A recent survey by the employment law firm Ogletree Deakins, Strategies and Benchmarks for the Workplace: Ogletree’s Survey of Key Decision-Makers, found that complying with the combination of federal, state, and local laws and regulations governing background checks is the fourth most challenging multi-jurisdictional issue facing employers today. 

This is easy to understand, given the hornet’s nest of liability that can arise when a background check is poorly performed and fails to comply with the various requirements often posed by every level of government. This has only become more troublesome in recent years as litigation has increased and several new laws have been introduced, further complicating the ability of employers to conduct background checks on applicants. Here are some of the most significant new developments challenging employers.

FCRA Disclosure Litigation

In recent years, the disclosure requirements of the Fair Credit Reporting Act (FCRA) have become a key battleground for class action lawsuits. Under the FCRA, employers must provide a disclosure that informs applicants that a consumer report may be performed and used to make employment decisions.

These disclosures must meet the FCRA’s strict requirements for language and cannot include any extraneous language. The FCRA provides for statutory damages of between $100 and $1,000 per violation, which can result in significant losses if the same disclosure has been used over several years.

Fair Chance Laws

Fair chance laws, also known as “ban-the-box” laws, are legislation designed to restrict an employer’s ability to perform inquiries into an applicant’s criminal history until a certain point later in the hiring process. Initially, these laws were simply intended to prohibit the inclusion of questions concerning criminal history on an application for employment, i.e., banning the box. However, these laws have grown considerably in scope and often now prohibit employers from asking questions concerning a candidate for employment’s criminal history or performing background checks until after a conditional offer of employment has been made.

Restrictions on the Publication of Personally-Identifying Information

Recent court decisions in both Michigan and California have led to difficulty in performing accurate background checks by restricting the publication of personally-identifying information used to confirm criminal records belong to a particular individual. This has led to considerable confusion regarding employers’ ability to perform background checks within these states.

In Michigan, the state’s Supreme Court issued a ruling in July 2021 that prohibited the state courts from including personally identifying information in court records. Since then, the court has amended these rules to permit job applicants to allow the disclosure of this information.

In California, however, no clear resolution has yet been reached. The issue began when a state Court of Appeal released a ruling prohibiting a Superior Court from permitting its electronic index of criminal case records from being searchable by date of birth or driver’s license number. Many other courts within the state have followed suit in restricting access to this information.

As of yet, there is no solution to allow for background checks to be conducted using this information. However, in February of this year, Senate Bill 1262 was introduced, which would provide a legislative solution. Until this legislation comes to pass, consumer reporting agencies will need to use other means to provide accurate and complete criminal record searches.

Final Thoughts

As these many new complications show, it is crucial to regularly review your background check policies and ensure that they are compliant with the ever-changing requirements. One of the best ways to ensure your background check practices remain compliant is to partner with a background check provider you can trust to remain up to date with the latest developments.

Pre-employ offers resources to help employers stay compliant and incorporate fair chance hiring practices. Download our free resource guide on 5 Tips To Avoid FCRA Non-Compliance to learn more.

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