What are the laws concerning background checks on potential hires and employees?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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Employers have a basic right to conduct extensive background checks both for prescreening purposes, and after hire as well. This right extends across broad areas including criminal records, employment or education verification, credit reports, motor vehicle records, references and more.

Many experts advise employers to continue credit and software searches after hiring—especially if the employee is taking on more and more responsibility for company assets. Some laws restrict financial background checks, however, to an employee making more than $75,000 per year.

Getting Background Information

The most common and productive way that employment background information is acquired is directly from the applicant. Most companies use an employment application form that authorizes further software search inquiries with the candidate’s own permission.

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Limits to Getting Employment Information

The federal Equal Employment Opportunity Commission (EEOC) has strict guidelines on several important parts of background checks that will apply to software searches. The EEOC, for example, has a seven year limit on asking about arrests…but no time limit at all on convictions. The EEOC also prohibits an employment decision strictly on the basis of a prior arrest or conviction. California goes even further than the EEOC, however, and completely prohibits all inquiries about arrests and convictions.

Obtaining the data for prescreening may also be a problem. Many state arrest records are incomplete; employers usually rely on a county database to identify arrests. With more than 3,000 counties in America, it is even more important to use legal and accurate search software if one is going to attempt such a search. Using inaccurate software search data can be cause for a lawsuit. The average jury award for making a negligent mistake in hiring is more than $840,000.

Always follow federal and state guidelines, as promulgated by the EEOC and your state’s Department of Labor. Don’t take chances using software that illegally mines information on employees – prospective or current. The risks of finding and/or acting on inaccurate information inappropriately will lead you straight into a lawsuit.

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