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Legal Considerations in Custom Background Checks

PSI Team | Uncategorized

Background checks come in handy when picking a new hire. They reveal whether a person is being truthful about their background, skills, and other information, lending weight to the decision to hire. Custom background checks are especially useful because they concentrate on specific information that’s relevant to the job. That is all well and good, but background checks come with their caveats. Employers must negotiate a gauntlet of legal issues to avoid potential fines, lawsuits, and other negative outcomes. Here are several legal considerations in custom background checks employers should keep in mind.

Federal Laws Governing Background Checks

Several federal laws cover what employers can and cannot do regarding background checks and certain stipulations that they must fulfill.

Fair Credit Reporting Act (FCRA)

The FCRA deals with accuracy, privacy, and fairness regarding consumer reports and the information they contain. Background checks qualify as consumer reports if an employer is using a third-party agent to compile public record information that the employer then uses for employment decisions. Therefore, the following steps must occur:

  • The employer must inform the candidate of the need for a background check.
  • The candidate must give written consent to a background check.
  • The employer must provide the candidate with a copy of the report and a summary of their rights after completing the background check and before taking adverse action if necessary.
  • The employer must inform the candidate whether the results led to any adverse action.

Equal Employment Opportunity Commission (EEOC)

The EEOC addresses employment discrimination and dictates that the background checks employers use do not discriminate because of race, color, national origin, gender, religion, disability, age, and similar protected classes.

State and Local Law

Regional and local law can also have a say in background checks. For example, some laws prevent employers from asking about a candidate’s criminal history on their job applications. A company’s best course of action is to design a hiring policy and to run it by its legal team to ensure it’s in line with local, state, and federal law. This policy should include a section on background checks and how the employer will conduct them.

Good Ideas and Best Practices

Stay Consistent

Create a fair and consistent policy for background checks, outlining the checks performed, their relevancy to the position, and how the hiring manager will make their decisions.


Let candidates know what’s happening and how and why the hiring manager will conduct background checks. Let the candidate know what the hiring manager is looking for and how they’ll use the acquired information.

Data Privacy

Protect the information your company acquires and ensure that only authorized individuals in your company will view and use it. Once the information has served its purpose, properly dispose of it.

Those are just a few of the legal considerations in custom background checks and tips on how your company can and should use the acquired information. Contact us today for a consultation for more information on custom background check packages!