With the recent proliferation in gun violence and the national debate surrounding it, employers are growing even more cognizant of the potentially severe ramifications of hiring or retaining an employee with a questionable background. When undesirable employees slip through the cracks of the pre-employment vetting process, they can saddle a company with enormous liability and pose a risk to customers and the workplace. Employers can use background checks on job applicants and current employees to prevent potential problems. However, most background checks are highly regulated by federal and state law, which dictate:

• What types of information may be obtained on a job applicant
• The proper procedures for requesting and using background check information
• Whether and when it may be appropriate to conduct re-screens on current employees

Establishing and maintaining well-written and strictly enforced employment policies governing background checks, in conjunction with informing job applicants and employees of any such investigations, are crucial to ensure legal compliance and provide adequate security for the workplace. The rest of this article outlines some key considerations for employees who conduct background checks:

Employment background checks: The basics

Employers typically conduct employment background checks through an outside company, known as a consumer reporting agency (CRA). CRAs assemble data such as credit history, payment patterns, civil liens and judgments, and criminal activity into consumer reports. Employers may then use this information to determine if a candidate is suitable for a particular position. These transactions are regulated by the Fair Credit Reporting Act (FCRA), a federal law that addresses the collection, distribution and use of consumer information by CRAs in order to enhance consumer privacy and ensure accurate information. Employers that run background checks internally (without the use of CRAs) are not subject to FCRA.

Under the FCRA, before an employer procures a consumer report, the employer must:

1. Obtain written consent from the applicant or employee
2. Provide a “clear and conspicuous” written disclosure to the applicant or employee about the report.

If the investigation turns up information used in making an adverse employment decision, the law requires additional disclosures to the affected applicant or employee, including a copy of the consumer report, notice of the individual's FCRA rights and the contact information of the investigating CRA.

The type of information that can be collected and the extent to which it may be used may also be subject to state law. For instance, in Illinois, the Illinois Credit Privacy Act (ICPA) prevents an employer from obtaining or making employment decision on credit history, unless the employer meets one of several exceptions. Similarly, in Illinois and many other states, employers cannot use information regarding arrests or sealed or expunged convictions for employment purposes under these states' civil rights statutes. Please also note that background check information used by an employer to evaluate an applicant or employee should be job-related to the position in question and consistent with business necessity in order to avoid potential disparate impact liability under federal and state anti-discrimination laws.

Background checks on current employees

Employers may choose to periodically re-screen their current employees in order to identify any individuals who may pose a threat in the workplace. After all, a background check conducted when an employee is hired is merely a snapshot of a particular point in time. When conducting post-hire employee investigations, however, employers must be aware of several important considerations.

Because the FCRA applies to CRA-run background checks of both prospective and current employees, the authorization and disclosure requirements must be met each time a consumer report is requested. This may be avoided by securing a blanket release/disclosure from employees covering both background checks at the time of hire and at any time during employment. However, employers must make certain that any such general release is broad enough to put the employee on adequate notice of the nature of any future investigations the employer plans to perform.

In cases where an employer uses an outside investigator to investigate suspected misconduct relating to employment, or compliance with laws and regulations or any existing written policies of the employer, the FCRA does not require the employer to provide notice or obtain authorization from the employee. However, this exemption does not allow employers to conduct routine, post-hire background checks for previously undetected criminal activity unrelated to suspected workplace misconduct.

Finally, employers may opt to conduct post-hire background checks entirely in-house to avoid the restrictions of the FCRA, but doing so requires employers to take appropriate precautions to ensure that FCRA-mandated procedures are not inadvertently invoked through methods and/or resources that may fall within the purview of the statute.

With the recent proliferation in gun violence and the national debate surrounding it, employers are growing even more cognizant of the potentially severe ramifications of hiring or retaining an employee with a questionable background. When undesirable employees slip through the cracks of the pre-employment vetting process, they can saddle a company with enormous liability and pose a risk to customers and the workplace. Employers can use background checks on job applicants and current employees to prevent potential problems. However, most background checks are highly regulated by federal and state law, which dictate:

• What types of information may be obtained on a job applicant
• The proper procedures for requesting and using background check information
• Whether and when it may be appropriate to conduct re-screens on current employees

Establishing and maintaining well-written and strictly enforced employment policies governing background checks, in conjunction with informing job applicants and employees of any such investigations, are crucial to ensure legal compliance and provide adequate security for the workplace. The rest of this article outlines some key considerations for employees who conduct background checks:

Employment background checks: The basics

Employers typically conduct employment background checks through an outside company, known as a consumer reporting agency (CRA). CRAs assemble data such as credit history, payment patterns, civil liens and judgments, and criminal activity into consumer reports. Employers may then use this information to determine if a candidate is suitable for a particular position. These transactions are regulated by the Fair Credit Reporting Act (FCRA), a federal law that addresses the collection, distribution and use of consumer information by CRAs in order to enhance consumer privacy and ensure accurate information. Employers that run background checks internally (without the use of CRAs) are not subject to FCRA.

Under the FCRA, before an employer procures a consumer report, the employer must:

1. Obtain written consent from the applicant or employee
2. Provide a “clear and conspicuous” written disclosure to the applicant or employee about the report.

If the investigation turns up information used in making an adverse employment decision, the law requires additional disclosures to the affected applicant or employee, including a copy of the consumer report, notice of the individual's FCRA rights and the contact information of the investigating CRA.

The type of information that can be collected and the extent to which it may be used may also be subject to state law. For instance, in Illinois, the Illinois Credit Privacy Act (ICPA) prevents an employer from obtaining or making employment decision on credit history, unless the employer meets one of several exceptions. Similarly, in Illinois and many other states, employers cannot use information regarding arrests or sealed or expunged convictions for employment purposes under these states' civil rights statutes. Please also note that background check information used by an employer to evaluate an applicant or employee should be job-related to the position in question and consistent with business necessity in order to avoid potential disparate impact liability under federal and state anti-discrimination laws.

Background checks on current employees

Employers may choose to periodically re-screen their current employees in order to identify any individuals who may pose a threat in the workplace. After all, a background check conducted when an employee is hired is merely a snapshot of a particular point in time. When conducting post-hire employee investigations, however, employers must be aware of several important considerations.

Because the FCRA applies to CRA-run background checks of both prospective and current employees, the authorization and disclosure requirements must be met each time a consumer report is requested. This may be avoided by securing a blanket release/disclosure from employees covering both background checks at the time of hire and at any time during employment. However, employers must make certain that any such general release is broad enough to put the employee on adequate notice of the nature of any future investigations the employer plans to perform.

In cases where an employer uses an outside investigator to investigate suspected misconduct relating to employment, or compliance with laws and regulations or any existing written policies of the employer, the FCRA does not require the employer to provide notice or obtain authorization from the employee. However, this exemption does not allow employers to conduct routine, post-hire background checks for previously undetected criminal activity unrelated to suspected workplace misconduct.

Finally, employers may opt to conduct post-hire background checks entirely in-house to avoid the restrictions of the FCRA, but doing so requires employers to take appropriate precautions to ensure that FCRA-mandated procedures are not inadvertently invoked through methods and/or resources that may fall within the purview of the statute.