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Background Investigations in the Employment Process – Part I

January 9th, 2012 by ( )

Recently I’ve received a number of questions from government personnel and employers regarding the use of background investigations in the employment process. An employer’s decision to implement a background investigation program is taken very seriously, and it is no small undertaking. There are many laws and other policy decisions that need to be considered throughout the process. First and foremost, employers have a duty to protect their employees and provide a safe environment for them, their customers, and the public. Employers can be held responsible for the harm their employees cause and therefore, employers often conduct background investigations to improve safety and avoid violence in the workplace. Generally, background investigations may include the following search elements:

  1. Professional Reference Check
  2. Social Security Number Verification
  3. Employment History and Verification
  4. Education Verification
  5. Professional License or Certification Verification
  6. Military History and Verification
  7. Driving History / Motor Vehicle Record
  8. Credit History
  9. Criminal History

Both state and federal laws determine whether, when, and to what extent an employer can use information from a background investigation (BI) check in making its hiring decisions. For example, a USA Today article published April 11, 2011, reported that 25 states are considering whether credit checks should be used in the hiring process. Additional laws employers may consider when developing a BI policy and program include the following:

  • OSHA of 1970 General Duty Clause – “Each employer shall furnish to each of its employees a safe place of employment free from recognized hazards that are causing or likely to cause death or serious physical harm to its employees.”
  • Negligent Hiring and Retention Doctrine – Under the theory of negligent hiring, a victim of an employee’s tortious conduct can sue the employer for failing to take reasonable care in hiring or retaining the employee. Negligent retention is the breach of an employer’s duty to be aware of an employee’s unfitness and to take corrective action through coaching, reassignment, or termination. An employer who knew or should have known of his employee’s propensities and criminal record before commission of an intentional tort by an employee may be liable for damages to a customer or co-employee injured by such misconduct. The employer’s knowledge of past acts of impropriety, violence, or disorder on the part of the employee is generally considered sufficient to forewarn the employer who selects or retains such employee in his service that he may eventually commit an assault. However, not every crime or infirmity of character does not necessarily establish that the person has a violent or vicious nature. The employer has a duty to investigate and use reasonable care when doing so. This standard of care can be higher in some industries more so than others, especially for industries that serve, transport or care for the public and for children.
  • Duty to Warn – An employer can be liable if it has information regarding a possible violent act and fails to warn the potential victim. If a company has information leading it to believe violence may happen now or in the future it must take action (see Tepel vs. Equitable Life Society, 1990).
  • Fair Credit Reporting Act (FCRA) – If an employer uses a “consumer report” for the purpose of evaluating a consumer (e.g., potential employee or job applicant) for employment, promotion, reassignment or retention as an employee, the employer must comply with the FCRA. When doing so, an employer must properly disclose such intent to the consumer and receive the consumer’s authorization and consent to procure the consumer report. Employers must meet additional conditions for using consumer reports before taking any adverse actions (e.g., such as revoking a job offer).
  • Consumer Reporting Employment Clarification Act – In November 1998, President Clinton signed into law the Consumer Reporting Employment Clarification Act which amended Section 605 of the FCRA to eliminate any restrictions on the reporting of criminal convictions. Otherwise, Section 605 of the FCRA prohibits consumer reporting agencies from providing adverse information that is more than seven years old (ten years in the case of bankruptcies) for employment purposes where the annual salary is less than $75,000. There are no restrictions upon reporting adverse information for jobs involving salaries of more than $75,000. Sections 604, 606, and 615 of the FCRA further explain employers’ responsibilities when using consumer reports for employment purposes.
  • EEOC Laws – On September 10, 2010, the EEOC Office of Legal Counsel staff members wrote an informal discussion letter in response to an inquiry from a member of the public regarding criminal records. It states:

    “The Equal Employment Opportunity Commission (Commission or EEOC) was created in 1965 to enforce the prohibitions against employment discrimination in the federal civil rights laws. The EEOC enforces Title VII of the Civil Rights Act of 1964 (Title VII), which prohibits employment discrimination by many private employers on the basis of race, color, national origin, religion, or sex. The EEOC looks at criminal records exclusions because they can lead to employment discrimination that violates Title VII. When employers screen out an applicant due to a criminal record, the result typically is that African Americans and Hispanics are disproportionately excluded from employment opportunities.

    If an employer excludes applicants because they have criminal records, and this practice disproportionately excludes African Americans or Hispanics, the employer must show that these exclusions are “job related and consistent with business necessity.” If they do not meet this standard, they are discriminatory and unlawful under Title VII.

    The key is that the employer must consider the nature of the job, the nature and type of offense for which the person was convicted, and how long ago the conviction occurred. A practice of not hiring anyone who was ever convicted of a crime will not meet this standard if it disproportionately excluded African Americans or Hispanics. Ideally, the employer considers each applicant with a conviction individually, but if this is not practical, the employer may apply a carefully-tailored rule to screen applicants who are likely to pose an unacceptable risk in particular positions.”

The letter also provides these links to helpful information regarding the use of arrest and conviction records by employers:

  1. EEOC Compliance Manual, Section 15: Race and Color Discrimination (2006), discussion titled “Conviction and Arrest Records” in Section 15-VI.B.2.
    http://www.eeoc.gov/policy/docs/race-color.html#VIB2conviction
  2. EEOC Policy Guidance No: N-915, “Policy Guidance on the Consideration of Arrest Records in Employment Decisions under Title VII of the Civil Rights Act of 1964,” September 7, 1990.
    http://www.eeoc.gov/policy/docs/arrest_records.html
  3. EEOC Enforcement Guidance No: N-915, “Policy Statement on the Use of Statistics in Charges Involving the Exclusion of Individuals with Conviction Records from Employment,” July 29, 1987.
    http://www.eeoc.gov/policy/docs/convict2.html
  4. EEOC Policy Guidance No: N-915, “Policy Statement on the Issue of Conviction Records Under Title VII of the Civil Rights Act of 1964,” February 4, 1987.
    http://www.eeoc.gov/policy/docs/convict1.html
  5. Individuals who are excluded from employment may file a charge with the EEOC if he or she believes discrimination occurred.

The information provided herein is no way intended as a substitute for the legal advice and counsel of your attorney or other professional. Stay tuned for Part II, which will include a list of tasks that employers may wish to consider when creating and implementing a BI policy and program.

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