The Changing Regulatory & Legal Landscape of Employment Background Checks

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The last two years have brought a significant evolution in the regulatory and legal environment of employment background screening.

As a result, many employers are eager to audit and update their screening programs to help protect themselves from litigation or other legal actions.

To help organizations with this process, it may be helpful to review some of the recent events that have spurred this evolution.

  1. Updated guidance from the U.S. Equal Employment Opportunity Commission (EEOC). Responding to what it considers to be a business practice that could unintentionally discriminate against minorities, the EEOC, in April 2012, issued revised guidance to employers regarding how they should use criminal background checks during the hiring process. Broadly speaking, the revised guidance advises employers to consider the necessity, scope, and applicability of using a criminal record check, and that the results of such a check should be subject to an “individualized assessment” for each applicant.
  2. Increased scrutiny and action from the EEOC. Subsequent to issuing its revised guidance, the EEOC filed two lawsuits against employers, claiming that the organizations’ policies regarding criminal background checks resulted in discrimination against minority applicants and employees. Additionally, the EEOC listed in its four-year Strategic Enforcement Plan that one of its top priorities is “eliminating systemic barriers in recruitment and hiring”, indicating a likely strong focus on enforcing the updated guidance.
  3. Increased class-action lawsuits against employers under the Fair Credit Reporting Act (FCRA). More lawsuits are being filed against employers regarding violations of applicant and employee rights under the FCRA. Some of these accusations include inadequate authorization and disclosure forms and deficient notifications during the adverse action process. Recent settlements in these lawsuits have ranged between $2.5 and $3 million.
  4. Legislative changes at the state and local level. State and local legislative bodies are also taking a closer look at the use of criminal record and credit history information during the hiring process. Some of these bodies have passed legislation placing strict regulations on how employers can use this type of information to make an employment decision.

Given the collective impact of all of these developments, it is no wonder that many employers are undertaking a careful evaluation of their policies and programs related to background screening.

In most cases, such an audit would benefit from working with an expert in employment law to help them navigate these uncertain waters.

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HireRight is a leading provider of on-demand employment background checks, drug and health screening, and electronic Form I-9 and E-Verify solutions that help employers automate, manage and control background screening and related programs.

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