Why employers want to know
By Amy B. Crane | Bankrate.com
An employer's need to know about potential employees is driven by a number of factors, according to the Privacy Rights Clearinghouse. These include:
- False or misleading information given by job applicants, estimated by some sources at 30 to 40 percent of all information given on resumes and job applications.
- Federal and state legal requirements for certain jobs, including those that involve contact with children, the elderly or disabled, as well as some government jobs.
- Fallout from corporate scandals, such as Enron and WorldCom
- The Sept. 11 attacks
- Negligent hiring lawsuits, where a company is sued because an employee caused harm to someone else.
"The goal of a company is to find out as much as they can about the skills and behaviors an applicant will bring to an organization," says Mary Massad, vice president of human resource development for Administaff, a personnel management company. "An employer is basically trying to establish whether you will be a good fit for the organization and what type of risk you might pose to that organization."
Most employer background checks focus on employment history, educational background, credit history, motor vehicle history and criminal background, she says. Employment and educational background checks verify information that employees have provided in resumes and on job applications, so it's important to be honest on your resume and when filling out a job application, she says.
"A lot of applicants are shocked when a background check is actually run and turns up something that is at odds with the information they've provided," Massad says. If you sign a consent for a background check, it's safe to assume that the company you are seeking employment with will be conducting such a screening.
What they can't include
The federal Fair Credit Reporting Act put national standards in place for background checks. However, these standards only apply to companies that hire a consumer-reporting agency to do the background check. If a company does the background check in house, it is exempt from the provisions of this act.
Also, the Privacy Rights Clearinghouse notes that the restrictions on reporting imposed by the Fair Credit Reporting Act don't apply to jobs that have salaries more than $75,000 per year. Some states, most notably California, have stronger protections for consumers in these situations than the federal act.
The federal act stipulates that the following information cannot be reported on an employer background check:
- Records of arrests, civil lawsuits and civil judgments after seven years
- Accounts put in for collection after seven years
- Paid tax liens after seven years
- Any other negative information -- criminal convictions being the exception -- after seven years.
- Negligent hiring lawsuits, where a company is sued because an employee caused harm to someone else.
While bankruptcies can be included in background checks, federal law prohibits discrimination against applicants who have filed for bankruptcy. In many but not all states, employers cannot seek arrest record information on applicants, though such information is a matter of public record, according to the Privacy Rights Clearinghouse.
Your rights
Under the recently passed Fair and Accurate Credit Transactions Act, you have the right to obtain a free copy of an employment background check file once a year. However, many screening companies don't keep information on file once they've given a report to a company, so that right might not do you much good in practice, says Friery.
While an employer doesn't have to tell you what company is doing the screening, it makes sense to ask because at least some companies will provide that information so you will know where to go if there is a problem.
While all third-party employment-screening companies are required to provide free reports and make a toll-free number available for consumers, this information isn't easy to track down.
If an employer is prepared to deny you employment as a result of information obtained during the course of a background check, the employer must provide you with a "pre-adverse action disclosure" before that decision not to hire you is actually made, according to the Privacy Rights Clearinghouse. This disclosure should include a copy of the report and an explanation of your rights under both the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act.
Massad says that at this point, or even before this point, many employers will give you the chance to explain any problems. "For example, if you have the same name as your father and the background check shows that you have problems, you could call the company that reported the inaccurate information and figure out how to dispute it," she says. "Many employers will give five to 10 days to dispute that information and once the information has been corrected, consideration will again be given to that applicant."
If a company denies you employment as a result of this information, it must give you an "adverse action notice" that includes the name and contact information of the screening company, that the employer made the adverse decision -- not the credit reporting agency -- and that you as the applicant can dispute the information for either accuracy or completeness.
The caveats
Friery doesn't believe that these provisions adequately protect consumers. "We really question the effectiveness of these provisions," she says. "An employer can easily say that the person was not hired because someone else was more qualified, not because of the information found out in the background check, in which case they don't have to provide these notices.
So how would you ever know if there was inaccurate information in your background check report if no one tells you?"
These issues are important given the growing incidence of criminal identity theft and the general level of misinformation in public records, says Stanley of the ACLU. "People can find themselves trapped in a Kafka-esque situation where they are running around in circles unable to correct false information about themselves or if they are able to correct it, it just pops up again somewhere else," he says. "In the meantime, they've been passed over for a job or denied credit or lost their dream home and there is nothing they can do."
Both Stanley and Friery believe that additional steps need to be taken by the federal government to protect privacy. "We need an overall federal privacy law that protects consumers and states what information can and can't be used for," he says. He notes that in most European countries, privacy laws are much stronger and governments closely monitor privacy rights and issues and also enforce the laws.
"Right now, private parties can be sloppy about information and about people's lives without any fear of the consequences," he says. "These kind of horror stories that we've long predicted are inevitable are starting to hit people in the face."
Consumers can also take other steps to protect themselves from potential issues raised during a background check. The Privacy Rights Clearinghouse recommends that you take pro-active steps at the start of your job hunt, including ordering a copy of your credit report and checking court and state department of motor vehicle records and your personnel file at past employers for accuracy. You could also pay a large background-checking firm to run a background check on you so that you'll be prepared for anything that might turn up.
Applications and interviews
The Fair Credit Reporting Act does not restrict employers from asking questions in a job application form. So, while a background check can't include an arrest record, for instance, there is nothing to stop an employer from asking if you've ever been arrested.
Employment applications have gotten longer and sometimes people are confused about how to answer a question. But even an inadvertent mistake can get you in trouble if that information on your application doesn't jibe with what's uncovered in a background check.
Job interviews are a different story. The federal Equal Employment Opportunity Commission enforces federal employment laws. Basically, questions asked in an interview should directly relate to functions that a person has to perform on the job. Questions that shouldn't be asked include:
- Are you married?
- Do you have children?
- Are you a U.S. citizen?
- Do you have any disabilities?
- How much do you weigh?
For a rundown of other illegal questions and related questions that are legal, see the Job Choices Career Library article "Handling Illegal Questions" at Jobweb.com.