Employment Law Reporter – April 2014

(Please download PDF for full issue.)


In a joint publication of the Equal Employment Opportunity Commission and the Federal Trade Commission, these federal agencies have issued a Guidance to Employers in which they discussed the common practice of using background checks to select employees. It should be noted that the Guidance does not make reference to state background check laws which may augment federal requirements.

Before Obtaining the Background Check:

Employers who use a professional company to obtain employee or applicant background information must observe the Fair Credit Reporting Act (FCRA) as part of the process by: (1) telling the applicant or employee in a “stand-alone” writing that the employer might use the information for decisions about his or her employment; (2) separately telling the applicant if the employer is also asking a company to provide an “investigative report” that is based on personal interviews concerning a person’s character, general reputation, personal characteristics, and lifestyle; (3) obtaining the applicant’s written permission to do the background check; and (4) certifying to the company from which the employer is getting the report that the employer complied with all of the FCRA requirements and will not discriminate against the applicant or employee, or otherwise misuse the information in violation of federal or state equal opportunity laws or regulations.

In addition to complying with the technical requirements of the FCRA, employers must make sure that they are treating all applicants equally. It is illegal to check the background of applicants and employees when that decision is based on a person’s race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older). For example, asking only people of a certain race about their financial histories or criminal records is evidence of discrimination. Similarly, asking medical questions before a real conditional job offer has been made is also prohibited and likely to demonstrate evidence of discrimination. If the employee has already started the job, says the EEOC, employers may not ask medical questions unless there is objective evidence that the employee is unable to do the job or poses a safety risk because of a medical condition.

After Obtaining Information from the Background Check:

Just as the act of obtaining background information cannot be used to discriminate, the act of invoking background information to deny an applicant a job also cannot be applied in a discriminatory way. This means, for example, that employers should apply the same standards to everyone, regardless of their race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older). According to the EEOC, this also means that employers need to take special care when basing employment decisions on background problems that may be more common among people of a certain race, color, national origin, sex, or religion; among people who have a disability; or among people age 40 or older. For example, employers should not use a policy or practice that excludes people with certain criminal records if the policy or practice significantly disadvantages individuals of a particular race, national origin, or another protected characteristic, and does not accurately predict who will be a responsible, reliable, or safe employee. In legal terms, the policy or practice has a “disparate impact” and is not “job related and consistent with business necessity.” In addition, the EEOC advises that employers must be prepared to make exceptions for problems revealed during a background check that were caused by a disability. For example, the agency says, if an employer is inclined not to hire a person because of a problem caused by a disability, the employer should allow the person to demonstrate his or her ability to do the job – despite the negative background information – unless doing so would cause significant financial or operational difficulty.

If an employer has a legitimate basis to take an adverse action against an employee or applicant based on information obtained through a commercial background search service, the employer is required by the FCRA to first give the applicant or employee a notice that includes a copy of the consumer report relied on to make the employment decision and a copy of the official “A Summary of Your Rights Under the Fair Credit Reporting Act”. The employer must also provide the applicant or employee (orally, in writing, or electronically) the following information: (1) that he or she was rejected because of information in the report; (2) the name, address, and phone number of the company that sold the report; (3) that the company selling the report didn’t make the hiring decision, and can’t give specific reasons for it; and (4) that he or she has a right to dispute the accuracy or completeness of the report, and to get an additional free report from the reporting company within 60 days.

Disposing of Background Information:

The EEOC requires that non-educational institutions must preserve any personnel or employment records (including all application forms, regardless of whether the applicant was hired, and other records related to hiring) for one year after the records were made, or after a personnel action was taken, whichever comes later. Once the employer has satisfied all applicable recordkeeping requirements, it may dispose of any background reports, but they must do so in a secure way. That, says the FTC, can include burning, pulverizing, or shredding paper documents and disposing of electronic information so that it can’t be read or reconstructed. For more information, see “Disposing of Consumer Report Information? Rule Tells How” at http://www.business.ftc.gov/documents/alt152-disposing-consumer-report-information-rule-tells-how.


This publication is published by the law firm of Ervin Cohen & Jessup LLP. The publication is intended to present an overview of current legal trends; no article should be construed as representing advice on specific, individual legal matters, but rather as general commentary on the subject discussed. Your questions and comments are always welcome. Articles may be reprinted with permission. Copyright ©2014. All rights reserved. ECJ is a registered service mark of Ervin Cohen & Jessup LLP. For information concerning this or other publications of the firm, or to advise us of an address change, please send your request to bfranzman@9d1.8d8.mwp.accessdomain.com9d1.8d8.mwp.accessdomain.comecj.glyphix.comecjlocal.dev or visit the firm’s website at www.ecjlaw.com.



Did you know…

That That minimum wage in California goes up to $9.00 per hour effective July 1, 2014? This means hourly wage workers will get an increase as well as salaried exempt employees who are receiving twice the minimum wage in order to maintain their Wage Order exemption.

Well, now you know!



Upcoming 2014 Seminars at ECJ

Thursday, April 24, 2014

8:30 a.m. – 9:30 a.m. Hiring Mistakes You’re Making and How to Stop Them by Karina B. Sterman, Esq.

10:00 a.m. – 12:00 p.m. Sexual Harassment Prevention Training by Kelly O. Scott, Esq.

Please note: Accountants requesting CPE credit must attend in person at ECJ to receive credit.

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