This is the first of a two-part series on pre-employment screening.

An increasing number of employers are conducting some form of pre-employment screening on job applicants. Employers are researching not only a candidate’s educational qualifications and prior job history, but also a candidate’s criminal history, credit history and online presence. At the same time, the Equal Employment Opportunity Commission (EEOC) and various states have begun scrutinizing the legality of some of these practices.

Employers who conduct pre-employment screenings on job applicants should be aware that federal and state laws govern both the acquisition and use of such information. Obtaining certain types of information about job applicants without permission or using the information incorrectly, can lead to both civil liability and fines and can open an employer up to claims of employment discrimination. This article discusses the legal risks and pitfalls related to pre-employment screening.

Part I covers issues to consider when conducting criminal background checks. Part II will discuss three other pre-employment inquiries that have received increased attention from the EEOC in recent months: credit checks, investigations into an applicant’s online presence and inquiries into an applicant’s current employment status.

Criminal Background Checks

More and more employers seek the criminal record history of job applicants, sometimes even before extending the applicant an offer. Typically, employers will seek such information on employment applications, often asking applicants to indicate in a check box question whether they have been convicted of a felony or misdemeanor within a certain time period . Other employers will ask this question and explore a candidate’s response during a job interview, and most employers will ask applicants to submit to a full criminal background check after a conditional offer of employment is extended. Employers who gather and use criminal history information need to be mindful of applicable local, state and federal laws regarding criminal background checks.

Acquisition of Criminal Records

A variety of laws govern the acquisition and use of criminal records, including the point in the job application process when an employer may inquire into an applicant’s criminal past. In fact, several cities and states have begun to restrict employers’ ability to seek that information directly from applicants prior to job offers being extended.

For example, Philadelphia became one of the first cities to regulate when public and private employers may ask a job applicant about his or her criminal history. Pursuant to Philadelphia’s new “Ban the Box” law, which went into effect in July 2011, employers are precluded from making any inquiry regarding criminal convictions before and during the application process and initial interview process, or from requiring applicants to disclose such information.

Similarly, Massachusetts law bars employers from asking criminal history questions on an applicant’s initial written job application, unless otherwise required by law. Unlike Philadelphia’s new law, however, Massachusetts employers may still ask applicants about their criminal history during an interview.

Hawaii also has a “ban the box” law prohibiting public and private employers, with some exceptions, from inquiring about and considering an applicant’s criminal record on a job application. Hawaii law goes even further by allowing an employer to obtain and consider such information only after a conditional offer of employment has been extended. Several other states (California, Connecticut, Minnesota and New Mexico) have similar “ban the box” laws that apply to public sector employers, and many states and cities are considering such legislation.

To date, no federal law governs when employers may make such inquiries in the application process. Federal law does, however, require employers to adhere to other requirements when obtaining criminal records regarding applicants and employees. The federal Fair Credit Reporting Act (FCRA) requires employers who use third party consumer reporting agencies to gather such information to follow certain steps:

  1. Employers must provide notice to the applicant of the intent to obtain a report.
  2. Employers must actually obtain the applicant’s written consent. Note that a signature at the bottom of an employment application is not considered legal consent under the FCRA.
  3. The employer must certify to the consumer reporting agency that it made the appropriate disclosure and obtained consent from the applicant.

The FCRA also requires employers follow two additional steps when using criminal history information:

  1. Prior to taking any adverse action, the employer must provide the applicant with advance notice of its intended course of action, as well as provide the applicant with a statement of the employee’s rights under the FCRA and provide a copy of the background report.
  2. Once an employer decides to take adverse action, it must provide a second notice to the applicant containing specified information regarding the reason for its decision, an explanation of the applicant’s rights under the FCRA and the contact information for the consumer reporting agency that supplied the report to the employer.

Several states have laws similar to the FCRA, so employers should also consult the laws of the states in which they operate to ensure that there are no additional requirements.

Use of Criminal Records

Arrest Records

Nearly all state laws prohibit employers from considering a job applicant’s arrest that did not result in a conviction. Moreover, the EEOC takes the position that because the use of arrest records as an absolute bar to employment has a disparate impact on some protected groups; such records alone cannot be used to exclude applicants from employment and has even gone as far as stating that a pre-employment inquiry may violate Title VII. The EEOC has consistently invalidated employment policies containinga blanket exclusion of those individuals with arrest records. Thus, employers should avoid asking job applicants any questions designed to elicit information regarding prior arrests that did not result in convictions and should remove any such questions from employment applications.

Conviction Records

Unfortunately for multi-state employers, state law also governs how employers may use conviction information. While some states place little to no restrictions on employers, others strictly regulate how and when it may be used. For example, Pennsylvania allows employers to consider felony and misdemeanor convictions to the extent that they relate to the applicant’s suitability for employment in the position for which he or she applied. Thus under Pennsylvania law, an employer may consider a prior DUI conviction if the position requires or involves driving but not for a clerical or secretarial position.

New York law goes even further in limiting the type of convictions employers may consider. It generally prohibits employers from denying or terminating employment because of a prior conviction unless a direct relationship exists between the offense and the job, or the person would present an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.

When using conviction records, employers are to consider:

  1. The state’s public policy of encouraging employment of previously convicted persons
  2. Specific duties and responsibilities necessarily related to the job
  3. The bearing the offense might have on the person’s fitness or ability to perform the job
  4. Time elapsed since the offense
  5. The person’s age at the time of the offense
  6. The seriousness of the offense
  7. Evidence of successful rehabilitation
  8. The legitimate interest of the employer in protecting property, and the safety and welfare of specific individuals or the general public

Accordingly, employers are advised to consult applicable state laws before making any hiring decisions based on conviction history.

Although no federal law restricts or prohibits employer use of criminal records, the EEOC has renewed its focus on the use of convictions in employment decisions. The EEOC previously issued a series of guidelines and policy statements on the use of criminal records and is considering updating them. Although individuals with criminal records are not a protected class under Title VII, the EEOC has determined employer policies that exclude individuals from employment on the basis of their arrest and conviction records (i.e., blanket policies) may violate Title VII because such policies disproportionately exclude minorities. The EEOC made this determination in light of statistics showing that minorities are arrested and convicted at a rate significantly in excess of their representation in the population.

According to the EEOC, exclusion of a job applicant on the basis of a conviction record violates Title VII unless there is a business necessity for the employment decision. To establish this, the employer must show that it considered:

  1. The nature and gravity of the offense
  2. The time that has passed since the conviction and completion of the sentence
  3. The nature of the job sought

Thus, employers who consider criminal records in employment decisions without a determination that the background check was job-related and consistent with business necessity run the risk of opening themselves up to a disparate impact claim by the EEOC.

Employers who conduct criminal background checks during the pre-employment screening process should be mindful of the myriad of federal and state laws governing the process. They are advised to consult counsel for guidance before making employment decisions based upon such information. With proper counsel, employers can ensure that they are in compliance with all applicable laws.

In part II, we will examine three other aspects of pre-employment inquiries that have received increased scrutiny from the EEOC in recent months: credit checks, investigations into an applicant’s online presence and inquiries into an applicant’s current employment status.