How To Conduct a Background Check Legally

This guide outlines the steps and legal requirements for conducting employment background checks safely and effectively. To learn more about best practices for avoiding liability when hiring employees, see FindLaw’s The Hiring Process​ section or consult a local employment law attorney.

Before You Begin: Establish a Consistent and Relevant Policy

Before you check a single record, your first step should be creating a clear, written background check policy. To avoid discrimination claims, you must apply your screening process consistently for a specific role. For example, if you require a credit check for an accounting position, you should require it for all candidates applying for that role, not just some.

Step 1: Decide What Information To Check

Depending on the role and your company policy, a background check can include a wide range of information. Always make sure the inquiry relates directly to the job’s duties. Common records can be grouped into several categories:

• Identity and foundational records: Social Security number validation and identity verification
• Criminal and public records: Criminal history, court records, and sex offender registry searches
• Professional history and qualifications: Job history, education verification, professional licenses, and references
• Financial history: Credit reports and credit history
• Behavioral and suitability checks: Pre-employment drug tests and driving history/motor vehicle records (MVRs)

Ensure your background check is truly business-related. Checking a candidate’s driving record is essential for a delivery driver, but irrelevant and possibly discriminatory for a graphic designer who works remotely. To avoid potential liability, tie every background report directly to the job.

Step 2: Obtain Consent From the Applicant

You must notify an applicant that you intend to run a background check and get their written permission to do so. This is not optional.

Under the FCRA, if you use a third-party company to run pre-employment background checks, you must provide a clear, standalone disclosure form that is separate from the job application. Obtaining this consent is the foundation of a compliant screening process.

Step 3: Understand Key Legal Limitations

While screening candidates, you must navigate several major laws and regulations. Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, national origin, sex, religion, or age. The Equal Employment Opportunity Commission (EEOC) enforces these federal laws and prohibits using the background check process to discriminate. The EEOC also provides helpful resources for employers.

Let’s take a closer look at some legal issues to be aware of regarding background checks during the hiring process.

Criminal Records and “Ban the Box” Laws

Many states and cities have “Fair Chance” or ban-the-box laws​ prohibiting employers from asking about prior convictions on an initial job application. In these jurisdictions, you may only conduct criminal background checks after a conditional job offer has been made. Because this is a major area of liability, consult with a lawyer to learn the rules applicable in your particular state.

Credit History and the FCRA

The Fair Credit Reporting Act (FCRA)​ is a federal law that governs how companies collect and use credit information via third-party vendors. Several states have even stricter rules limiting the use of credit reports for employment decisions, so check your state’s laws before using credit history to screen an applicant.

The Risks of Social Media Checks

It can be tempting to search for candidates on social media, but this is a highly risky practice. A “DIY” search can easily expose you to an applicant’s protected information, such as their age, religion, family status, or disability. If you then decide not to hire them, the candidate could claim it was for a discriminatory reason. It’s far safer to rely on a compliant, professional background check process and avoid informal online searches.

Drug Screening

States vary on laws for pre-employment drug testing. While many states and employers have relaxed restrictions on marijuana, drug testing is still permitted in all 50 states. Federal law does not require drug testing for most jobs, except in a few “safety-sensitive” occupations.

Protected Information You Can’t Consider

Certain records are confidential and cannot be used in a background check except in very limited circumstances:

• Medical records: Medical records are confidential, but you can require a post-offer physical exam if it’s relevant to the job
• Workers’ compensation: You may only use information from a workers’ compensation claim if the injury might directly interfere with the applicant’s ability to perform the job’s duties
• Military records: Under the federal Privacy Act, military records are confidential and can only be released with the service member’s consent

Violations are punishable by sanctions that include fines.

Step 4: Taking Action on a Background Check

If you plan to make an adverse hiring decision (i.e., not hire a candidate) based on information in a background check run by a third party, there’s a strict two-step process under the FCRA that you’re required to follow. First, you must provide the applicant with:

• A pre-adverse action notice​
• A copy of the report you used
• A document titled “A Summary of Your Rights Under the Fair Credit Reporting Act“

The applicant then has a right to review the information and dispute any inaccuracies with the reporting agency. After a reasonable period, you’ll be required to provide them with a final adverse action notice if you’re still not going to hire them.

Have Questions About Employee Background Checks? Talk to an Attorney

Considering background check results can help you make better hiring decisions, but the legal landscape is complex and tricky. It’s a good idea to reach out to an experienced employment law attorney​ who can help you develop a compliant background check policy that gets you the information you need while complying with all relevant employment laws.