EEOC and FTC Publish Guides on Using Employment Background Checks

EEOC-FTC-GuidesSome time ago, the Equal Employment Opportunity Commission (EEOC) and Federal Trade Commission (FTC) announced the publication of “joint tips” on using background checks in hiring. One of the two co-published guides is for employers, titled Background Checks: What Employers Need to Know. The other is for job applicants and employees: Background Checks: What Job Applicants and Employees Should Know.

Theoretically, a consolidated guideline should help. The EEOC enforces Federal anti-discrimination laws as they affect the use of background checks, and the FTC enforces the Fair Credit Reporting Act requirements on the use of third party background checks from providers like us. On their face, these “joint tips” seem like a good idea.

While it is useful to have a policy summary that combines both EEOC and FTC restrictions on the use of employment background checks, it is a challenge to be both brief and comprehensive. As an overview, these guides provide a reminder to HR staff or a training guide for new hires. However, you’ll quickly find that these guides will need to be supplemented with a lot of other information to design a background check policy that meets acceptable standards.

The Employer Guide: Between Theory and Practice

Unfortunately, the employer guide does not change the fact that employers have to walk a narrow line between using background information for adverse actions and discrimination.

If you err on the side of avoiding discrimination and refrain from taking adverse action against someone who later implodes on the job, you can potentially be sued for negligent hiring. If you err on the side of caution in rejecting potentially risky hires using blanket standards, you will quite likely be sued for discrimination.

This double bind is why the employers’ guide seems to be saying two different things at the same time. It says you should apply the same standards to everyone. Except, you must not apply the same standards if it discriminates, including discrimination defined as “disparate impact”.

In other words, you have a right to do a background check and use that information to exclude an individual, but you will need to do an individualized assessment to be on firm ground (and these guides do NOT refer to individualized assessments – you would have to know about that from other sources).

The summary of the two-step adverse action process mandated by the FTC is more straightforward. The guide also goes beyond the criminal background check policy to emphasize that medical records and genetic information are highly restricted. The EEOC policy also emphasizes that people with disabilities should be given special consideration before being excluded, “unless doing so would cause significant financial or operational difficulty.”

The Employee Guide: Notes on a Wall

The employee guide has important information for employees, like how to get a free credit report in order to work on fixing mistakes (or adopting a better budget). Most of the substantive content is a repetition of what’s in the employers’ guide, with a change in perspective. There are a lot of phone numbers, links, and suggestions for where to get help. An employee needs to read and understand the document to become better informed about how the hiring process is supposed to work.

Federal law requires employers to post labor law compliance posters in plain sight. While current employees have access to this important information, they might easily overlook it if it is hung haphazardly, like wallpaper, in the break room. Unfortunately, there is no practical suggestion for how to disseminate this information to potential job applicants.

This is where the employee guide comes in. This guide is intended to educate job applicants about their rights, and to let them know that employers can ask them about their background as long as they don’t use the information to discriminate. Otherwise, employees’ legal representatives may have to interpret the laws for them after a problem has occurred.

Need help designing your background check policy? Request a consultation with one of our experts.

elements of a comprehensive background check

About Michael Gaul

A security industry professional since 1988, Michael has extensive expertise in the fields of human capital risk management, physical security, and background screening process management. Michael leads Proforma’s sales, marketing, and strategic customer relations efforts.


View all posts by Michael Gaul →