You have the perfect candidate for an open position. They have the right experience, seem to fit the company culture well and check all the boxes for what you’re looking for in an employee. All that’s left is the background check, something you assure the applicant is merely a formality.
Except when the results come back, the news isn’t right. Something in the applicant’s background — a criminal conviction, a poor credit history, a terrible driving record — means you cannot hire them. Beyond the disappointment of losing a potentially good employee, you also have some legal responsibilities.
In fact, if your decision is negatively impacted by the report from an employment screening service, you are legally required to explain your decision or face some significant consequences.
How to Use an Employee Background Check
The need to conduct a background check on employees varies based on your business. Not all negative information is relevant to your business. For instance, a collection of traffic violations may not be appropriate when the employee’s responsibilities do not require driving or using a company vehicle.
Therefore, you need to develop a decision matrix for interpreting reports when using background checks. This matrix will form the backbone of your screening policy and determine what constitutes detrimental or harmful information.
The matrix should relate specific information to the duties of the job. The matrix may not always be the final word when hiring.
Adverse Action Procedure
Under the terms of the Fair Credit Reporting Act (FCRA), individuals have the right to know and dispute information that leads to adverse action against them — i.e., not getting a job offer.
When you receive the report from your background screening provider, and the decision matrix indicates that you should not hire the individual, you must send a pre-adverse action letter to the person within three days of receiving the report.
This pre-adverse action letter must contain several vital pieces of information.
With this letter, you must include a written summary of the report and notification that the information may affect an offer of employment, a copy of the background screening report, the details of the background screening company used, and a copy of “A Summary of Your Rights Under the FCRA.”
The letter should also provide the individual with a reasonable amount of time to respond to the information contained in the report; standard practice is five business days.
If the employee cannot or will not dispute the information in the report, you can legally decide not to hire them.
When you make that decision, you must send another Adverse Action Letter, this time. This letter should outline the action you’re taking (such as withdrawing a job offer) and that the decision was made based on the information contained in the background check. You must also note that you, not the employee screening service, made the decision.
The letter should also provide the contact information for the screening company and let the person know they can request an additional copy of the report within 60 days. You must also include another copy of their consumer rights under the FCRA.
When the Candidate Responds
Everyone makes mistakes. Sometimes, information that shows up in a background screening isn’t an accurate representation of the person’s character. Sometimes, information is there due to error. That’s why requesting an explanation from the person before deciding is essential.
When you receive a negative report about a candidate, you can request written clarification or converse with the person. They may be able to provide documentation to prove their case or an explanation that eliminates doubt about their character.
This clarification can help you evaluate the person more fairly and make a more unbiased decision regarding their employment. It’s also important to consider the severity and age of offenses and how they relate to the job.
Following these procedures protects your business from lawsuits related to unfair hiring practices. You can also reduce problems by informing applicants that they will be subject to a pre-hire background check.
Allowing them to be upfront with you ahead of time and explain any potentially harmful information can reduce the likelihood of needing to make a hard decision.
At the same time, it’s important to expect that some people will fail a background check. When developing your hiring policies, carefully consider which roles require background checks and make clear policies about what should trigger an adverse action. Be consistent and fair, and you’ll avoid the liability of making hard decisions.