Background checks and the firms that conduct them are regulated by federal laws and state laws.

 

Federal Laws

The Fair Credit Reporting Act (the “FCRA”). The FCRA is a federal law that applies, whenever an employer requests a background check from a background screening company. A credit report does not have to be a component of the background check in order for the FCRA to apply. Under the FCRA, background checks are called “Consumer Reports” and background-screening firms are referred to as “Consumer Reporting Agencies.” The complete text of FCRA is available by clicking here.

The two primary responsibilities required of employers under the FCRA are:

  1. Obtaining a signed consent form from the employment applicant, and providing the employment applicant with a written disclosure that a background check may be requested. The forms that must be signed include the Authorization for Release of Information Form and the Disclosure Form. To view these forms, click here.
  2. If the background check (Consumer Report) includes derogatory information that causes the employer not to hire an applicant, the following steps must be taken:

The applicant must be given a copy of the background check (Consumer Report) along with a “Pre-Adverse Action Notice,” and a copy of the “Summary of Rights Under the FCRA.” You can download both those forms by clicking here.

If after a reasonable period of time the employer makes a final decision not to hire the applicant, the employer should send the applicant an “Adverse Action Letter” and another copy of the “Summary of Rights Under the FCRA.” You can download both those forms by clicking here.

The applicant has the right to dispute the accuracy of the information included in the background check. If so, the background screening company has a duty to reinvestigate within 30 days. Contact information for the screening agency that completed your applicant’s background checks is included in the Adverse Action Letter, and the candidate should contact them directly.

The Notice to Users of Consumer Reports: Obligations of Users Under the FCRA defines the responsibilities of employers under the FCRA in much greater detail. Notice to Users of Consumer Reports is available by clicking here.

In addition to the FCRA, there are numerous federal statutes concerning employment and pre-employment.

ADA – Americans with Disabilities Act http://www.ada.gov/pubs/adastatute08.pdf

DPPA – Drivers Privacy Protection Act http://www.accessreports.com/statutes/DPPA1.htm

Equal Pay Act of 1963.www.eeoc.gov/policy/epa.html.

ADEA — Age Discrimination in Employment Act of www.eeoc.gov/policy/adea.html.

Title VII of the Civil Rights Act of 1964 (Title VII) www.eeoc.gov/laws/statutes/titlevii.cfm  In addition, in April 2012 the EEOC issued a document calledEnforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964.  http://www.eeoc.gov/laws/guidance/arrest_conviction.cfm

 

State Laws

There are also numerous state laws that apply to conducting background checks on employees and employment applicants. These state laws may impose greater restrictions than the FCRA. The California Investigative Reporting Agencies Act is the most restrictive state law pertaining to background checks in the U.S., and it places limitations on both the types of records that can be included in a background check, as well as how far back the records can be checked. The following is a summary of some of the state laws that affect pre-employment background checks.

State Restrictions on Consumer Reporting Agencies

California (Enacted October 1, 2002)

CA Civil Code (Investigative Consumer Reporting Agencies Act) – 1786 et seq.
Under the federal Fair Credit Reporting Act (FCRA), most of the background screening reports we provide are considered “consumer” reports, while under the California Investigative Consumer Reporting  Agencies Act (ICRA), Cal. Civil Code §1786 et seq., they are classified as investigative consumer reports. It should be noted these requirements are placed only on California employers who hire California residents to work in the state of California.

1786.16(2) – Disclosure
If an investigative consumer report is sought for employment purposes other than suspicion of wrongdoing or misconduct by the subject of the investigative consumer report, disclosure must be made in advance of ordering the report and should state that an Investigative Consumer Report may be ordered, identifying the permissible purpose for the report. The disclosure must indicate the Investigative Consumer Report may include information on the consumer’s character, general reputation, personal characteristics, and mode of living and define the nature and scope of the investigation requested. The name, address, and telephone number of the investigative consumer reporting agency conducting the investigation must be included. The consumer must authorize in writing the procurement of the report on the disclosure form.

1786.16 (5) (b) (1) – Copy of Report
Provide the consumer a means by which the consumer may indicate on a written form, by means of a box to check, that the consumer wishes to receive a copy of any report that is prepared. If the consumer wishes to receive a copy of the report, the recipient of the report shall send a copy of the report to the consumer within three business days of the date that the report is provided to the recipient, who may contract with any other entity to send a copy to the consumer. The notice to request the report may be contained on either the disclosure form, or a separate consent form. The copy of the report shall contain the name, address, and telephone number of the person who issued the report and how to contact them.

1786.18.7 – Conviction Records
A consumer credit reporting agency shall not report records of arrest, indictment, information,misdemeanor complaint, or conviction of a crime that, from the date of disposition, release, or parole,antedates the report by seven years. These items of information shall no longer be reported if it is learned in the case of a conviction that a full pardon has been granted or in the case of an arrest,indictment, information, or misdemeanor complaint a conviction did not result. However, this provision is exempt if the investigative consumer report is to be used in the underwriting of life insurance involving, or that may reasonably be expected to involve, an amount of two hundred fifty thousand dollars ($250,000) or more OR if the investigative consumer report is to be used by an employer who is explicitly required by a governmental regulatory agency to check for records that are prohibited when the employer is reviewing a consumer’s qualification for employment.

1786.29– Cover Sheet to Report
A 12 pt. bold statement on the first page of each investigative consumer report must indicate that the report does not guarantee the accuracy or truthfulness of the information as to the subject of the report but that it is accurately copied from public records, and information generated as a result of identity theft,including evidence of criminal activity, may be inaccurately associated with the subject of the report. The name, address and telephone number of the CRA must be on the report.

1786.53 – Reports Compiled by Employer
The same obligation for an employer to furnish a copy of the investigative consumer report exists even when you compile background information without using the services of an investigative consumer reporting agency.

Colorado (Enacted January 1, 1996)

CRS 12-14.3-105.3
No CRA may report records of arrest, indictment, or conviction of crime, which from date of disposition,release, or parole, antedate the report by more than seven years.Exception: If salary will be equal to $75,000 or more, the 7-year restriction does not apply.

Indiana
Only convictions may be reported.  No reporting of infractions or expunged records.

Kansas (Enacted January 1, 1974)

KS 50-704
No CRA may report records of arrest, indictment, or conviction of crime, which from date of disposition,release, or parole, antedate the report by more than seven years.Exception: If salary will be equal to $20,000 or more, the 7-year restriction does not apply.

Kentucky (Enacted July 15, 1980)

KRS 367.310
No consumer reporting agency shall maintain any information in its files relating to any charge in acriminal case, in any court of this Commonwealth, unless the charge has resulted in a conviction.

Maryland (Enacted 1976)

Code of MD 14-1203
No CRA may report records of arrest, indictment, or conviction of crime, which from date of disposition,release, or parole, antedate the report by more than seven years.Exception: If salary will be equal to $20,000 or more, the 7-year restriction does not apply.

Code MD 19-1907
Information contained in pre-employment background verifications for adult dependent care providers may not be used for any purpose other than that for which it was disseminated; or be redisseminated.

Massachusetts (Enacted 1974)

MGL/93-52
No CRA may report records of arrest, indictment, or conviction of crime, which from date of disposition,release, or parole, antedate the report by more than seven years.Exception: If salary will be equal to $20,000 or more, the 7-year restriction does not apply.

Minnesota (Enacted 1993)

M.S. §13C.02
Employers must provide a check box on the FCRA disclosure that the applicant may return to the employer to receive a copy of the consumer report. The employer is responsible for notifying the consumer reporting agency of the consumer’s request and the report must be sent to the consumer by the CRA within 24 hours of providing it to the employer. The report must be accompanied by the statement of the consumer’s right to dispute and correct any errors.

Montana (Enacted 1975)

MCA 31-3-112
No CRA may report records of arrest, indictment, or conviction of crime, which from date of disposition,release, or parole, antedate the report by more than seven years. No exception for employment purposes.

Nevada (Enacted 1993)

NRS 598C.150
Reporting agencies are to purge from their files, reports of criminal proceedings which precede the report by more than 7 years.Note: Definition of “consumer report” is specific to credit reports although definition of “reporting agency”is not limited to credit.

New Hampshire (Enacted August 29, 1971)

HRS 359-B: 5
No CRA may report records of arrest, indictment, or conviction of crime, which from date of disposition,release, or parole, antedate the report by more than seven years.Exception: If salary will be equal to $20,000 or more, the 7-year restriction does not apply.

New Mexico (Enacted 1969)

NM Statute 56-3-6
“Credit bureaus” cannot report arrests and indictments pending trial, or convictions of crimes, after seven years from date of release or parole. Such items cannot be reported if at any time it is learned that after a conviction a full pardon has been granted or after an arrest or indictment a conviction did not result.Note: “Credit bureau” is defined as “Any business engaged in furnishing credit information about consumers”.

New York (Enacted 1977)

FCRA, Article 25 Section 380-j
Prohibited Information (a) No consumer reporting agency shall report or maintain in the file on a consumer, information relative to an arrest or a criminal charge unless there has been a criminal conviction for such offense, or unless such charges are still pending.(b) A CRA can report information about a detention of an individual by a retail establishment if the individual has admitted wrongdoing, has received notice that the information will be reported to a CRA and may be further reported to a retail establishment for employment purposes.(f) No CRA may make any consumer report containing records of convictions which, from date of disposition, release, or parole, antedate the report by more than seven years. Exception: If salary is reasonably expected to be $25K or more, the 7-year restriction does not apply.

Oklahoma (Enacted November 1, 2000)

24 O.S. § 147
Prior to requesting a consumer report for employment purposes, the requestor or user of the consumer report shall provide written notice to the person who is the subject of the consumer report that a consumer report will be used and the notice shall contain a box that the consumer may check to receive a copy of the consumer report. If the consumer requests a copy of the report, the user of the consumer report shall request that a copy be provided to the consumer when the user of the consumer report requests its copy from the credit reporting agency. The report sent to the consumer shall be provided at no charge to the consumer.

Texas (Enacted October 1, 1997 – Not applicable)

Business & Commerce Code, Chapter 20, §20.05
No CRA may report “records of arrest, indictment, or conviction of crime, which from date of disposition,release, or parole, antedate the report by more than seven years. Exception: If salary will be equal to$75,000 or more, the 7-year restriction does not apply.

Washington (Enacted 1993)

RCW 19.182.040
No CRA may report “records of arrest, indictment, or conviction of a crime, which from the date of disposition, release, or parole, antedate the report by more than seven years.Exception: If salary will be equal to $20,000 or more, the 7-year restriction does not apply.

 

Disclaimer

This information should not be relied upon as legal advice, nor should the information be regarded as complete.