Double-Check Criminal Background Checks

When conducting criminal background checks, employers must weigh two sometimes-conflicting factors. First, the formerly incarcerated may be a source of much-needed talent—second-chance initiatives benefit employers as well as employees. Second, some convictions could mean taking on unacceptable safety or other risks in hiring a candidate into a particular position.

These business issues correspond with legal risks: On the one hand, to avoid a claim of unlawful refusal to hire, employers need to understand the protections that the formerly incarcerated have. On the other hand, employers need to consider whether hiring a candidate would expose them to a negligent-hiring claim in light of a prospective hire’s criminal record and the job for which he or she has applied.

Employers must consider a plethora of federal, state and local laws in balancing these competing considerations. 

How does an employer weave the laws into a practical protocol? Let’s enter the legal maze.

Scope of the Background Check

In most cases, the background check will be conducted by a third party rather than by the employer itself. The third party is considered a “consumer reporting agency” (CRA) for purposes of the primary federal law in this area, the Fair Credit and Reporting Act (FCRA).

As part of contracting with a CRA, the employer should make clear what the CRA should and should not disclose to it. As a general rule, an employer should not receive information that it lawfully cannot consider. 

For example, many states, such as California and Massachusetts, restrict an employer’s consideration of certain misdemeanors. So the CRA should be instructed not to report such misdemeanor convictions. 

‘Ban-the-Box’ Laws 

After an employer contracts with a CRA, it should decide when to conduct background checks and whether to limit them to certain positions. Requiring them of only certain individuals is inadvisable; if an employer checks backgrounds based on people rather than positions, it invites claims of explicit or implicit bias, which very well may exist. 

Then there’s a question of timing. An increasing number of state and local laws prevent employers from asking about criminal history—or conducting a background check—until after a conditional offer is made. Even if an employer is not subject to “ban-the-box” laws (referring to a check box on an application that asks about criminal records), it ordinarily makes sense not to conduct a background check until after a conditional offer is extended. 

By waiting until then, an employer is less likely to have a viscerally negative reaction to the existence of any conviction, because the employer has already decided that it wants to hire the applicant. The formerly incarcerated are a source of talent that employers should not categorically ignore, independent of the law.

The Process

The background-check process that an employer will follow is set forth in the FCRA. In general, there are three main steps: 

1. Authorization by the applicant. 
2. Pre-adverse action notice.
3. Adverse action notice.

Each of these elements is addressed below. 

Authorization 

All applicants must sign a background-check authorization that’s compliant with federal law. The authorization would not be compliant, for example, if the applicant waives any claims that he or she may have with regard to the background check.

Some states, such as California, require a separate authorization. Any form required by a state should be a separate form and not combined with the FCRA authorization, or it may not comply with the FCRA. 

After the employer receives information from the CRA about an applicant, HR will need to determine preliminarily whether any conviction disqualifies the applicant from employment.

In 2012, the Equal Employment Opportunity Commission (EEOC) published guidance effectively requiring that employers, in most cases, make an individualized assessment rather than apply blanket rules such as “We do not hire felons for any position.” 

As part of the individualized assessment, the EEOC guidance calls for employers to consider:

While the EEOC guidance is subject to challenge, its principles minimize an employer’s exposure to adverse impact claims. Moreover, an increasing number of state and local jurisdictions are requiring a holistic approach to conducting background checks. 

For example, New York state requires that an employer consider eight enumerated factors. New York City goes further and requires that the employer provide rejected applicants with its analysis of how it applied the eight factors.

Of course, there are exceptions to individualized assessments. For example, securities laws bar applicants with certain convictions from performing certain jobs. Also, most, if not all, states have laws to protect children from sexual and other forms of abuse. These laws generally prevent employers from hiring applicants with certain convictions to perform jobs in which they may have unsupervised interaction with children.

Pre-Adverse Action Notice