Many employers perform background checks on prospective employees as part of the hiring process. Employers view criminal background and credit checks in particular as important screening tools for hiring qualified workers.
Although there is no federal law prohibiting the use of criminal or credit history by an employer, the Equal Employment Opportunity Commission (EEOC) has taken the position that using criminal and credit records may have a disparate impact on minorities. For that reason, the EEOC recommends against their use in employment decisions absent a business necessity.
Many states have also taken a restrictive view of using criminal and credit background checks by employers. Ten states have passed laws that limit employers’ use of credit information in employment. Approximately 12 states have enacted laws that prohibit an employer from using an applicant’s criminal history in making employment decisions.
Taking the opposite view, a federal court recently decided a case involving an employer who used criminal and credit check records to deny a job to a minority applicant. The court ruled in favor of the employer rather than the EEOC, observing that employers have legitimate reasons for conducting credit and criminal background checks. Rather than using a poor criminal or credit history as a blanket disqualification, the court suggested only specific practices would be objectionable because of a disparate impact on certain groups.
CPC recommends employers check state law prior to conducting any background checking and then comply with all required disclosures. Have questions? Give us a call.