These checks are essential; however, there are cases when collecting information is illegal. Some laws govern privacy and discrimination in many countries.
In this article, you will learn about the legality of background checks and the laws and regulations governing them.
Laws and Regulation Background Checks
Background checks are subject to several federal and state laws that limit and protect individuals' rights. Understanding and complying with these laws guarantee fair, responsible, and legal background checks.
Here are the laws that govern background checks:
1. Fair Credit Reporting Act
Enacted in 1970, the FCRA allows consumers to dispute credit report inaccuracies. Background checkers must collect, distribute, and use employee data with informed consent.
Background checkers must also comply with credible CRAs and know FCRA regulations. Consumer agency reports may include the following:
- Credit health
- Mode of living
- General Reputation
- Personal Characteristics
2. Equal Employment Opportunity Laws (EEO)
This law ensures employers conduct background checks fairly, treat applicants and workers equally, and do not use the information for discriminatory purposes.
It also requires employers to obtain consent and inform applicants about the purpose of the background check.
3. Title VII of the Civil Rights Act
Discrimination based on race, ethnicity, sex, or religion is illegal under the Civil Rights Act. It covers public/private employees applying to workplaces with at least 15 employees.
The Act's Title VII does not explicitly protect criminal background as a trait. However, there's one basis the EEOC looks for in background checks under Title VII: disparate impact.
It prohibits employment practices that have a disparate impact on protected groups. The EEOC examines this disparate treatment when doing background checks as follows:
- Biased statements.
- Inconsistencies in hiring.
- Similarly situated comparators.
- Employment testing and statistical evidence.
4. Americans with Disabilities Act (ADA)
The ADA safeguards individuals from discrimination based on physical or mental impairments. It prohibits using medical information for discrimination in companies with over 15 employees.
Under the ADA, employers can ask about employees' abilities to perform job-related tasks. However, they cannot mandate pre-employment physicals. Nonetheless, employers can request a physical examination after a contingent job offer.
5. Drug Screen Laws
With recreational and medical marijuana legalized in numerous states, conducting background checks for marijuana or THC use is illegal.
Nine states have decriminalized marijuana, while 22 states, three US territories, and DC allow recreational use.
Specific sectors, like transportation, nuclear energy, and military contracting, are highly regulated and require drug testing.
6. Family Educational Rights and Privacy Act (FERPA)
FERPA is a federal law that requires colleges and universities to protect the confidentiality of education records.
It prohibits outsiders from accessing or sharing student records or form data without written consent from the student.
7. Health Insurance Portability and Accountability Act (HIPAA)
HIPAA is a federal law prohibiting the unauthorized disclosure of patient health data. The privacy rule gives individuals control over how their health information is used.
Employers undertaking health-related background checks should respect the privacy and security of such information.
8. Employee Polygraph Protection Act (EPPA)
The EPPA prohibits most private companies from doing lie detector testing. Employers cannot also use or inquire about lie detector test findings.
Employers cannot fire, discipline, or discriminate against employees or job applicants who choose to exercise or decline their rights under the Act. Likewise, they cannot fire or discriminate based on the results, submit complaints, or engage in Act-related judicial processes.
9. Ban the Box
The “Ban the Box” policies ban businesses from asking applicants about their criminal background or regulating what information can be gathered and used.
In California, "ban the box" prohibits employers from asking about criminal pasts before making a conditional job offer. After the offer, employers can ask about criminal history but must individually assess the applicant's criminal history.
10. Brady Handgun Violence Prevention Act (Brady Act)
The Brady Act came into effect in 1994. It is the first federal law to enforce background checks for gun sales.
Under this law, federally licensed dealers must request a NICS background check from the FBI for gun buyers. The sale is denied if the system detects a firearm ban.
11. Fair Chance to Compete for Jobs Act of 2019 (Fair Chance Act)
The Fair Chance Act is a federal ban-the-box law. This law applies to federal agencies and employers with civilian or defense contracts. It also prohibits them from asking about criminal records before making conditional job offers.
The exceptions to this law include:
- Jobs requiring a security clearance
- Positions with law enforcement duties
- National security positions
- Jobs where employers are required to consider criminal history information by law
This law affects the background check process by delaying inquiries into an applicant's criminal history until later in the hiring process.
12. Investigative Consumer Reporting Agencies Act (ICRAA)
ICRAA regulates background reports employers and landlords use to make employment and rental decisions. It covers consumer reports about a person's character, reputation, personal traits, or lifestyle.
Before doing a background check, landlords must inform and get consent from applicants. Applicants also have the right to request a copy of the report their employer or landlord requested.
13. Consumer Credit Reporting Agencies Act (CCRAA)
The CCRAA follows alongside the ICRAA. It is a state law similar to the ICRAA but with some differences.
The CCRAA imposes specific requirements for employers when they want to access credit information that the ICRAA does not cover. It focuses more on credit reports.
According to the CCRAA, credit and investigative consumer reports are considered background reports.
14. California Information Privacy Act (CIPA)
Employers who use third-party background check agencies must follow CIPA's rigorous requirements. Employees can choose to receive the results if their employers handle their checks.
For those hiring a third-party agency to conduct a background check, employers must issue a "clear and conspicuous" notice. The background check notice should be written and explain its scope.
15. CA Labor Code 432.7
CA Labor Code 432.7 prevents both private and public employers from inquiring about certain aspects of a job applicant's criminal history, including the following:
- Dismissed or sealed convictions
- Pre-trial or Post-trial diversion programs
- Non-conviction criminal charges
Employers can ask about pending criminal charges but cannot make hiring decisions based on them.
16. Birth Date Redaction Laws
In 2021, California decided to redact birth dates and driver's license numbers from court records accessible through its website. This has posed hurdles when background-checking job applicants' criminal histories to ensure workplace safety.
The law aims to give ex-offenders the right to live better without facing unfair judgment based on their past.
17. California AB 506
This law became effective in January 2022. Volunteers, workers, and managers of youth-serving organizations must undergo background checks. Those with a history of child neglect or abuse are prohibited from being part of the organization.
Signed into law on September 29, 2022, this legislation automatically seals felony records for non-sex-offender and non-violent offenses that meet specific criteria:
- The person was convicted after January 1, 2005
- Has not committed a felony in four years
- Completed sentence, probation, or parole as directed
Employers conducting background checks won't have access to sealed records. Qualified convictions improve employment chances since they don't have to disclose their convictions.
19. CA Civil Code 1786.18 (a) (7)
Under this civil code, consumer reporting agencies can't report the following:
- Arrest, convictions of crime, indictments, or misdemeanor complaints older than seven years old
- Non-conviction arrests
- Full pardon has been granted
This provision restricts employers and landlords from using outdated and irrelevant criminal records in background checks.
20. CA Health and Safety Code 11361.5
This law prevents credit reporting agencies (CRA) from disclosing misdemeanor marijuana convictions older than two years.
If two years have passed since the arrest or conviction without a subsequent conviction, a person can request the Department of Justice destroy the records.
In the context of background checks, employers should not discriminate against individuals based on convictions or arrests for marijuana that fall within a specific time frame.
21. CA Labor Code 1024.5, Part 2, Division 2
This code affects background checks by limiting the use of credit reports for employment decisions. Under this labor code, businesses can only use credit reports to hire for certain positions, including:
- Managerial position
- Role in the State Department of Justice
- Law enforcement position
- Required by law to have a credit report
- A position involving regular work with sensitive personal information
- Position with fiduciary responsibilities on behalf of the employer
- A job with access to trade secrets and other valuable business information
- Position with access to $10,000 or more in cash
22. Texas Business and Commerce Code § 20.05
This law restricts background checks conducted by CRAs. CRAs are prohibited from reporting when they are 7 or 10 years old for jobs with salaries under $75,000 annually.
It does not apply for salaries of $75,000 and up or when the employer hires for a position in an insurance agency. CRAs may not furnish consumer reports containing information related to the following:
- Bankruptcies older than ten years
- Civil lawsuits
- Civil judgments
- Paid tax liens
- Medical collections (if the individual had insurance at the time the debt was incurred)
- Any other item that is older than seven years
23. Miya's Law
As the new legislation outlines, a consumer reporting agency must conduct the required background check following the FCRA. The screening must cover criminal background checks and searches in all 50 states and DC.
24. Salary History Ban Law
New Jersey's Salary History Ban Law prohibits private companies from asking job applicants about their wage history, benefits, and other compensation details during the hiring process.
Employers must ensure that the employment background check results from a CRA do not include salary history or inquiries.
Background checks are legal but must follow specific regulations to protect privacy, prevent discrimination, and ensure responsible conduct. Adherence to these guidelines benefits both employers and individuals in various activities.