August 12, 2014

Looking Behind the Curtain: Background Checks


The recruitment process for hiring new staff is almost complete.  The applications have been reviewed, the candidates interviewed, and a conditional offer of employment has been made to the seemingly ideal applicant.  The only thing left is for the applicant to successfully pass the background check.  This sounds simple, but looking behind the curtain may expose your business to liability if not done properly.  This article will provide readers with an update on lawfully completing background checks in Oregon.


First, employers may conduct background checks on prospective employees only after a conditional offer of employment has been made and accepted by the prospective employee.  A best practice is to have the conditional job offer letter signed and accepted by the prospective employee along with a written Authorization to Conduct Background Check.  This provides evidence of the job offer, the employee’s acceptance, and the authorization for the background check.  No background checks should be conducted until after the receipt of both the signed conditional job offer letter and authorization form are returned, and consideration should be given to requirements of any collective bargaining agreements that may apply.


Second, conducting the background check may be different for various classes of employees.  For example, the background check an employer conducts for the hiring of an accountant handling payroll and financial accounts will be different than that for a receptionist.  Given that the accountant will be handling money, bank accounts, and payroll, it would be appropriate to conduct a credit history review as a necessary and legitimate condition of employment.  On the other hand, pre-employment credit check of a receptionist is not justified unless the employer can show there is a necessary and legitimate reason for the credit check.  In that case, a general pre-employment background check policy would not be enough to justify the pre-employment credit check.


Third, the advent of social media and its uses has created new areas of inquiry by employers.  In the most egregious situations some employers demand prospective employees provide access to personal social media accounts so the employer may review the social media postings to learn more about the prospective employee.  Oregon has specifically passed legislation that prohibits an employer from demanding or requiring a prospective employee, or any employee for that matter, to disclose or provide access to a personal social media account (with the exception of a very narrow exemption that is not relevant here).  Employers should be very careful to avoid asking for or requiring a prospective employee to submit names and passwords for social media accounts.  Violation constitutes an unlawful employment practice and provides a private cause of action for the aggrieved prospective or current employee.  If an employer checks “public” social media, a best practice would be to have someone that is not the hiring decision maker review the social media site so protected characteristics that may be disclosed are not acted upon by the decision maker.


Fourth, the employer should have a clear understanding of what information is to be obtained, how it is to be obtained, who is to have access and use of the information, and what its responsibilities are under the Fair Credit Reporting Act (“FCRA”).  Unfortunately, when there has been a significant passage of time between recruitments for open positions, employers may fail to utilize best practices to avoid liability in the hiring process.  Too often they simply forget about the application of the FCRA to the hiring process and then reject a prospective employee without providing appropriate information and opportunity to challenge and explain derogatory information that appears in a consumer report.  For example, because a credit bureau report is a consumer report, employers have specific duties to fulfill before they can rely on the report to make an employment decision.  The best practice is to consult with employment legal counsel for assistance in understanding the duties in the hiring process, especially as it relates to background checks.


Finally, employers should not reduce or discontinue conducting background checks on prospective employees.  However, they should review the job description carefully and then determine what type of background check will provide the necessary information to assist in the ultimate hiring decision.  A one-size-fits-all approach to background checks may lead to possible unlawful employment practices if the information solicited is not appropriate or relevant to the advertised position.  Likewise, if it fails to conduct a reasonable background inquiry, an employer can be held liable for foreseeable harms later committed by an employee.  However, if the background check is done in good faith, reasonably tailored to ensure the information obtained is job related and justified by the nature of the position being filled, then the information obtained and relied upon, even FCRA covered information, is appropriate to the hiring process and will not give rise to liability. 


Recruitment and selection of employees is an area that may create potential liability if not done properly, especially background checks.  If it has been some time since the employer has recruited, it would be wise to consult with employment legal counsel to assist in outlining a fully legal and defensible process.  By consulting with an employment attorney, the  employer may not only identify and hire the best candidate, but it will have avoided some of the mistakes that can create liability when looking behind the curtain.

For more information on this topic, please contact or call (888) 598-7070.


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