Must all employers check applicants against a terrorist list before hiring?

Although the short answer is no, there is a bit more to this question that employers should consider. Under the U.S. Treasury Department, the Office of Foreign Assets Control (OFAC) administers and enforces economic sanctions against certain countries and certain individuals, such as drug traffickers and terrorists. To help enforce these sanctions, the OFAC publishes a frequently updated list called the "Specially Designated Nationals," or the SDN list, which includes names of individuals, companies and other entities that U.S. persons are prohibited from dealing with. Compliance with these sanctions means all U.S. persons (which, by definition, includes employers) cannot engage in any dealings with these countries or individuals, including hiring individuals on the list. Therefore, although checking the list is not specifically required, hiring someone on the list is prohibited. 

So, shouldn't all employers check the list? Not necessarily. This decision should be made with the guidance of legal counsel, and employers must address the following concerns.

First, even though the list is open to the public on the Treasury's website, it is not easy to sort through. Individual and organization names are mixed together, and there are often many aliases; dates of birth are often missing, or several alternatives are listed; addresses are not specific and may only list country and city. The list also contains many common Latino and Arabic names. All these factors make it difficult to make a positive identification, and employers may unfairly deny employment to an innocent individual. Federal and state discrimination and other civil liberties claims could follow if these hiring practices are not conducted carefully and with expert guidance.

Second, when an employer does find a match on the list, it would then be required to notify the OFAC. Although the OFAC does offer some guidance on when a match should be reported, time and effort may be required to make this determination, report it and follow up with the OFAC before making a final hiring decision. With the OFAC itself reporting that the chances of a match are not high, employers will need to determine if consulting the SDN—and at what point—in the hiring process would be in their best interests.

Many background checking companies offer an add-on service to check not only the SDN but various other lists, such as those compiled by the United Nations, Interpol and the FBI. Employers should know what lists will be checked and how best to use that information in their hiring practices.