It’s perfectly legal to base a hiring decision on the results of a background check, says employment law attorney Mark Jeffries (mark.jeffries@steptoe-johnson.com) of the firm Steptoe & Johnson PLLC.

But if you decide not to hire an otherwise qualified applicant based on the results of a background check, there is more involved than simply informing the applicant, “Thanks, but we’re not interested.”

First of all, basing a hiring decision on the results of a background check opens the possibility of:

• a disparate treatment claim (if the individual can prove that others outside of a protected category were hired, despite similar violations showing up in their background checks), or
• a disparate impact claim (if a member of a protected category can prove that the use of background checks adversely affects members of the protected category more than others).

A best practice is having a written policy outlining what sorts of flags raised in a background investigation will be disqualifying and under what conditions. For example:

• Will your company only consider felony convictions to be disqualifying? Or are there some misdemeanor convictions that will act as a bar to employment?
• How far back in the applicant’s past will you look? Is a felony conviction from 20 years ago, with no intervening trouble, enough to prevent you from hiring an applicant?

In the EEOC’s view, Title VII requires that a hiring policy that excludes applicants with criminal convictions be job-related and consistent with business necessity. As such, a background check hiring policy should accurately distinguish between applicants who pose an unacceptable level of risk to an employer and those who do not. For example: It might be reasonable for a policy to exclude applicants who have drunk driving convictions – if the job requires driving a company vehicle. However, if no driving would be required for the job, then that policy might not be found reasonable by the EEOC if it were challenged.

Plus, companies also have obligations under the Fair Credit Reporting Act that must be undertaken before informing the applicant of the adverse decision and afterward if the background check was done by a company that is in the business of conducting background checks:

• Before taking an adverse action, such as not hiring an otherwise qualified applicant, you must give the applicant a copy of the report you relied upon to make the decision and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act.”
• After taking the adverse action, you must inform the applicant orally, electronically, or in writing (and it is always best to memorialize such decisions in writing), that he or she was rejected because of information contained in the report; the name, address, and telephone number of the company that provided the report; that the company providing the report did not make the hiring decision and cannot give specific reasons for the decision; and that the applicant has the right to dispute the accuracy or completeness of the report and to get an additional free report from the reporting company within 60 days. Your legal counsel can assist you in drafting both the pre- and post-adverse action notifications.

Finally, there are recordkeeping requirements under the EEOC and the DOL. After recordkeeping requirements are met, companies also have secure record disposal requirements under the FTC.

Yes, but you must have a reason why the “unfavorable result” actually pertains to the denial of the specific position since an offer has been made, says HR Manager Chad Miranda.

HR should also provide an opportunity for the potential candidate to respond. I would be very clear in my reasoning for rescinding an offer in writing to the candidate and also carefully allow an opportunity for that candidate to respond to begin a bit of an interactive process.

It depends on a number of factors, explains HR Manager Ellen Huelmann, which are including but not limited to:

• the position the applicant is being considered for
• the specifics of the background check results, and
• state, municipality and federal regulations.

For example, if you work in healthcare, some misdemeanors can rule applicants out. In positions where driving is required, even some traffic violations can rule applicants out. Definitely do your research specific to your industry and location. Ideally, consult with legal counsel.

You would want to initiate the adverse action process and notify the candidate that you have made the decision based on the results of the check you performed, according to Nicole Cerfontain Rosas, a Vice President of People Operations in Arizona.

Be sure to follow the established guidance under FCRA, provide the candidate with a copy of the results you used to come to your decision and allow them sufficient time to contest the results in the instance they believe the information to be incorrect.

Document every step in the process, and keep records of all communication.