Background Checks and the Law


When it comes to background checks there is a lot of confusion. What can a company do or not do? What are my rights? The easiest way to think about this is my information a matter of fact? If the information is a public record it may be accessed without your permission, but most companies do not do this.

Due to the sensitivity of the information contained in consumer reports and certain records, there are a variety of important laws regulating the dissemination and legal use of this information. Most notably, the [[Fair Credit Reporting Act]] (FCRA) regulates the use of consumer reports (which it defines as information collected and reported by third party agencies) as it pertains to adverse decisions, notification to the applicant, and destruction and safekeeping of records.

If a consumer report is used as a factor in an adverse hiring decision, the applicant must be presented with a “pre-adverse action disclosure,” a copy of the FCRA summary of rights, and a “notification of adverse action letter.” Individuals are entitled to know the source of any information used against them including a Credit rating agency| or a credit reporting company. Individuals must also consent in order for the employer to obtain a credit report.

Most of the time, credit reports are not pulled, unless the candidate is going to work for a financial company or a company working for them in a financial capacity. It is not to determine their credit worthiness. There’s a perceived correlation between a high debt load and the possibility of embezzlement, theft or malfeasance.

Most companies are required to list you as an employee in the National Directory of New Hires (NDNH): a central repository of employment, unemployment insurance claimant data, and quarterly wage data from State Directories of New Hires, State workforce agencies, and federal agencies. This is used to track parents that escape their responsibilities and force them to comply with child support orders across state lines. Credit agencies report off this database. The how and the why is a mystery, but they do. Employers in turn, use the credit report to validate previous employment as many companies have opted to not validate employment.

One study showed that half of all reference checks done on prospective employees differed between what the job applicant provided and what the source reported. The interesting part of all of this is that while a company may be following one law they may be unknowingly violating another.

The other thing is tell the truth about your education! This is the easiest thing to check and all colleges comply. They do not want non-graduates touting they have a degree from Harvard and really the applicant went to one summer school class on campus that was open to all. You would be shocked how many people say they finished their doctorate and they really never finished.

If there is something in your background, tell your recruiter. They can help you navigate this. Just do not lie. If you have fudged in the past clean it up. Get it off all of your resumes, profiles, etc.

Things that may surprise you!

1. Most people have been fired at least once in their life.

2. Most people have made mistakes.

3. Most applicants have something negative on their credit report.

4. Most credit reports have inaccurate information on them.

5. Most applicants have failed at something.

6. Most applicants did not fit in somewhere.

I use offline references on candidates lightly. I never do background checks without permission. Even if I have expressed permission on a candidate brief, I ask again.

Things to remember while interviewing

Perfection is not possible. Learn from your mistakes. Be honest. Do Not Lie. Be yourself.

Use our Behavioral Interviewing Guide to help you through the tough spots. Your recruiter will be with you every step along the way.

Written by Melanie Kirk. Empyrean Consulting, Inc.



Filed under Background Check, Candidate Documents, Client Documents, Interviewing Soft Skills

2 responses to “Background Checks and the Law

  1. Pingback: Although Tempting, Don't Lie on Your Resume | Gigats Info

  2. Pingback: Although Tempting, Don't Lie on Your Resume | Gigats Information

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