2025 Background Screening Compliance Year In Review
From clean slate laws to AI regulation, 2025 rewrote the rules for hiring, screening, and compliance.
If 2024 introduced uncertainty into background screening compliance, 2025 turned that uncertainty into structure. Lawmakers, regulators, and courts spent the year redefining how employers must evaluate risk across the hiring lifecycle. The result was not a single sweeping reform, but a coordinated shift away from bright-line rules and toward process-driven accountability.
Across criminal history reform, pay transparency, cannabis testing, artificial intelligence, privacy, and immigration compliance, the message was consistent. Employers are expected to show their work. Decisions must be timed correctly, documented carefully, and defensible when challenged. Tools and vendors may support those decisions, but responsibility ultimately rests with the employer.
For organizations that conduct background checks, 2025 was not just about tracking new laws. It was about rethinking how compliance functions inside hiring, screening, and workforce management programs. That recalibration will continue into 2026.
Criminal History Reform: From Access to Accountability
Criminal history reform continued to accelerate in 2025, but the story was less about expanding ban-the-box laws and more about what came after the box disappeared.
Clean slate laws continued to reshape data availability
Clean slate legislation expanded across the country, with states automating the sealing or expungement of eligible records after defined crime-free periods. Minnesota, Colorado, Washington, D.C., Virginia, Hawaii, and Illinois all advanced or implemented versions of these frameworks. Some laws delivered immediate relief. Others faced technical delays that postponed implementation well beyond statutory effective dates.
For employers, the impact was uneven access to criminal history data. Records began disappearing from background checks not because employers changed policy, but because courts and repositories removed data entirely. That trend will continue, and employers should expect further erosion of historical criminal records over time.
Fair chance laws became procedural
While clean slate laws reduced what employers could see, fair chance laws increasingly governed how employers must act once records are disclosed.
Philadelphia’s amended Fair Criminal Record Screening Standards illustrate this shift. Effective January 6, 2026, the city imposes strict lookback limits. Employers may consider felony convictions only if the underlying arrest or release from incarceration, whichever is later, occurred fewer than seven years from the date of inquiry. Misdemeanor convictions older than four years may not be considered, and summary offenses are categorically excluded. The ordinance also formalizes a provisional adverse action step requiring written notice, identification of the records at issue, and a ten-business-day response period for evidence of error or rehabilitation.
Washington State moved in a different direction, but with similar effect. Amendments to the Fair Chance Act require employers to delay criminal history screening until after a conditional offer, conduct individualized assessments for adult convictions, and provide written explanations before rescinding an offer. These obligations extend to current employees, not just applicants, and represent one of the most expansive fair chance frameworks in the country.
Kansas City added another dimension by treating criminal history status as a protected characteristic, at least within its civil rights framework. While the ordinance does not clearly impose individualized assessment requirements on private employers, it reframes criminal history as a potential discrimination issue rather than a screening consideration. That reframing carries practical implications, particularly for employers that rely on categorical exclusions.
Wisconsin and Madison highlighted classification risk
Wisconsin courts clarified that noncriminal citations issued by law enforcement qualify as protected arrest records under the Wisconsin Fair Employment Act. As a result, employers may not take adverse action based solely on municipal or civil citations, even where those citations resemble criminal conduct.
Madison’s local ordinance adds another layer by requiring employers to consider an applicant’s character when evaluating conviction history. Although the ordinance does not define that term, it pushes employers toward documenting rehabilitation, work history, and conduct since the offense. Together, these developments reinforce that in Wisconsin, classification matters as much as conduct.
Minneapolis elevated criminal history into civil rights law
Minneapolis went further by adding justice-impacted status as a protected class. Employers may still conduct background checks, but adverse action based on criminal history must be justified through a multi-factor assessment tied to job relevance. Because the protection operates within a civil rights framework, missteps now carry discrimination risk rather than purely procedural exposure.
The takeaway from 2025 is clear. Criminal history reform is no longer about when employers ask questions. It is about whether employers can demonstrate fair, individualized, and well-documented decision-making once information is disclosed.
Pay Transparency and Salary History Bans: Disclosure Becomes Data
Pay transparency laws reached a tipping point in 2025. What began as a posting obligation evolved into a broader compliance ecosystem that touches hiring, compensation strategy, and data governance.
States such as Illinois, Minnesota, Massachusetts, New Jersey, Vermont, California, and Washington expanded or refined pay range disclosure requirements. Local governments, including Cleveland, Columbus, and New York City, layered additional obligations on top of state frameworks. Remote hiring ensured that these laws applied far beyond state borders, pulling national employers into local compliance regimes even without physical operations.
Several trends defined the year. First, regulators demanded good-faith ranges grounded in real compensation practices. Placeholder ranges increasingly drew scrutiny. Second, enforcement shifted toward documentation. Employers now must show how they set ranges, how they correct errors, and how quickly they respond to notice. Third, pay transparency began converging with pay data reporting.
Delaware joined this trend with a law effective September 2027. While the delayed effective date provides runway, the law’s scope is expansive, covering internal postings, benefits disclosures, and remote roles tied to the state. Employers that wait until implementation approaches may find themselves rebuilding compensation infrastructure under pressure.
Washington illustrated how transparency obligations convert into litigation risk. Courts have made clear that applicants may bring claims even without genuine intent to accept a position. As a result, technical posting defects now carry real exposure, particularly for employers that rely on centralized templates across jurisdictions.
Salary history bans continued to generate quieter but persistent risk. Violations increasingly stemmed from informal recruiter conversations or third-party sourcing practices rather than application language. In practice, compliance failures often arose outside formal systems.
Massachusetts and California expanded demographic pay reporting requirements. New York City advanced proposals that would require large employers to submit detailed pay equity studies. These developments reflect a broader expectation that disclosure alone is not enough. Regulators want data that supports those disclosures and reveals disparities.
For background screening programs, pay transparency matters because job postings sit upstream from screening decisions. Inaccurate postings create downstream risk, particularly when compensation intersects with adverse action decisions or disparate impact claims.
By the end of 2025, pay transparency no longer functioned as a narrow HR obligation. It became a compliance discipline that requires coordination across recruiting, legal, compensation, and compliance teams.
Credit History Checks: Narrower by Design
Credit checks have always played a limited role in employment screening, but New York tightened the reins in 2025. Under Senate Bill 3072, most employers can no longer request or use a candidate’s credit history when making hiring decisions unless the role falls into one of eight limited categories. These include jobs involving fiduciary duties, access to financial assets, law enforcement roles, or those required to undergo credit checks under federal or state law.
Set to take effect in April 2026, the law sends a clear message: if an employer can’t justify a credit check, they shouldn’t be running one.
Cannabis Legalization and Drug Testing: Procedure Replaces Prohibition
Cannabis law continued its slow march toward normalization in 2025, but workplace compliance grew more complex, not less.
Federal rescheduling efforts signaled momentum at the national level, while Congress rewrote hemp definitions to ban products such as delta-8 and THCA flower. States continued to diverge sharply. Some expanded employee protections and restricted testing. Others preserved employer discretion and zero-tolerance policies.
Minnesota illustrated the procedural turn in cannabis compliance. Employers already limited in their ability to test for THC now face additional notice obligations when acting against registered medical cannabis users. Employers must cite specific federal laws or benefits at risk and provide advance written notice before taking adverse action. General safety justifications no longer suffice.
Texas stopped short of a comprehensive medical cannabis program but expanded access while preserving employer authority. Kentucky implemented a medical cannabis program with minimal employment accommodation requirements, reinforcing that legalization does not automatically equate to workplace protection. Iowa modernized its drug testing framework by allowing electronic notices, a seemingly minor change that materially affects compliance execution and documentation.
Across jurisdictions, one theme dominated. Cannabis compliance is no longer about whether employers can test. It is about how employers justify and execute decisions when testing is legally permitted.
Employers that continue to test for THC must align drug testing policies with state-specific procedures, impairment standards, and notice requirements. Those that do not risk violating laws that protect lawful off-duty conduct, medical use, or disability accommodations tied to underlying conditions.
AI, Privacy, and Employment Technology: Accountability Without Uniformity
No compliance category evolved faster in 2025 than AI and employment technology. The year made one reality unmistakable: employers cannot rely on a single national framework to govern AI use in hiring.
Federal efforts to impose a unified approach faltered. Executive actions oscillated between promoting innovation and resisting state regulation. Congressional proposals stalled. In that vacuum, states stepped in.
California finalized regulations clarifying that automated decision systems fall squarely within existing anti-discrimination laws. Employers remain liable for biased outcomes even when vendors design or deploy the tools. Recordkeeping obligations now extend to training data, scoring logic, and outputs. Human oversight is no longer optional in practice, even when not explicitly mandated.
Colorado delayed implementation of its AI Act until June 2026, but preserved its core requirements, including risk assessments and algorithmic discrimination safeguards. Texas passed a more restrained AI governance law that limits liability to intentional discrimination and preempts local regulation.
Other states took narrower but meaningful steps. In December, the New Jersey Division on Civil Rights finalized rules codifying disparate impact liability under the Law Against Discrimination. The rules explicitly cover pre-employment screening, job advertisements, and automated decision tools. Employers must provide empirical evidence when defending a policy that causes a disparate impact. Tools not adequately tested for bias may expose employers to liability.
Illinois, meanwhile, amended its Human Rights Act to prohibit AI tools that result in discriminatory outcomes based on protected characteristics. The law bans the use of zip codes as proxies for race, ethnicity, or national origin and requires employers to notify individuals when AI is used to make decisions in hiring, promotion, or termination.
Privacy enforcement also accelerated. California regulators issued the first major penalties tied to employment-related privacy violations under the CCPA, underscoring that applicant and employee data now sits squarely within privacy enforcement priorities.
For employers, the lesson from 2025 was sobering. AI compliance is not about whether a tool qualifies as artificial intelligence. It is about whether employers understand how tools function, monitor outcomes, retain records, and intervene when results create risk.
I-9, E-Verify, and Immigration: Process Under Pressure
Immigration compliance returned to the foreground in 2025 as enforcement intensified and work authorization became more volatile.
USCIS updated Form I-9 and aligned E-Verify terminology, requiring employers to update systems even while older forms remain valid. Government shutdowns disrupted verification timelines. New E-Verify fields now flag revoked document numbers, increasing reverification obligations.
More significantly, policy shifts affected hundreds of thousands of workers authorized under Temporary Protected Status, humanitarian parole, and related programs. Litigation created uncertainty. Automatic EAD extensions narrowed. Valid documents no longer guaranteed valid authorization.
Employers now face greater risk when relying on static records. Continuous monitoring, internal audits, and careful reverification practices matter more than ever. At the same time, employers must avoid discriminatory assumptions tied to nationality, immigration category, or document type.
ICE enforcement activity increased, raising the stakes for technical errors. Penalties climbed. Audits resumed. Employers learned that immigration compliance is no longer a back-office function. It sits at the center of risk management.
Other Notable Developments
In Spokane, Washington, a first-in-the-nation ordinance prohibits employers from asking about an applicant’s address or housing status until after a conditional offer. The law treats housing status as a potential barrier to employment in the same way criminal history is treated in ban-the-box laws, aiming to prevent discrimination against unhoused individuals or those using shelters or P.O. boxes.
In New Mexico, state lawmakers took an unconventional step by legalizing psilocybin for therapeutic use and prohibiting employer discipline based solely on its legal use outside of work. The law does not require accommodation, but it signals a potential expansion of the rights afforded to off-duty medical cannabis users.
And in Oregon, HB 3187 bans inquiries into age, date of birth, and education dates prior to an interview or conditional offer, aligning with broader efforts to limit early-stage screening questions that can lead to bias. The law takes effect in September 2025 and includes exceptions where age requirements are legally mandated.
What 2025 Taught Employers About Compliance
Across every category, 2025 delivered the same message in different forms. Compliance now lives in execution.
Regulators expect employers to move beyond policy statements and demonstrate how decisions are made, documented, and reviewed. Technology does not shield employers from liability. Vendors do not absorb responsibility. Automation does not eliminate human judgment. In many cases, it increases the need for oversight.
Employers that struggled in 2025 often shared common traits. Siloed teams. Static policies. Inflexible workflows. Overreliance on tools without understanding their limits.
Those that adapted treated compliance as an operational discipline. They trained recruiters and hiring managers. They aligned screening workflows with legal timing requirements. They audited postings, assessments, and tools before regulators forced the issue.
Looking Ahead to 2026
The developments of 2025 will not slow down in 2026. Clean slate laws will expand. Pay transparency enforcement will mature. Cannabis testing rules will tighten procedurally. AI oversight will deepen. Immigration compliance will remain volatile.
The employers best positioned for what comes next will not be those chasing headlines. They will be the ones investing in documentation, cross-functional collaboration, and defensible decision-making.
In today’s compliance environment, getting the answer right matters. Showing how you reached it matters more.
Release Date: January 28, 2026
Alonzo Martinez
Alonzo Martinez is Associate General Counsel at HireRight, where he supports the company’s compliance, legal research, and thought leadership initiatives in the background screening industry. As a senior contributor at Forbes, Alonzo writes on employment legislation, criminal history reform, pay equity, AI discrimination laws, and the impact of legalized cannabis on employers. Recognized as an industry influencer, he shares insights through his weekly video updates, media appearances, podcasts, and HireRight's compliance webinar series. Alonzo's commitment to advancing industry knowledge ensures HireRight remains at the forefront of creating actionable compliance content.