Are Background Checks Legal?

Without the proper information, the background screening process can be a source of anxiety for both prospective hires and employers alike. It’s important for companies to set up a consistent hiring process that prevents employer neglect and other liabilities, and partnering with a certified background check service like eKnowID can help relieve stress and ensure quality. Background checks are certainly legal, but can become illegal if companies don’t follow various federal, state, and local mandates.

Yes, But Adhere to Federal Law

Background checks are legal across the United States, but federal employment laws govern what information can be used and how it can be used in all states. For example, a background check that violates the Fair Credit Reporting Act is illegal. The act is designed to protect tenants, employees, and consumer privacy. 

The Federal Trade Commission says of the act, “Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act. Companies that provide information to consumer reporting agencies also have specific legal obligations, including the duty to investigate disputed information.” 

The federal law also prevents employers in all 50 states from conducting background checks without explicit, written consent from the individuals being screened. It further mandates that employers must inform personnel if background check results will be used against them in a company decision, and employers must adhere to specific processes to allow individuals to correct any misinformation before action is taken.

Similarly, federal Equal Employer Opportunity laws are set up to prevent hiring discrimination across the country in relation to background screenings and other hiring practices. The U.S. Equal Employment Opportunity Commission explains, “It's illegal to check the background of applicants and employees when that decision is based on a person's race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older). For example, asking only people of a certain race about their financial histories or criminal records is evidence of discrimination.” This demonstrates why a clear background check process with consistent practices for all hires or personnel is essential to protecting all parties involved.

Yes, But Don’t Discriminate

While there are laws uniformly governing all states, some state and local legislation has also extended protections even beyond what federal laws cover. Employers must be aware of both federal and state hiring laws since they can sometimes differ in scope and from region to region. 

For instance, many states now have “ban the box” measures designed to prevent hiring discrimination based on criminal history that can appear on a background check. Economic policy think tank The Center for American Progress explains that the laws range in application, location, and for employer types: “Thirty-six states, the District of Columbia, and more than 150 cities and counties have adopted ban the box measures that apply to all public employers. Fourteen states and 20 cities have gone even further, extending their ban the box measures to private sector employers as well.”

“Ban the box” laws are intended to ensure qualified prospective employees can contend for a position without criminal history being used to immediately discriminate against them. Generally, the laws govern when and to what extent a background screening can be run. The United States has the highest documented incarceration rate in the world--inequitably impacting BIPOC communities and, increasingly, women--and this directly connects with employment opportunities. A  Harvard University study exposes that stigma and discriminatory practices still deeply affect hiring decisions when a background check reveals these histories: 

“We find a significant negative effect of a criminal record on employment outcomes, and one that appears substantially larger for African Americans. The sequence of interactions preceding hiring decisions suggests that black applicants are less often invited to interview, thereby providing fewer opportunities to establish rapport with the employer. Furthermore, employers’ general reluctance to discuss the criminal record of an applicant appears especially harmful for black ex-offenders...Economic models of employment often assume that the productivity of prospective workers can be readily assessed, but in reality, employers often face acute information shortages in evaluating new hires.”

This lack of information paired with inequitable hiring processes expose how employers may be missing out on qualified, capable candidates when utilizing results of a background screening inappropriately or at the wrong time in an employment process. They may also be perpetuating discriminatory practices that set themselves up for ethical and legal violations. When arrest, conviction, or incarceration histories are used to discriminate in hiring practices, the results can dramatically impact companies, but also communities and entire economic ecosystems for generations. 

Research by Brennan Center for Justice demonstrates how stigmatized criminal history, hiring discrimination, and generational poverty are all connected: “[Formerly] imprisoned people earn less than half of what their peers earn over their careers...the value of these lost earnings for formerly imprisoned people approaches half a million dollars per person, an amount that could easily make the difference between escapable and inescapable poverty.”

This research exhibits the ways background checks are indeed legal--but can quickly become illegal if employers are not vigilantly adhering to evolving federal, state, and local laws. It also demonstrates how companies could have significant positive effects on their own communities when they de-stigmatize and humanize background check processes and set up ethical, legal hiring practices. eKnowID offers valuable background check services that seek to support companies in both legal and ethical dimensions, encouraging screening-in--not just ruling out qualified candidates.

DISCLAIMER: The information provided is for general information only and does not constitute legal advice.