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Stay compliant with these 4 tips on employee background checks

Denver employers who want to stay compliant with the Fair Credit Reporting Act and off the radar of Equal Employment Opportunity Commission investigators may be interested in the following four strategies offered by a private investigator who works with an employee screening firm. First, it is important to point out that although performing a background check on a potential employee may appear to be one of the more obvious methods for narrowing down your applicant pool, they can bring unwanted attention from the EEOC.

The EEOC wants to ensure applicants are treated fairly and some background reports, such as a credit check can give some applicants an unfair advantage over other applicants considered to be in a protected class. This would include older workers, minority or disabled employees and the like. The Fair Credit Reporting Act or FCRA does affect the use of background checks on potential employees. Although the term "credit" appears in the legislation's title, it covers background checks for pre-employment screenings in general. Here are four tips on how to stay in compliance with this legislation.

  • Ensure any third party consumer reporting agency you enlist to perform background checks on applicants acknowledges or certifies that it and you will follow all FCRA guidelines.
  • It is also important that the employer obtain all necessary written release and disclosure forms separate from the actual application document from the potential applicant prior to authorizing the background check, or consumer report from the third party reporting agency.
  • If information found in a background check is used in a decision to not consider an applicant for employment that applicant is entitled to a "pre-adverse action letter." This letter lets the applicant know that due to information obtained through the consumer report (background check) the employer is considering a denial of employment. That consumer report document that contains the adverse information should be included with the letter. The applicant is then provided with an opportunity to dispute the adverse information and the employer and or reporting agency has 30 days in which to investigate the information in dispute.
  • If a second investigation reaffirms the information is correct, or the applicant does not dispute the information a notice of adverse action must be provided to the applicant. The agency used to conduct the background check will usually assist the employer with this step.

Source:, "Background checks: 4 steps to comply with Fair Credit Reporting Act (FCRA)," Jared Callahan, Oct. 23, 2012

Our law firm helps Denver area employers with a full range of employment law services, including the development of employee policies and manuals as well as handling claims of employment discrimination such as sexual harassment or wrongful termination.

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