Hunton Employment & Labor Perspectives

On March 10, 2014, the Federal Trade Commission (“FTC”) and the Equal Employment Opportunity Commission (“EEOC”) issued joint guidance regarding the use of background checks.  The FTC, which enforces the Fair Credit Reporting Act, monitors compliance with how background checks are conducted.  The EEOC, which enforces federal laws against discrimination, seeks to ensure that the use of background checks does not disparately impact protected groups.

The guidance consisted of two documents. The first document entitled "Background Checks: What Employers Need to Know" is for employers and advises them on their existing legal obligations under both the FRCA and federal non-discrimination laws. The FTC and the EEOC want employers to know that they must notify applicants/employees that they will run a background check and may use the information for decisions regarding his or her employment. Additionally, they explain that the employer needs to obtain written permission from job applicants before getting background reports about them from companies in the business of compiling background information. They also reaffirm that employers need to ensure that they are treating everyone equally and remind them that it is illegal to discriminate based on a person's race, color, national origin, sex, religion, age, disability, or genetic information, including family medical history, when requesting or using background information for employment. Moreover, the guidance discusses the requirements for the preservation and disposal of personnel or employment records.

The second document entitled "Background Checks: What Job Applicants and Employees Should Know" describes an applicant's/employee's rights under federal law when a background check is run. The agencies want applicants to know that it is not illegal for potential employers to ask about their background or require a background check, as long as the employer does not unlawfully discriminate. But, they also note that an employer is not allowed to ask for medical information until an applicant is offered a job and or ask for genetic information-including family medical history-except in very limited circumstances. Furthermore, the document explains that when a person has been turned down for a job or denied a promotion based on information in their background reports, they have to right to review the reports for accuracy.

This was the first time that the EEOC and the FTC have partnered to address the use of employment background checks. Peggy Mastroianni, counsel for the EEOC, stated that "the laws enforced by the EEOC and the FTC intersect on the issue of employment background checks, so this was a unique opportunity for the agencies to work together to provide a user friendly technical assistance to our stakeholders." She further explained that "the number one goal here is to ensure that people on both sides of the desk understand their rights and responsibilities."

The fact that the EEOC and FTC have collaborated to issue a new set of guidelines reaffirms that both agencies consider this topic to be a priority and could potentially share information and leads when enforcing the laws surrounding the use of background checks. As such, employers must be aware of the risks that come with the use of background reports or information when making personnel decisions, including hiring, retention, promotion, and reassignment and ensure that they are complying with the relevant federal laws, as well as laws of their state and municipality.