Considerations When Using Criminal Background Checks

By David James and Joe Schmitt

According to a poll by the Society for Human Resource Management (SHRM), 73 percent of businesses consider the criminal backgrounds of applicants for all positions, and another 19 percent of organizations evaluate applicants’ criminal background for select positions.

These employers have concluded that criminal background checks limit their potential liability, advance their business goals, or both. However, the federal Equal Employment Opportunity Commission (EEOC) has made criminal background checks a point of emphasis, attempting to restrict their use. Additionally, the Fair Credit Reporting Act and state ban-the-box laws create procedural requirements.

As even the EEOC must acknowledge, criminal background checks serve a purpose in the workplace. Criminal screening may protect a business’s customers, property and reputation. Criminal background checks may also safeguard the general public; indeed, certain industries, such as health care and education, have affirmative obligations to conduct background checks for this very reason. Further, criminal screening protects fellow employees.

With these risks, organizations understandably may prefer to reject all applicants with a criminal history. Such a conclusion might seem supported by the absence of a federal law directly prohibiting such a practice. But, the EEOC has concluded that a blanket refusal to hire applicants with a criminal history constitutes disparate-impact discrimination, a form of indirect discrimination prohibited by Title VII of the Civil Rights Act.

According to the disparate-impact theory, use of criminal backgrounds as a screening device has a disparate—or unequal—impact on people of color, who have higher arrest and conviction rates. Consequently, EEOC guidelines provide that in order to reject an applicant because of his/her criminal background, an employer must be able to establish “business necessity.” To reach this conclusion, employers must weigh the following three factors:

  • The nature and gravity of the offense(s);
  • The time that has passed since conviction and/or prison; and
  • The nature of the job sought.

Thus, the more serious the offense, the closer in time the conviction is to the application, and the more related the conviction is to the job sought (e.g., embezzlement and banking), the more appropriate it is to turn down an applicant based on his/her criminal history.

As a practical matter, the EEOC guidelines require employers to conduct individualized analyses of applicants with criminal histories. Thus, businesses should avoid bright-line rules such as a blanket refusal to hire all applicants with convictions, regardless of when the crime occurred. Rather, organizations should consider the particular crime at issue as compared to the job sought and the passage of time since the conviction.

That being said, one clear rule employers should adopt is refraining from asking about, or using, arrest data. Use of past arrests, as opposed to convictions, has been widely criticized as overly broad and particularly impactful on communities of color. Furthermore, an increasing number of states, such as California and Wisconsin, unequivocally prohibit inquiry into arrest records.

Additional laws govern procedural aspects of criminal background checks. The federal Fair Credit Reporting Act requires that employers provide a written, stand-alone authorization form to applicants before obtaining a report. If something in a report causes management to take adverse action, such as rejecting a candidate for employment, the employer must provide a pre-adverse action notice, informing the candidate of the intended action and providing an opportunity to explain or dispute the report.

Subsequently, the company must provide an adverse action notice confirming the decision. Of course, these are highly technical documents with specific requirements.

On the local level, many states have passed ban-the-box laws. These laws prohibit employers from asking about criminal backgrounds on applications or in other ways early in the hiring process. Rather, inquiries, including criminal background reports, are limited to the conditional offer stage, similar to pre-employment drug and alcohol tests.

Ultimately, employers should balance the need for criminal background reports against increased regulatory and judicial scrutiny of this practice. Certainly reviewing criminal backgrounds continues to have a place for many workforces, and employers should not necessarily scrap this practice.

However, at a minimum, employers should reconsider any per se disqualifications and instead adopt a practice of individually assessing the relevance of an applicant’s criminal history to the position sought.

David James and Joe Schmitt are shareholders in the labor and employment group at Nilan Johnson Lewis. Association members are entitled to no-cost, confidential, 60-minute legal consultations with James and Schmitt on labor and employment matters. Call the firm at (612) 305-7500.