Be Cognizant Of Potential Perils Of Background Investigations During The Hiring Process

Strong Internal Policies And Practices Can Minimize Risk If Followed, Increase Exposure If Not.
January 17, 2015

Be Cognizant Of Potential Perils Of Background Investigations During The Hiring Process

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Whether hiring a mailroom clerk or a CFO, any company would be remiss if it didn’t conduct at least some due diligence as to the backgrounds of their prospective hires. While the wisdom of investigating a candidate’s history may be unassailable, the manner in which such research is done intersects with multiple federal and state legal and regulatory schemes, and can expose a company to significant liability if it runs afoul of those rules. This is particularly true as to credit histories, criminal background checks, and, to a lesser extent, a candidate’s social media activity.

Credit Checks

Discount retail chain Dollar General recently found out the importance of strictly complying with the letter of the law as to conducting credit checks when it settled a $4 million class action suit based on the chain’s failure to provide proper or timely notices to candidates that they were conducting and would be using credit checks in their employment decisions, as required by the Fair Credit Reporting Act.

EEOC And FTC Guidance

This case comes on the heels of guidance issued earlier this year by the U.S. Equal Employment Opportunity Commission and the Federal Trade Commission as to the importance of adhering to both the technical and substantive requirements governing employers’ use of background checks. The guidance emphasizes that while it is not illegal to collect background information regarding potential hires (excluding certain medical and genetic information), companies need to be cognizant of the laws governing how such information can be collected, how candidates need to be advised about how and why such information is being obtained, and how it can be used.

“Ban The Box” Laws

In addition to federal anti-discrimination and other laws that govern candidate investigations, a patchwork of state laws and even county or city ordinances also place limits on the process. Thirteen states and almost 70 cities and counties – including New York City – have adopted so-called “ban the box” laws that limit or prohibit questions about a candidate’s criminal history and/or delay certain background checks until later in the hiring process.

Access To Social Media Accounts

Checking out a candidate’s social media presence has now become standard operating procedure for many employers, whether conducting a simple Google search or reviewing posts on Facebook, Instagram, Twitter, or other social media sites. There is nothing wrong with reviewing publicly available online information or posts by or about a candidate and using that information in a hiring decision. However, some employers request passwords or access to a candidate’s social media accounts to gain access to posts and information that the candidate has elected to keep “private.” A number of states have passed or are considering laws that prohibit employers from demanding social media or online account access from candidates or existing employees. Thirteen states now have such laws, and 28 more states, including New York, introduced such legislation in 2014.

For employers, an effective hiring process must not only include efforts to ensure that the right candidates are hired for the job, but also the establishment of procedures and protocols to ensure that those efforts comport with applicable federal, state, and local laws.

If you are seeking counsel and guidance on your company’s hiring processes or how to reduce potential exposure arising from those processes, please contact Ohrenstein & Brown at (888) 260-6821