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The federal government has already increased it’s enforcement on misclassifying employees as Independent Contractors and on illegal immigration. Now it appears it is setting its sights on background screenings.

On this blog, we have advocated background screenings for contract candidates. Well, some pending regulations and laws may make it a little harder for employers to use background screenings and credit checks, according to the Society for Human Resources Management (SHRM).

The organization recently reported that Acting Equal Employment Opportunity Commission (EEOC) Chairman Stuart Ishimaru wants his agency to issue some new regulations on nondiscriminatory background screenings within the next 12-18 months. It is expected that those regulations would require employers to provide “empirical evidence” when using business necessity as a defense in discrimination cases.

SHRM also reported on a recent EEOC lawsuit against a Dallas-based company that claims that the company used credit histories to discriminate against black, Hispanic, and male applicants. The EEOC is asking the U.S. district court to forbid the company from using credit and criminal background checks, and they want the court to require the company to hire the rejected applicants with back pay dating back to the date they were rejected!

Then there is the Equal Employment for All Act that has been introduced in the House that would prohibit most employers from using credit reports in hiring and employment decisions, even if the employee signed a consent form for the credit check. There would be a few exceptions for certain government and financial jobs.

Does this mean background checks should not be conducted on contractors? No. But SHRM recommends that employers are especially careful with credit checks to ward off discrimination claims. Credit checks should not automatically be required of all employees. If a discrimination case were to arise, the employer must explain why a credit check was needed to predict job performance and how it is related to the specific function of the job the candidate was being considered for.

It is important to the review the Fair Credit Reporting Act before conducting any screenings and be aware of any upcoming changes!

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