Background checks for employment are an essential element in protecting your company, its brand, assets, employees, and customers. The concept of background screening is straightforward. However, designing, executing, and maintaining an up-to-date, legally compliant screening program to ensure maximum return on investment and minimum risk is not straightforward, it’s downright complex.
Laws and regulations vary from country to country, state to state, and even city to city. A wide range of employee selection and screening topics are subject to regulation including ban the box (fair chance acts), salary bans, criminal history restrictions, credit report use limitations, privacy and data security requirements, and cross-border data transfers. Without the guidance of a Consumer Reporting Agency like EBI, this rapidly evolving legal landscape can be extremely overwhelming to employers. In fact, we hear the same questions again and again as new laws and guidance take effect that impact how background checks can be conducted. This week, we begin a two-part series that delivers answers to your top background check questions.
No; most employers are not. There is no law or regulation requiring all employers to conduct background screening for employment purposes. There are, however, laws and regulations applicable to specific industries where some form of background screening is required. Often referred to as “regulated industries,” examples include healthcare, education, transportation, and energy. Some industries are regulated by US federal law, such as financial services and transportation. Other industries, such as education and healthcare, are regulated by state law, which sometimes results in state-to-state variances in screening requirements.
Most employers screen. For four years, HR.com has conducted an annual survey on behalf of the Professional Background Screening Association (PBSA). The 2020 HR.com survey reported 94% of employers to conduct some type of background screening. The survey, published in July 2020, found reasons for screening vary by employer, but 83% of respondents said their top reason was protecting the safety of employees and customers.
In response to “Who does your organization screen?”, the survey found an increase in all categories of workers screened. The increase in the screening of contingent workers, volunteers, and vendor representatives was especially significant. This appears to signify a growing realization that anyone with access to an organization’s employees, customers, facilities, systems, and/or data is a potential risk.
Anyone may conduct a background check, but not all background checks are created equal. A background check can be as simple as an employer calling a reference provided by an applicant, making a visit to the local county courthouse to check for criminal records, or searching a name on Google and checking social media. Some employers conduct those types of checks themselves, but most work with a professional screening company.
Employers outsource background screening to professional screening companies for the same reasons they outsource other business functions, such as payroll and benefits management. They want to work with experts who can provide a product or service efficiently, accurately, and cost-effectively – more so than they could do if the product or service was kept in-house.
Although the work of background screening companies is heavily regulated by international, federal, state, and even local law, there is no “background screener license” or registry. The only license sometimes required is a private investigator license. This requirement is state-specific and usually applies only to screening companies providing “investigative consumer reports,” which are reports containing information obtained through personal interviews in that particular state. (California classifies all background reports prepared by CRAs as “investigative consumer reports.”) As a result, many screening companies are not required to carry any license at all.
There is no such thing as a “perfect” background check. Background checks should be tailored to the specific position being filled, including position responsibilities and applicable legal and regulatory requirements. Working with a screening partner, it is important for employers to understand the full suite of background check products and what is applicable to the position. It is equally important for employers to understand the advantages and disadvantages of each background check product.
A new client should expect to be “credentialed” as the Fair Credit Reporting Act (FCRA) requires screening companies to verify the identity of a new client. New clients will likely be asked to complete a business application and provide business and/or credit references. New clients may be asked to provide a copy of corporate documents, such as articles of incorporation or a non-profit 501(c)(3) certificate. The screening company will likely compare these documents to those from official sources, such as the applicable Secretary of State’s office. The screening company usually will review the company’s website, verify physical address, and confirm the employer is not on a sanction list that would prohibit receipt of background reports.
New clients will also be required to sign a certification. Section 604(b) of the FCRA permits a screening company to provide background reports only if the user “certifies” they will comply with specific provisions of the FCRA and information provided “will not be used in violation of any applicable federal or state equal employment opportunity law or regulation.” This certification may be part of a broader agreement for services.
The screening company is required to provide two documents that are currently prescribed by the Consumer Financial Protection Bureau (CFPB). These include:
The screening company may also require a representative to conduct an onsite visit at the employer’s primary place of business. This requirement will vary depending upon the type of information the employer will obtain from the screening company. If credit reports are to be provided, for example, an onsite visit is typically required.
The assumption is “yes” but the reality is “no.”
The National Crime Information Center (NCIC) of the FBI houses over 17 million active records in 21 types of files – seven related to property and 14 related to people. Most employers are not permitted to access FBI records as part of a background check because these records are not publicly available. An FBI record check may occur only when a law or regulation creates a permissible purpose, which is done through federal or state law. Examples include: The Federal Deposit Insurance Corporation (FDIC) requires an FBI fingerprint check for bankers; similarly, most states require an FBI check for licensed insurance agents.
The NCIC was designed as a tool for law enforcement. Even if NCIC records were generally available, they would not be a single definitive source for all criminal records. Although often portrayed as the “gold standard” of background checks, FBI records are not all-encompassing.
These questions just scratch the surface of the screening industry. We’ll answer more of your top background check questions in Part Two.
But if you’re looking for more in-depth information sooner, we have you covered.
The Employer’s Guide to Background Screening: An HR Survival Guide – Vol. II answers nearly 100 of your most pressing background check questions. You can download this FREE guide anytime to get started on your screening journey.
As always, EBI is here to help make screening safer and smarter with our full suite of solutions. If you’re interested in learning more about why we’re the most awarded screening firm in the industry, reach out to one of our EBI team members.
Writer. Digital marketer. Storyteller. An award-winning writer and editor, Tricia O'Connor is the Marketing Content Manager at EBI. Tricia worked as a broadcast and print journalist for nearly two decades writing and producing programming for high-profile networks like ESPN Radio, History Channel, and Hallmark Channel, as well as contributing editorial work to publications nationwide. Tricia joined the EBI marketing team in 2019 and is responsible for content strategy, development, and engagement. Tricia earned a master's degree in journalism from the Medill School of Journalism at Northwestern University and is a proud undergraduate alumna of Wheaton College in Massachusetts.