Dos and Don’ts in Using Background Checks in Employment Decisions

Background checks are an extremely useful tool for employers in making employment decisions and can often help employers avoid mistakes in the hiring process. In some situations, background checks may even be necessary, such as when a position requires security clearance. When conducting a background check, employers generally seek guidance about a prospective employee's general character and suitability for a particular position. Specific information that may be used in this assessment includes verification of the applicant's social security number and past addresses, criminal record, driving record, credit history, education and past employment, professional licensure, reference checks, bankruptcy records, military service records, and even social media presence. Employers should be aware of certain legal requirements that may be relevant to each of these categories of information.

With the exception of certain restrictions related to medical and genetic information, the law permits employers to require background checks or question applicants about their background. However, any time background information is used to make employment decisions, there are a number of federal and state laws with which employers must comply. Most notably, employers must adhere to federal non-discrimination laws, enforced by the Equal Employment Opportunity Commission ("EEOC"), and the Fair Credit Reporting Act ("FCRA"), enforced by the Federal Trade Commission. Accordingly, employers must be extremely cautious when conducting background checks and making employment decisions based on those checks. The following tips can help employers avoid violations of federal and state laws when conducting background checks.

Before Conducting a Background Check

Employment Decisions Based on Background Information

Non-Discrimination

The FCRA

Social Media

Disposing of Background Information

The EEOC requires employers to keep any and all personnel and employment records for one year after the records were made or kept, or after a personnel action was taken — whichever is later. This includes all applications and other records related to hiring, whether or not the applicant was hired. This requirement is extended to two years for educational institutions, state and local governments, and federal contractors with 150 or more employees and a government contract of at least $150,000.

After expiration of the applicable time period, employers may dispose of any background reports and other information received. However, disposal is not as simple as throwing documents in the trash. The Federal Trade Commission requires that any background reports and information be disposed of securely, which can include burning, pulverizing, or shredding paper documents and disposing of electronic information so that it can't be read or reconstructed.

If you have any questions about your company's background check processes, please contact us.


Spotts Fain publications are provided as an educational service and are not meant to be and should not be construed as legal advice. Readers with particular needs on specific issues should retain the services of competent counsel.

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