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A government document on the proper use of  background checks is a must-read for any recruiter who runs contractor background checks.

Contractor Background Check Guide

The Equal  Employment Opportunity Commission (EEOC) and the Federal Trade Commission (FTC) co-published a technical assistance document for employers and another for employees explaining the laws governing background checks for contractors. The EEOC is responsible for making sure that background checks are not discriminatory while the FTC enforces the Fair Credit Reporting Act (FCRA), which protects the privacy and accuracy of the credit reports used in background checks.

The document titled “Background Checks: What Employers Need to Know” is the one that recruiters need to pay attention to. The document does not provide any new regulations but rather provides tips for acquiring and utilizing information from background checks properly.  While the document notes that it is not illegal to run background checks, it stresses the importance of following the regulations of the EEOC and FTC.

Key Points about Background Checks for Contractors

Here are some key points addressed in the document:

  • Don’t intentionally discriminate.  Treat everyone equally. If you require a background check of one candidate for a position, you should require it of any candidates for that position. For example, you shouldn’t run background checks only on people of a certain race.
  • Don’t unintentionally discriminate. If a background problem is more common among a certain race or other protected class, having a blanket policy forbidding the employment of people with that criminal background could disproportionately exclude members of that class. This is known as disparate impact. If you cannot show that basing employment decisions on that factor is “job related and consistent with business necessity,” you could be faced with a discrimination lawsuit.
  • Get the applicant’s written permission to run a background check and make sure they know the information can be used to make decisions about their employment.  The notice must be in writing and in a stand-alone format. It can not be part of the employment application.
  • Notify individuals BEFORE taking adverse employment action. They must be given a copy of the background check and “A Summary of Your Rights Under the Fair Credit Reporting Act.” This allows them to explain the negative information.
  • Communicate properly AFTER adverse employment action. You must notify the candidate (orally, in writing, or electronically) that they were rejected due to information on the background check and provide them with the name, address, and phone number of the company that ran the background check.  You must also notify them that the background check company did not make the hiring decision and that they cannot give the reasons for it.  Individuals can, however, dispute the accuracy or completeness of the report and request a free report from the background check company within 60 days.
  • Pay attention to record-keeping rules. The EEOC requires that you retain any employment records for a year after the records were made or a year after the employment action was taken, whichever is later.  If you are charged with discrimination, you must retain the records until the case is concluded.  When the records no longer have to be retained, they must be disposed of properly (burn, pulverize, shred, etc.).

The days when background checks were limited to direct hire employees are over.  As contractors become a more integral part of the workforce and are handling more critical and sensitive tasks, background checks can help ensure that you are not putting your contract staffing client or your reputation at risk by placing a contractor. Moreover, a number of companies require backgrounds checks before they will allow a contractor to start an assignment. Clients commonly require some or all of the following checks:

  • Social Security Number verification
  • Statewide misdemeanor and felony check
  • Sex offender
  • Address history
  • County level specific checks for the places the contractor has lived

You can outsource background checks, and all of the other employment tasks associated with contractors, to a provider of recruitment back-office solutions. If you do, make sure that they can handle the types of checks listed above AND that they are following the laws of the EEOC and FTC.  Background checks are meant to protect you and your clients, but only if they are handled properly.

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