Essential Information for Recruiters Running Contractor Background Checks


If you run contractor background checks, you will want to read a recent government document on their proper use.

In a joint effort, the Equal  Employment Opportunity Commission (EEOC) and the Federal Trade Commission (FTC) published a technical assistance document for employers and another for employees explaining background check laws enforced by both agencies. The EEOC is charge of laws that ensure background checks are not discriminatory. The FTC enforces the Fair Credit Reporting Act (FCRA), which is intended to protect the privacy and accuracy of credit reports that are used in background checks.

Recruiters will want to pay special attention to the document aimed at employers titled "Background Checks: What Employers Need to Know." 

While it does not provide any new regulations, it offers essential tips on the proper acquisition and use of background checks.  The document stresses that it is not illegal to run background checks but that employers must follow the regulations of the EEOC and FTC when doing so.

When running background checks, here are some of the most important do's and don'ts:

  • Don't intentionally discriminate.  All applicants should be treated equally, so if you require a background check for one candidate for a specific position, be sure you are requiring it of the other candidates for that position. EXAMPLE: Don't run background checks only on people of a certain race.
  • Don't unintentionally discriminate. Some criminal backgrounds are statistically more common among a certain race or other protected class, so if you have a blanket policy forbidding the employment of people with that criminal background, it could  create a disparate impact. That means that a certain class is disportionately affected by your policy. It is essential that you only base employment decisions on such a factor if doing so "job related and consistent with business necessity."
  • Get applicant's written permission to run the check. They should sign a release that specifies that the information can be used to make decisions about their employment.  The release must be in writing and in a stand-alone format. It can not be part of the employment application.
  • Notify individuals BEFORE taking adverse employment action. Provide them with a copy of the background check and "A Summary of Your Rights Under the Fair Credit Reporting Act" so they have the opportunity to explain the negative information.
  • Ensure proper communication AFTER adverse employment action. The candidate must be provided with a notice (orally, in writing, or electronically) that they were rejected due to information on the background check. You must give them the name, address, and phone number of the company that ran the background check, but make sure they understand that the background check company did not make the hiring decision and cannot give the reasons for it.  Individuals can, however, dispute the accuracy or completeness of the report and request a free report from the background check company within 60 days.
  • Keep accurate records. You must retain any employment records for a year after the records were made or a year after the employment action was taken, whichever is later, per the EEOC.  If you are charged with discrimination, you must retain the records until the case is concluded.  Be sure to burn, pulverize, shred, or otherwise destroy the records once they don't have to be kept anymore.

Background checks are no longer limited to direct hire employees.  As contractors become a more integral part of the workforce and are handling more critical and sensitive tasks, background checks are critical to ensure that you are not putting your client or your reputation at risk by placing a contractor. Plus, your clients will likely require some or all of the following checks before they will allow a contractor to start an assignment:

  • Social Security Number verification
  • Statewide misdemeanor and felony check
  • Sex offender
  • Address history
  • County level specific checks for the places the contractor has lived

One way to escape background check compliance headaches is to outsource the employment of your contractors to a contract staffing back-office that will handle the background checks.  If you do, make sure that they can handle the types of checks listed above AND that they are following the laws of the EEOC and FTC.  Background checks are meant to protect you and your clients, but only if they are handled properly.

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

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

Views: 176

Comment by Derdiver on April 14, 2014 at 3:12pm

This is becoming a real problem in many circles. Great post, thank you! 

Comment by Debbie Fledderjohann on April 14, 2014 at 3:19pm

Yes, it's creating quite a catch-22 for recruiters who employ contractors. If they don't do backgrounds, they could put their reputation at risk at best or face a damaging negligent hiring lawsuit at best. However, if they do run them, they could be facing discrimination issues.  It's truly a "proceed with caution" situation. I'm glad you liked the article! 


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