3 Good Reasons to Revisit Your Employment Screening Practices

checklistThere are some very compelling reasons to take a fresh look at your employment screening programs as recent developments in the regulatory environment combine to increase the risks associated with improper hiring practices. Here are three significant trends:

1. Increased Enforcement of Criminal Records Screening Practices

The EEOC’s updated guidance on the use of criminal histories in employment background checks is officially in play and the EEOC is taking a strong enforcement posture when it comes to employers’ adherence to fair hiring guidelines. In particular, the EEOC is concerned with the potential adverse impact against African Americans and Hispanics when employers use arrest or conviction records in the hiring process.

Jon Hyman, partner at Cleveland’s Kohrman Jackson & Krantz and author of Ohio Employer’s Law Blog, explained that the EEOC’s updated guidance provides that in order for employers to consider criminal convictions they must perform a targeted screen that considers at least the nature of the crime, the time elapsed, and the nature of the job, and then the employer must provide an opportunity for an individualized assessment to determine if the policy as applied is job related and consistent with business necessity.

In its recently issued strategic plan for fiscal years 2012-2016, the EEOC further underscores its mission by naming the identification, investigation, and litigation of systemic discrimination a top strategic priority. Systemic discrimination cases involve a pattern or practice, policy, or class case where the alleged discrimination has a broad impact on an industry, profession, company or geographic area.

Examples of systemic practices, as provided by the EEOC, include:

  • Discriminatory barriers in recruitment and hiring
  • Discriminatorily restricted access to management trainee programs and to high level jobs
  • Exclusion of qualified women from traditionally male dominated fields of work
  • Disability discrimination such as unlawful pre-employment inquiries
  • Age discrimination in reductions in force and retirement benefits
  • Compliance with customer preferences that result in discriminatory placement or assignments

2. Stronger Enforcement of FCRA Requirements

Two recent high-profile class action cases make clear the need for employers to ensure, among other requirements, that the process used to gain consent from employees and candidates prior to initiating a background check is in line with FCRA rules.

When an employer hires a Consumer Reporting Agency (CRA) to perform background checks or verifications on a prospective or current employee, that employer has certain obligations under the FCRA. These can be summarized as follows:


  • Provide FCRA and EEO Compliance Certification to the CRA — Employers must certify to its CRA/background screening provider that it will comply with FCRA and EEO laws. This straightforward certification is usually included as part of a CRA’s service agreement.
  • Applicant Disclosure and Authorization Requirement — Employers must comply with pre-background check disclosures and authorization. Before ordering a background check the employer must provide a disclosure document that has specific language about the background check and obtain the signature/authorization of the applicant. It must be a standalone document or screen (in the case of an HRIS system).
  • 2-Step Adverse Action Requirements — According to the broad definitions of the Fair Credit Reporting Act, a denial of employment constitutes an adverse action. Any decision that is adverse to the interests of the current or prospective employee would similarly fit the definition. Employers must provide notification to the applicant before and after the adverse action, allowing time after the pre-adverse action for the individual to respond to the findings or explain any inaccuracies. This can be a very low impact activity if you outsource to your CRA, yet it can be a very costly mistake to fail to comply fully.

3. Legislation and Scrutiny of Employment Credit Reports

Finally, as the Consumer Financial Protection Bureau (CFPB) takes over enforcement of laws that protect consumers from discrimination and other unfair treatment in consumer finance, employers are wise to evaluate their policies and practices related to the use of credit reports in hiring.  The CFPB’s stated role is to “prevent harm to consumers from unlawful financial practices and ensure that markets for consumer financial products and services are fair, transparent, and competitive.”

Credit reports have come under fire by legislators, as illustrated by the number of introduced or pending state legislation in the 2012 session related to the use of credit information in employment. As of November 2012, 40 bills in 19 states and the District of Columbia have been introduced or are pending in the 2012 legislative session. Out of the total 41 bills, 40 address restrictions on the use of credit information in employment decisions. The total number of states that limit employers’ use of credit information in employment is now eight.

With these 3 reasons in mind, there’s no time like the present to revisit your employment screening program and ensure that it continues to deliver the benefits of a safer and more productive workforce.  To learn more, we invite you to download our complimentary Employment Screening Survival KitGet your copy now.

Survival Kit for Employers

About MichaelGaul

Michael is a results-oriented marketing executive with over two decades of experience in employment screening, physical security, and business process management. Michael has deep experience in human capital risk management and a passion for educating business leaders and HR professionals on strategies that tangibly protect their interests. Michael serves on the Board of the Secure Cash and Transport Association (SCTA) and is a member of the Professional Background Screening Association (PBSA), and the American Society of Industrial Security (ASIS).
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