Sep 14, 2012 General Employment Issues

Important Updates for Employers Conducting Background Checks and Criminal History Inquiries

By January 1, 2013, employers conducting background checks through third-party consumer reporting agencies must update one of the disclosure notices they provide to applicants and employees under the federal Fair Credit Reporting Act (“FCRA”).  Employers should also review their general criminal history screening procedures for employees and applicants in light of recent enforcement guidance from the Equal Employment Opportunity Commission (“EEOC”) regarding the consideration of arrest and conviction records in employment decisions.  The following provides a brief overview of the updated notice required under FCRA and the EEOC’s recent enforcement guidance.  

1.  Employers Must Provide an Updated FCRA Notice.

(a)  Background Regarding the Current FCRA Notice.

Employers utilizing third-party background check reports for hiring and other employment purposes must comply with FCRA and any applicable state laws.  Under FCRA, an employer must, among other things, provide applicants and employees with a notice of their rights under FCRA in various situations, including: (i) prior to taking an adverse action against an individual based on his or her background check report; and (ii) in connection with the procurement of an investigative consumer report.  Employers generally use a sample notice entitled “A Summary of Your Rights Under the Fair Credit Reporting Act,” previously published by the Federal Trade Commission (“FTC”), to satisfy this requirement. 

(b)  Updated FCRA Notice.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, rule-making authority for the relevant portions of FCRA was transferred to the Consumer Financial Protection Bureau (“CFPB”), as of July 21, 2011.  The CFPB subsequently re-issued the FTC’s notice “A Summary of Your Rights Under the Fair Credit Reporting Act” to reflect the transfer of authority to the CFPB and other administrative changes.  On or prior to January 1, 2013, employers must use the CFPB’s new notice (or a form substantially similar to the notice), in lieu of the notice from the FTC that they are currently providing to applicants and employees to comply with FCRA.  A copy of this new notice was published as Appendix K to the applicable CFPB regulations implementing this requirement (12 C.F.R. Part 1022) and is available here.  We understand that the CFPB may also publish a more user-friendly copy of this notice on its website in the near future. 

Employers should review their current background check materials and, on or before January 1, 2013, replace current copies of “A Summary of Your Rights Under the Fair Credit Reporting Act” with the updated version of the notice published by the CFPB.  Please do not hesitate to contact any of our attorneys if you have any questions regarding this new requirement, or if you have any questions generally regarding employers’ background check obligations under FCRA or state law (which may be more restrictive than FCRA).

2.  EEOC Issues New Enforcement Guidance Regarding the Use of Arrest and Conviction Records in Employment Decisions.

Earlier this year, the EEOC issued its Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (the “Guidance”).  A copy of the Guidance is available on the EEOC’s website, at:  The EEOC also published Questions and Answers regarding the Guidance, which are available on the EEOC’s website at:

In the past, the EEOC has stated that employers’ use of arrest and conviction records in hiring or other employment decisions can lead to race or national origin discrimination in violation of Title VII of the Civil Rights Act of 1964 where:

  • the employer treats people of different races or national origins differently in connection with inquiries about their criminal history (i.e., disparate treatment); or
  • the employer’s policy or practice regarding individuals’ criminal history (a) disproportionately screens out people of certain races or national origins, and (b) the employer fails to demonstrate that its policy or practice is job-related for the position at issue and consistent with business necessity (i.e., disparate impact).  

The Guidance consolidates and supersedes the EEOC’s prior guidance and provides additional recommendations and best practices.  Highlights of the Guidance include the following:

  • Employers should not exclude individuals based on arrest records alone because, among other things, an arrest does not establish that criminal conduct has actually occurred.  Conviction records may, however, be lawfully considered if the employer can show its screening policy and practice is job-related for the position at issue and consistent with business necessity.  
  • One way an employer can show its criminal records screening policy or practice is job-related and consistent with business necessity is to develop a “targeted screen”.  Employers who use a “targeted screen” consider at least:

(a)  the nature of an individual’s crime, the time elapsed, and the nature of the job sought by the individual; and

(b)  then provide an opportunity for an individualized assessment for people excluded by the screen to determine whether the policy as applied is job related and consistent with business necessity. 

The Guidance provides further details regarding the ways employers can conduct the individualized assessment described in (b) above, and also describes circumstances where consideration of only the factors described in (a) above may be sufficient for a targeted screen. 

  • In some industries, employers are subject to federal statutory and/or regulatory requirements that prohibit individuals with certain criminal records from holding particular positions or engaging in certain occupations, and compliance with federal laws and/or regulations is a defense to a charge of discrimination.  Additionally, employers may have a defense when complying with federal statutes and regulations that govern eligibility for occupational licenses and registrations.
  • The EEOC recommends as a “best practice”, but does not require, that employers wait until the post-job application stage of the hiring process before asking individuals to disclose relevant information regarding past convictions.  

Employers should review their screening policies and practices and employment applications in light of the EEOC’s Guidance.  Employers must also be mindful of any state laws and regulations governing their operations, which may be more restrictive than the EEOC’s recommendations in the Guidance and impose additional requirements regarding criminal history inquiries.  Please do not hesitate to contact any of our attorneys if you would like assistance reviewing your current policies, practices and applications, or if you would like guidance regarding the specific state laws that may apply to your company’s operations.