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Candidate Background Screening Regulations

Posted by Jeff Pelliccio on May 8, 2017 9:00:00 AM

In ICS insights

Most employers understand the importance of making employment offers contingent on satisfactory background checks, and know that conducting thorough and complete background checks on new hires is important. After all, doing so can help identify potential issues before an employee is already onboarded, at which point it can be tricky (and often costly) to terminate employment.

The employment screening process is one that is continuing to evolve. Several states have enacted legislation limiting the types of background checks companies can run and limiting the way companies use that information in employment decisions. Some of the biggest trends include "ban-the-box" and "fair chance" laws, as well as state limitations on the use of credit history.

Ban the Box and Fair Chance Laws

In states, counties or cities where ban-the-box laws have been enacted, hiring managers cannot ask candidates about possible criminal history until after either an initial interview or until a contingent/provisional job offer has already been extended. According to the National Employment Law Project, as of April 1, 2017, 26 states and more than 150 cities and counties across the country had already enacted ban-the-box legislation.

In nine states (Connecticut, Hawaii, Illinois, Massachusetts, Minnesota, New Jersey, Oregon, Rhode Island and Vermont), private employers can no longer include questions on job applications asking whether candidates were previously convicted of criminal offenses. 

Fair chance laws go even further and are designed to make hiring decisions more fair by requiring employers to look at any criminal history through the lens of how (or whether) it applies to the job the employee is seeking. That evaluation should consider things like how much time has passed since the criminal conviction took place, and whether there were any mitigating circumstances. 

For example, an employer hiring to fill open accounting positions would likely need to evaluate a candidate's previous conviction for a white collar crime more seriously than a previous DUI conviction. 

The idea behind ban-the-box and fair chance laws is that employees won't face unfair stigma early on in the hiring process. 

Fair chance laws go even further and are designed to make hiring decisions more fair by requiring employers to look at any criminal history through the lens of how (or whether) it applies to the job the employee is seeking. That evaluation should consider things like how much time has passed since the criminal conviction took place, and whether there were any mitigating circumstances. 

State Limitations on the Usage of Credit History

Using an employee's credit history as part of the employment decision has long been a practice for many employers. However, because of a concern that using credit history in employment screening may unfairly disadvantage some prospective employees, more and more states are enacting legislation that limits how and when employers can use that information. 

Employers in California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington face various limitations. In some cases, only financial institutions are allowed to require credit reports and use that information as part of employment decisions. Even then, the credit information may only be used to deny employment if it is substantially related to the job the employee is applying for.  

Each state's law is a little bit different, with some defining exceptions more narrowly than others. 

FCRA Laws

Even if you are hiring in a state that does not currently include ban-the-box or fair chance laws, or one that limits how credit information may be used, it is important to remember that employers nationwide are still subject to the provisions of the Fair Credit Reporting Act (FCRA).

In part, the FCRA requires that candidates receive disclosure about, and consent to, a background check/consumer report. Employers who make employment decisions on the basis of information contained in a consumer report must notify the candidate and provide them with certain information in a timely manner.

Employers must also certify to the consumer reporting agency that they are in compliance with FCRA requirements.

ICS Provides Pre-Screening and Background Check Services

If this patchwork of pre-employment screening laws is confusing, you can rest easy knowing that ICS provides a full suite of state- and federal-compliant pre-screening and background check services. 

Employers who choose ICS' Employer of Record Payroll Services can be confident knowing that we provide thorough and complete background check services that comply with all current regulations. Not only do we help keep your company in compliance with employment laws regarding the classification of your workforce - we keep you in compliance on the front end too.  

ICS also provides compliant background check services for the contract placement, permanent placement, and temp to permanent placement candidates we refer. To learn more, contact ICS today.