as the applicant's 'home' state would not come into play."

Meyer stressed the importance of following these state laws during any hiring decisions to avoid complaints with the EEOC, National Labor Relations Board or other federal and state agencies that govern hiring practices.

"If you are an applicant, make sure you know what protections and rules an employer should adhere to, and if you are an employer, make sure you take such state-specific laws into consideration during your hiring process," said Meyer. "Employers should review their hiring practices to ... make sure that decisions do not run afoul of any federal or state laws and are supported by requirements of the job."

Image Credit: RawPixel/Shutterstock
Katharine Paljug
Katharine Paljug,
Business News Daily Writer
Katharine Paljug is a freelance content creator and editor who writes for and about small businesses. In addition to Business News Daily, her articles can be found on Your Care Everywhere, She Knows, and YFS Magazine. Visit her website to access her free library of resources for small business owners.