Background Check

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Avoid the pitfalls that come with conducting a background check.

For many employers, obtaining background checks on applicants or employees is a routine part of doing business. Indeed, some employers, such as educational institutions, are required to conduct background checks.

Information contained in a background check, legally known as a consumer report, can help employers screen undesirable applicants, investigate current employees, and protect against claims of negligent hiring or retention.

Consumer reports typically contain information about an individual’s creditworthiness and standing, general reputation, personal characteristics and mode of living, and may include information such as an individual’s criminal history, driving record, educational background, and civil litigation record.

Along with the power to conduct background checks comes the obligation to conduct them properly.

Federal and State Laws
Specifically, there is at least one federal statute that may be implicated when conducting background checks , the federal Fair Credit Reporting Act (FCRA).

There are at least as many state statutes. California, for example, has two separate statutes that must be complied with when conducting background checks. Under these statutes, employers generally are required to make certain disclosures to the applicant or employee, and obtain his or her consent before obtaining a consumer report. Additional disclosures are required if the employer takes adverse action, such as not hiring the applicant or terminating the employee after obtaining a consumer report, including making a copy of the consumer report available to the person.

The FCRA does not apply when the employer conducts public record searches, such as searching on the Internet or seeking public records in criminal or civil courts. However, some state statutes require that a copy of the public record be given to the applicant or employee if an adverse action is taken based on that public record.

Often Overlooked
Many employers try to avoid all of these pitfalls by hiring an outside agency, known legally as a consumer reporting agency, to conduct the background checks.

However, many of these agencies are not providing employers with forms and releases that comply with federal or applicable state law.

Furthermore, each state has its own laws and regulations as to what may or may not be included in the consumer report. For example, agencies generally are prohibited from providing a consumer report containing information about bankruptcies more than 10 years old and other adverse information more than seven years old.

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About the author

Emma Luevano

Emma Luevano is a regular contributor to LatinBusinessToday.com on legal issues relevant to small and medium business. She is a partner at the law firm Mitchell Silberberg & Knupp LLP (www.msk.com) who advises and represents management on labor and employment matters, including sexual harassment and other forms of discrimination, public policy violations, wrongful termination, class action wage and hour issues,and retaliation.