When Doing Background Checks The Equal Employment Opportunity Commission

The Equal Employment Opportunity Commission (EEOC) plays a crucial role in ensuring fairness and preventing discrimination in employment practices, including the use of background checks. Understanding the EEOC's guidelines and regulations regarding background checks is essential for employers to avoid potential legal issues and maintain a fair and inclusive workplace.

The EEOC's Stance on Background Checks: An Overview

The EEOC enforces federal laws prohibiting employment discrimination. While background checks themselves aren't illegal, the EEOC is concerned with how they are used and whether they disproportionately impact protected groups under Title VII of the Civil Rights Act of 1964. This act prohibits discrimination based on race, color, religion, sex, and national origin. The EEOC's focus is on ensuring that background checks are job-related and consistent with business necessity.

• Disparate Treatment vs. Disparate Impact: The EEOC distinguishes between disparate treatment, where an employer intentionally discriminates against an individual based on their protected characteristic, and disparate impact, where a seemingly neutral policy or practice has a disproportionately negative effect on a protected group. Background checks often raise concerns about disparate impact.
• The Importance of Job-Relatedness: The EEOC emphasizes that background checks should only be used to gather information that is directly relevant to the specific job requirements. Employers must be able to demonstrate a clear connection between the information sought and the essential functions of the position.
• Individualized Assessment: Even if a background check reveals potentially negative information, the EEOC encourages employers to conduct an individualized assessment of each candidate's circumstances. This involves considering the nature of the offense, how long ago it occurred, and its relevance to the job.

EEOC Guidelines for Using Background Checks

The EEOC provides specific guidance for employers on how to use background checks in a non-discriminatory manner. These guidelines are based on court decisions, settlements, and the EEOC's own investigations. Key elements of the EEOC's guidance include:

1. Develop a Written Policy: Employers should have a clear and written policy regarding the use of background checks. This policy should specify the types of information that will be sought, the positions for which background checks will be conducted, and the criteria used to evaluate the results.

2. Ensure Job-Relatedness and Business Necessity: The policy should clearly explain how the background check information is related to the specific job requirements and how it serves a legitimate business need. This requires a thorough job analysis to identify the essential functions of each position.

3. Obtain Consent: Employers must obtain the applicant's or employee's written consent before conducting a background check. This consent should clearly explain the scope of the background check and how the information will be used.

4. Provide Pre-Adverse Action Notice: If the background check reveals information that may lead to an adverse employment action (e.g., not hiring, termination), the employer must provide the individual with a copy of the background check report and a summary of their rights under the Fair Credit Reporting Act (FCRA). This gives the individual an opportunity to review the report and correct any inaccuracies.

5. Conduct an Individualized Assessment: Even if the background check reveals potentially disqualifying information, the employer should conduct an individualized assessment to determine whether the information is relevant to the specific job and whether the individual's circumstances warrant an exception.

6. Consider the Nature and Severity of the Offense: When evaluating criminal records, employers should consider the nature and severity of the offense, how long ago it occurred, and its relevance to the job. Minor offenses or offenses that occurred many years ago may not be relevant to the current job.

7. Provide a Reasonable Opportunity to Explain: The individual should be given a reasonable opportunity to explain the circumstances surrounding the negative information revealed in the background check. This allows the individual to provide context and potentially mitigate the employer's concerns.

8. Document the Decision-Making Process: Employers should document the decision-making process related to background checks, including the reasons for any adverse employment actions. This documentation can be crucial in defending against potential discrimination claims.

Fair Credit Reporting Act (FCRA) and Background Checks

The Fair Credit Reporting Act (FCRA) is a federal law that regulates the collection, use, and disclosure of consumer information, including information used for employment background checks. The FCRA imposes specific requirements on employers who use third-party background check companies (Consumer Reporting Agencies or CRAs).

• Disclosure and Authorization: Before obtaining a background check report from a CRA, the employer must provide the applicant or employee with a clear and conspicuous written disclosure stating that a background check will be conducted. The individual must also provide written authorization for the background check. This disclosure must be a standalone document and cannot be buried in an employment application or other documents.

• Certification to the CRA: The employer must certify to the CRA that it will comply with the FCRA's requirements, including providing pre-adverse action and adverse action notices.

• Pre-Adverse Action Notice: If the employer intends to take adverse action based on the background check report, it must provide the individual with a copy of the report and a summary of their rights under the FCRA. This gives the individual an opportunity to review the report and dispute any inaccuracies with the CRA.

• Adverse Action Notice: If the employer ultimately decides to take adverse action based on the background check report, it must provide the individual with a written notice that includes:

  • The name, address, and phone number of the CRA that provided the report.
  • A statement that the CRA did not make the decision to take the adverse action and cannot explain why the action was taken.
  • A notice of the individual's right to obtain a free copy of the report from the CRA within 60 days.
  • A notice of the individual's right to dispute the accuracy or completeness of the report with the CRA.

Potential Legal Challenges and How to Avoid Them

Employers who fail to comply with the EEOC's guidelines and the FCRA face potential legal challenges, including discrimination lawsuits and enforcement actions by the EEOC. Here are some common legal pitfalls and how to avoid them:

• Blanket Bans on Hiring Individuals with Criminal Records: Policies that automatically disqualify anyone with a criminal record, regardless of the nature or severity of the offense, are likely to be discriminatory. Employers must conduct an individualized assessment and consider the relevance of the offense to the job.
• Using Arrest Records as a Basis for Employment Decisions: Arrest records alone are not sufficient to justify an adverse employment action. An arrest is not a conviction, and using arrest records can disproportionately impact certain racial and ethnic groups. Employers should only consider conviction records.
• Failing to Provide Required Notices Under the FCRA: Failure to provide the required disclosures and notices under the FCRA can result in significant penalties. Employers must carefully follow the FCRA's requirements.
• Inconsistent Application of Background Check Policies: Applying background check policies inconsistently can raise concerns about discrimination. Employers should ensure that their policies are applied uniformly to all applicants and employees.
• Relying on Inaccurate or Incomplete Information: Employers should take reasonable steps to ensure that the information they rely on in background checks is accurate and complete. This includes verifying the information with the source and giving the individual an opportunity to correct any inaccuracies.

Best Practices for Conducting Background Checks

To minimize legal risks and promote fairness, employers should adopt the following best practices when conducting background checks:

1. Develop a Comprehensive Written Policy: The policy should clearly outline the types of information that will be sought, the positions for which background checks will be conducted, the criteria used to evaluate the results, and the procedures for providing notices and conducting individualized assessments.

2. Conduct a Job Analysis: Before implementing a background check program, conduct a thorough job analysis to identify the essential functions of each position. This will help ensure that the background check information is job-related and consistent with business necessity.

3. Use a Reputable Background Check Company: Choose a reputable background check company that is experienced in conducting employment background checks and is familiar with the FCRA and EEOC guidelines.

4. Train Hiring Managers and HR Staff: Provide training to hiring managers and HR staff on the proper use of background checks and the importance of complying with the FCRA and EEOC guidelines.

5. Review and Update Policies Regularly: Review and update background check policies regularly to ensure that they are consistent with current laws and regulations and reflect best practices.

6. Maintain Confidentiality: Maintain the confidentiality of background check information and only share it with individuals who have a legitimate need to know.

7. Consider Ban-the-Box Laws: Be aware of and comply with any state or local "ban-the-box" laws that restrict when employers can inquire about an applicant's criminal history.

The Impact of Artificial Intelligence (AI) on Background Checks

Artificial intelligence (AI) is increasingly being used in background checks, particularly for tasks such as social media screening and identity verification. While AI can offer efficiencies and cost savings, it also raises potential concerns about bias and discrimination.

• Algorithmic Bias: AI algorithms are trained on data, and if that data reflects existing biases, the algorithms can perpetuate and amplify those biases. This can lead to discriminatory outcomes in background checks.
• Transparency and Explainability: AI algorithms can be complex and opaque, making it difficult to understand how they arrive at their decisions. This lack of transparency can make it challenging to identify and address bias.
• Accuracy and Reliability: The accuracy and reliability of AI-powered background checks can vary depending on the quality of the data and the design of the algorithm. Employers should carefully evaluate the accuracy and reliability of any AI-based background check tools they use.

To mitigate the risks associated with AI in background checks, employers should:

• Ensure Data Quality: Use high-quality, representative data to train AI algorithms.
• Monitor for Bias: Regularly monitor AI algorithms for bias and take steps to mitigate any bias that is identified.
• Provide Transparency: Seek to understand how AI algorithms work and how they arrive at their decisions.
• Maintain Human Oversight: Do not rely solely on AI to make employment decisions. Maintain human oversight of the background check process and conduct individualized assessments.

EEOC Enforcement and Case Examples

The EEOC actively investigates complaints of discrimination related to background checks and has brought numerous enforcement actions against employers who have violated Title VII or other anti-discrimination laws.

• EEOC v. Freeman: In this case, the EEOC alleged that Freeman, a staffing company, used criminal background checks in a way that disproportionately excluded African Americans from employment. The EEOC argued that Freeman's background check policy was not job-related and consistent with business necessity.
• EEOC v. BMW Manufacturing Co.: The EEOC sued BMW, alleging that its criminal background check policy had a disparate impact on African American employees. The EEOC claimed that BMW's policy automatically disqualified employees with certain criminal convictions, even if the convictions were not related to their job duties.
• EEOC v. Kaplan Higher Education Corp.: The EEOC alleged that Kaplan's use of credit checks had a disparate impact on African American applicants. The EEOC argued that Kaplan could not demonstrate that the credit checks were job-related and consistent with business necessity.

These cases illustrate the EEOC's willingness to challenge background check policies that have a disparate impact on protected groups. Employers should carefully review their background check policies and practices to ensure that they are in compliance with the law.

The Future of Background Checks and EEOC Oversight

The use of background checks is likely to continue to evolve in the future, driven by technological advancements and changing societal norms. The EEOC will continue to play a critical role in ensuring that background checks are used in a fair and non-discriminatory manner.

• Increased Use of Technology: The use of technology in background checks, including AI and machine learning, is likely to increase. This will require employers and the EEOC to address the potential risks of bias and discrimination associated with these technologies.
• Focus on Rehabilitation: There is a growing recognition of the importance of rehabilitation and second chances for individuals with criminal records. The EEOC may place greater emphasis on individualized assessments and consider the steps that individuals have taken to rehabilitate themselves.
• Data Privacy Concerns: As background checks become more comprehensive and involve the collection of more personal information, data privacy concerns are likely to increase. Employers will need to be mindful of data privacy laws and take steps to protect the privacy of applicants and employees.
• Collaboration and Guidance: The EEOC is likely to continue to collaborate with employers, background check companies, and other stakeholders to provide guidance and best practices for conducting background checks in a fair and non-discriminatory manner.

Conclusion

The EEOC's guidance on background checks is essential for employers seeking to create fair and inclusive workplaces. By understanding the EEOC's concerns, following its guidelines, and implementing best practices, employers can minimize legal risks and ensure that background checks are used in a manner that is job-related, consistent with business necessity, and does not discriminate against protected groups. Continuous monitoring and adaptation to evolving legal and technological landscapes are crucial for maintaining compliance and fostering a fair employment environment.