Are Your Contractor Background Checks Discriminatory?

As a recruiter, your reputation rests on sending clients quality contractors. Beyond ensuring they fit the job requirements, you want to make sure contractors will not put your clients or their in-house employees at financial or physical risk. That's why many recruiters want background checks on contract candidates. But when done improperly, a practice that is meant to protect you and your clients can do more harm than good.

Criminal background checks have increasingly been under fire from the Equal Employment Opportunity Commission (EEOC).  Last year, the agency issued updated guidance regarding the use of criminal records in employment decisions. Now, according to The Wall Street Journal, the EEOC has filed complaints in federal courts against two large emplo... over their use of background checks.

The lawsuits against Dollar General Corp., and BMW assert that the companies' background check policies had a discriminatory impact against black applicants. According to The Wall Street Journal article, "the EEOC cited statistical disparities in the hiring rates of blacks and nonblacks after the companies ran criminal background checks."

If you are the employer of record for your contractors, you could be the one who would be held liable in this type of situation. Does that mean you should stop conducting background checks? No, but it does mean that you might want to consider outsourcing the employment of your contractors to a contract staffing back-office so they will be liable in these situations.

If you want to remain the employer of record, it's important that you take a close look at your background check policies and make sure they jive with the EEOC's guidance.  A few things to remember:

  1. It is best practice to not run background checks on applicants. Rather, you should wait until after the job offer has been extended to conduct a background check.
  2. Don't rescind a job offer based on an arrest record. An arrest record does not prove criminal conduct.
  3. Don't automatically discount anyone who has a conviction. You should consider the offense in relation to the job being offered as well as the length of time since the crime was committed.
  4. You must comply with the Fair Credit Reporting Act (FCRA) when conducting background checks.

Background checks can be a great tool to help ensure that you not putting your client - or your reputation - at risk when placing a contractor. But like any tool, it is only useful when used correctly.  When in doubt, consult with a labor attorney before making adverse employment decisions based on a criminal record. 

This article is for informational purposes only and should not be construed as legal advice.

Debbie Fledderjohann is the President of Top Echelon Contracting, Inc.

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