Employment Background Checks Q&A

  1. Why Does an Employer Conduct a Background Check?

    Employers check potential and current workers for several reasons. The things an employer wants to know about you can vary with the kinds of jobs you might seek. Here are a few of the reasons for employment screening.

    • Negligent hiring lawsuits are on the rise. If an employee's actions hurt someone, the employer may be liable. The threat of liability gives employers reason to be cautious in checking an applicant's past. A bad decision can wreck havoc on a company's budget and reputation as well as ruin the career of the hiring official. Employers no longer feel secure in relying on their instinct as a basis to hire.
    • Current events have caused an increase in employment screening.
    • Child abuse and child abductions in the news in recent years have resulted in new laws in almost every state that require criminal background checks for anyone who works with children. The move to protect children through criminal background checks now includes volunteers who serve as coaches for youth sports activities and scout troop leaders.
    • Terrorist acts of September 11, 2001, have resulted in heightened security and identity-verification strategies by employers. Potential job candidates and long-time employees alike are being examined with a new eye following September 11, 2001.
    • Corporate executives, officers, and directors now face a degree of scrutiny in both professional and private life unknown before the Enron debacle and other corporate scandals of 2002.
    • False or inflated information supplied by job applicants is frequently in the news. Some estimates are that 30% to 40% of all job applications and resumes include some false or inflated facts. Such reports make employers wary of accepting anyone's word at face value.
    • Federal and state laws require that background checks be conducted for certain jobs. For example, most states require criminal background checks for anyone who works with children, the elderly, or disabled. The federal National Child Protection Act authorizes state officials to access the FBI's National Crime Information Center (NCIC) database for some positions. Many state and federal government jobs require a background check, and depending on the kind of job, may require an extensive investigation for a security clearance.
    • The "information age" it self may be a reason for the increase in employment screening -- the availability of computer databases containing millions of records of personal data. As the cost of searching these sources drops, employers are finding it more feasible to conduct background checks.
    I don't have anything to hide. Why should I worry?

    While some people are not concerned about background investigations, others are uncomfortable with the idea of an investigator poking around in their personal history. In-depth background checks could unearth information that is irrelevant, taken out of context, or just plain wrong. A further concern is that the report might include information that is illegal to use for hiring purposes or which comes from questionable sources.

  2. What Is Included in a Background Check?

    Background reports can range from a verification of an applicant's Social Security number to a detailed account of the potential employee's history and acquaintances. Here are some of the pieces of information that might be included in a background check. Note that many of these sources are public records created by government agencies.

    • Driving records
    • Vehicle registration
    • Credit records
    • Criminal records
    • Social Security no.
    • Education records
    • Court records
    • Workers' compensation
    • Bankruptcy
    • Character references
    • Neighbor interviews
    • Medical records
    • Property ownership
    • Military records
    • State licensing records
    • Drug test records
    • Past employers
    • Personal references
    • Incarceration records
    • Sex offender lists
  3. What Cannot Be in a Background Check Report?

    The federal Fair Credit Reporting Act (FCRA) sets national standards for employment screening. However, the law only applies to background checks performed by an outside company, called a "consumer reporting agency" under the FCRA. The law does not apply in situations where the employer conducts background checks in house.

    Your state may have stronger laws, such as California's Investigative Consumer Reporting Agencies Act (Civil Code §1786) and the California Consumer Credit Reporting Agency Act (Civil Code §1785). In addition, many state labor codes and state fair employment guidelines limit the content of an employment background check.

    Under the FCRA, a background check report is called a "consumer report." This is the same "official" name given to your credit report, and the same limits on disclosure apply. The FCRA says the following cannot be reported:

    • Bankruptcies after 10 years.
    • Civil suits, civil judgments, and records of arrest, from date of entry, after seven years.
    • Paid tax liens after seven years.
    • Accounts placed for collection after seven years.
    • Any other negative information (except criminal convictions) after seven years.

    The most recent change to the FCRA made criminal convictions reportable indefinitely. California still follows the seven-year rule (CA Civil Code 1786.18) as do some other states. To find the limit for reporting criminal convictions in your state, contact your state employment agency or office of consumer affairs. Other laws that should be considered:

    Arrest information.

    Although arrest record information is public record, in California and other states employers cannot seek from any source the arrest record of a potential employee. However, if the arrest resulted in a conviction, or if the applicant is out of jail but pending trial, that information can be used. (California Labor Code §432.7).

    In California, an exception exists for the health care industry where any employer who has an interest in hiring a person with access to patients can ask about sex related arrests. And, when an employee may have access to medications, an employer can ask about drug related arrests.

    Criminal history.

    In California, criminal histories or "rap sheets" compiled by law enforcement agencies are not public record. Only certain employers such as public utilities, law enforcement, security guard firms, and child care facilities have access to this information. (California Penal Code §§11105, 13300) With the advent of computerized court records and arrest information, however, there are private companies that compile virtual "rap sheets."

    Employers need to use caution in checking criminal records. Information offered to the public by web-based information brokers is not always accurate or up to date. This violates both federal and California law when reported as such. Also, in California, an employer may not inquire about a marijuana conviction that is more than two years old.

    Workers' compensation

    In most states including California, when an employee's claim goes through the state system or the Workers' Compensation Appeals Board (WCAB), the case becomes public record. An employer may only use this information if an injury might interfere with one's ability to perform required duties. Under the federal Americans with Disabilities Act, employers cannot use medical information or the fact an applicant filed a workers' compensation claim to discriminate against applicants. (42 USC §12101).

    In California, employers may access workers' compensation records after making an offer of employment. To gain access, employers must register with the WCAB and confirm that the records are being accessed for legitimate purposes. Although the agency may not reveal medical information and the employer may not rescind an offer due to a workers' compensation claim (California Labor Code 132a), employers sometimes discover that applicants have not revealed previous employers where they had filed claims. In such situations, employers often terminate the new hire because it appears they falsified the application.

    Bankruptcies.

    Bankruptcies are public record. However, employers cannot discriminate against applicants because they have filed for bankruptcy. (11 USC §525)

    Although these laws should prevent an employer from considering certain information, there is no realistic way for the applicant to determine whether such information will be revealed in a background check. This is particularly true for investigations conducted online where the information obtained from web-based information brokers might not be verified for accuracy or completeness.

    For example, if you were arrested but never convicted, a data search could reveal the arrest, but the investigator who compiled the information might not delve further into the public records to determine that you were acquitted or the charges were dropped. Reputable employment screening companies always verify negative information obtained from data base searches against the actual public records filed at the courthouse.

    Can an employment application ask about things that should not be reported?

    The FCRA does not prohibit an employer from asking questions in an employment application. See FTC letters to Nadell and Sum:

    For example, an employment application might ask if you have "ever" been arrested. The FCRA says a consumer reporting agency cannot report an arrest that from date of entry was more than seven years ago. It does not say the employer cannot ask the question.

    How to handle such questions on an employment application is of real concern to many people, especially those concerned with a youthful mistake from the distant past.

    It is important to remember, however, that even the restrictions on reporting imposed by the FCRA do not apply to jobs with an annual salary of $75,000 or more a year. (FCRA §605(b) (3).

    Aren't some of my personal records confidential?

    The following types of information may be useful for an employer to make a hiring decision. However, under the federal Fair Credit Reporting Act, the employer is required to get your permission before obtaining the records. (See PRC Fact Sheet 11, "From Cradle to Grave: Government Records and Your Privacy," www.privacyrights.org/fs/fs11-pub.htm)

    • Education records.

      Under federal and California law, transcripts, recommendations, discipline records, and financial information are confidential. A school should not release student records without the authorization of the adult-age student or parent. However, a school may release "directory information," which can include name, address, dates of attendance, degrees earned, and activities, unless the student has given written notice otherwise. (20 USC §1232g, www.ed.gov/offices/OM/fpco/ferpa/index.html)

    • Military service records.

      Under the federal Privacy Act, service records are confidential and can only be released under limited circumstances. Inquiries not authorized by the subject of the records must be made under the Freedom of Information Act. Even without the applicant's consent, the military may release name, rank, salary, duty assignments, awards, and duty status. (5 USC §§552, 552a) For more on military records, visit the National Archives and Records Administration web site: www.archives.gov/facilities/mo/st_louis/military_personnel_records.html

    • Medical records.

      In California and many states, medical records are confidential. There are only a few instances when a medical record can be released without your knowledge or authorization. The FCRA also requires your specific permission for the release of medical records. If employers require physical examinations after they make a job offer, they will have access to the results. The Americans with Disabilities Act allows a potential employer to inquire only about your ability to perform specific job functions. (42 USC §12101)

    There are other questions such as age, marital status, and certain psychological tests that employers cannot use when interviewing. These issues are beyond the scope of this fact sheet. If you have further questions, contact the resources at the end of this fact sheet. The federal Equal Employment Opportunity Commission and the fair employment agencies in the states handle these issues.

    What can my former employer say about me?

    Often a potential employer will contact an applicant's past employers. A former boss can say anything [truthful] about your performance. However, most employers have a policy to only confirm dates of employment, final salary, and other limited information. California law prohibits employers from intentionally interfering with former employees' attempts to find jobs by giving out false or misleading references. (California Labor Code §1050)

    Under California law and the laws of many other states, employees have a right to review their own personnel files and make copies of documents they have signed. If you are a state or federal employee, your personnel file is protected under the California Information Practices Act or the federal Privacy Act of 1974 and can only be disclosed under limited circumstances. (California Civil Code §56.20; California Labor Code §§432, 1198.5; 5 USC §552a)

    Jobs such as truck driver positions fall under regulations of the federal Department of Transportation. Employers are required to accurately respond to an inquiry from a prospective employer about whether you took a drug test, refused a drug test, or tested positive in a drug test with the former or current employer. (49 CFR §40.25, 49 CFR §382.413. Federal Motor Carrier Safety Administration Regulations )

  4. Employee Background Checks and Your Credit Report

    An employment background check often includes a copy of your credit report. The three major credit reporting agencies (Experian, TransUnion, and Equifax) provide a modified version of the credit report called an "employment report." An "employment report" includes information about your credit-payment history and other credit habits from which current or potential employers might draw conclusions about you.

    An employment report provides everything a standard credit report would provide. However it doesn't include your credit score or date of birth. Nor does it place an "inquiry" on your credit file that may be seen by a company looking to issue you credit. Having too many credit inquiries tends to lower your credit score.

    My job doesn't require handling money. Why does the employer do a credit check?

    Often employers use your credit history to gauge your level of responsibility. Whether a valid assumption or not, some employers believe if you are not reliable in paying your bills, then you will not be a reliable employee. Unfortunately, a bad credit report can work against you in your search for employment. For more on how a credit record can affect your job search, see the FTC's fact sheet on this topic, www.ftc.gov/bcp/conline/pubs/alerts/ngcrdtalrt.htm

    In addition to your payment history, a credit report typically includes information about your former addresses and previous employers. Employers can use this as one way to verify the accuracy of information you provide on an application or resume.

    I never use credit. Can an employer hold that against me?

    Yes. The employer might be looking for someone who has an established record of paying bills on time. The FCRA says only that certain things like negative information more than seven years old cannot be considered. The absence of a credit history can also be considered. But if this bit of information means you don't get the job, the employer has to give you an adverse notice decision. For more on an employer's responsibility under the FCRA, see www.ftc.gov/bcp/conline/pubs/buspubs/credempl.htm