Employment Background Checks

Dustin Paschal here with Simon Paschal for another video tip of the week. Today we’re going to talk about background checks, something that I would assume almost every employer out there does during the application onboarding process. It’s kind of the last step before they decide whether or not they want to hire an employee. So background checks are governed by the Fair Credit Reporting Act and there are some guidelines within the act itself. It gets pretty detailed. We want to try to pare it down to some simplistic thoughts here for employers moving forward. And so when you get to that point where you want to do a background check on an employee and we’re talking anything from criminal to credit history, banking issues, any of that kind of stuff, you’re going to be governed by the Fair Credit Reporting Act.

And so the first thing you have to do is have the applicant fill out or complete a consent to conduct a background check. So you need to get with your lawyer and get a proper consent drafted. I think the FCRA has some suggestions out there on language, but get a consent drafted to conduct the background check. Once you conduct the background check, assuming everything comes out, all right, you’re all good. You hire the employer, you move on.

If something’s negative in the report, the law requires you to give to the employee what’s called a pre-adverse letter, which is basically just telling the employee something negative came back in your background check and here it is and you can’t take any action. You can’t refuse to hire the employee or anything like that prior to giving the employee or the applicant the pre-adverse letter and letting them address the situation. You have to give them the contact information of the credit reporting agency that reported the negative information and you have to give them a copy of the report from the credit reporting agency so that the employee or applicant can take steps to fix it if it’s incorrect or in error.

So once you give them that, you let the applicant do their thing, assuming it’s still there and it’s accurate negative information, then you can take your adverse employment action and then you give your actual adverse letter to the applicant or employee. And that kind of completes the whole circle, the whole process of a background check.

So the things to keep in mind, make sure you have a background check consent and release that the employee or applicant signs. And I would suggest to do a separate one rather than just a small section on the job application because some states don’t necessarily allow that, but have that consent and release. Then once the background check is conducted, if there is negative information, give that pre-adverse letter, the contact information and a copy of the report and then assuming the negative information remained, give the adverse letter and take your adverse employment action and you’re all good. So those are the things to keep in mind with a background check for employers. Thanks!


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