Employers do background checks to protect themselves from potential lawsuits and liabilities. Recent increases in negligent hiring lawsuits, identify thefts, misrepresentation or inflated information on resumes, and tightened security, all prompt employers to vigorously screen job seekers for potential problems or liabilities. Also, federal and state laws require backgrounds checks for certain jobs (, for anyone who works with children, the elderly, or disabled, for example)
2. How are background checks done?
There are many companies specializing in background checks, ranging from online data brokers to agencies specializing in employment screening, and even private investigators. Many larger companies have established relationships with employment screening firms and use them from background checks for all their applicants. Smaller firms tend to use online services and data brokers (as they tend to be less expensive). Chances are, it you apply for a job at a larger firm, they are more likely to do a scrupulous background check on you when compared to a smaller firm. It is also important to keep in mind that many companies are not going to be necessarily in compliance with all laws and regulations listed in this article. Unfortunately, they are very difficult to enforce and it is almost impossible to prove a potential employer of any wrongdoing.
3. What is included in a background check?
It depends on how the background check is conducted and the source of the information. A lot of this information is public domain: some can be easily obtained by anyone; other comes from internal databases and proprietary sources. In any case, there are many commercial services that offer detailed background checks with information from multiple sources. The information that can be found through a common background check can include but is not limited to:
- Driving Records & Vehicle Registration
- Credit Records
- Criminal Records
- Social Security Number
- Education Records
- Court Records
- Workers’ Compensation Records
- Bankruptcy & Debt Records
- Personal & Character References
- Neighbor Interviews
- Medical Records
- Property Ownership
- Military records
- State Licensing Records
- Drug Test Results
- Past Employment
- Incarceration records
- Sex Offender Lists
4. What cannot be included in a background check?
The federal Fair Credit Reporting Act (FCRA) sets time limits on what can’t be included in a background checks past a certain timeframe:
Ten (10) years for bankruptcy records
Seven (7) years for the following:
- Civil suits or civil judgments
- Accounts placed for collection
- Tax liens
- Records of arrest
- Any other negative information (except criminal convictions)
- Unfortunately, there are exceptions. This law only applies to external agencies hired to perform background checks, which means that the employer can collect this information on their own in house. Finally, the law doesn’t prohibit employers from asking for this information.
5. What information requires my permission before it can be released?
There is some information that requires your permission (under FRCA) before employers may obtain it. Such information includes:
- Medical Records generally require your permission to obtain. However, if employers require physical examinations, they will have access to your medical history.
- Education records (including school transcripts, recommendations, discipline and financial records) may not be released by schools without your approval.
- Military Service Records are confidential but some information (name, rank, salary, awards and duty assignments) may be released under Freedom of Information Act, and without your consent.
6. What can my former employer say about me?
A potential employer may contact your previous employer for references and your former employer can say anything they want about your performance, as long as it is truthful. Some employers have internal policies for what they can and can’t say for references.
You should also know that the potential employer may interview your associates, neighbors, friends, or family members about your “character, general reputation, personal characteristics, or mode of living”. This is called an “investigative consumer report.” For this type of report, a separate disclosure is required and you may also ask for the nature and the scope of such interviews.
7. How does Fair Credit Reporting Act (FCRA) protect me?
In addition to imposing some restrictions on employers (as described above), Fair Credit Reporting Act (FCRA) sets some very important ground rules that every job seeker should know:
- Under FCRA, you have a right to know when a background check is requested. The employer must obtain your written authorization to do a background check.
- If the employer uses the information in the report to take “an adverse action” (denying employment or terminating existing employment) then they are required to send you a notification along with a copy of the report and an explanation of your rights. They are also responsible to provide you with the name, address, and phone number of the company that provided the report.
8. Where Does FCRA fall short?
Unfortunately, there are two major loopholes when it comes to the Fair Credit Reporting Act. Both allow employers bypass all of its requirements and in both situations a job seeker would not be entitled to obtain a copy of the background check report:
- To be covered by FRCA, the report must be prepared by an outside company (or a “consumer reporting agency”). In other words, if the company does the background check internally (in house) then the FRCA doesn’t apply.
- If the employer tells the rejected job applicant that the decision was made not on the background report but on something else (lack of experience, someone was more qualified, etc.), then FRCA doesn’t protect the job applicant.
- Also, the FCRA doesn’t apply to jobs with an annual salary of $75,000 or more.
9. How can I obtain a copy of my background report?
In addition to the abovementioned situations, FCRA allows consumers to obtain a free copy of their credit report online, at https://www.annualcreditreport.com. It also requires a free annual file disclosure for consumer reports from agencies that compile, maintain and issue reports on the following:
- Medical Records & Medical Payments.
- Residential History
- Check Writing History
- Insurance Claims
- Employment History
- Subject to this requirement, companies that provide employment background checks are required to set-up a phone number that gives you instructions on how to get the information in your file. Some companies also provide access to the free file through their websites (but this is not required).
FTC has declined to publish a list of agencies that are subject to this requirement but the National Association of Professional Background Screeners’ Directory is good place to start: http://www.napbs.com/i4a/pages/index.cfm?pageid=3305. Also, if asked for a consent to a background check, it may be a good idea to ask the potential employer for the name of the company who will do the check.
10. How do I prepare for a Background Check?
If you are looking for a job, it is a good idea to spend some time preparing for a background check. The best strategy is to review reports on you for errors, omissions and inaccuracies. You want to take the following steps to reduce the chances of your potential employer finding adverse information about you during the background check, especially if it is inaccurate:
- Conduct your own background check. See if you can obtain free reports on you using the lists from above.
- Obtain a free copy of your credit report (https://www.annualcreditreport.com). Also read our article on how to prepare for an employment credit check.
- Google for your name and see where it comes up. Try to clean-up any “digital dirt” on you on social networks. Review information about you from the perspective of a potential employer.
- Make sure to read all consents (especially the fine print) carefully before signing them. Ask questions if something is not clear.
- If you have an arrest record or have been involved in court cases, make sure to check your court records.
- Check DMV records, especially if you job involves driving.
- Ask to get a copy of your personnel file from your previous employer.
- Tell your neighbors and associates that they may be contacted for an investigative consumer report.
- Make sure you to know your rights about what the employer can and cannot ask.
- Always ask for a copy of a background check report.
