Uber recently settled with the California lawsuit (without admitting wrongdoing) for $10 million for misleading the public about the background checks of its drivers. Uber’s background checks didn’t include fingerprints to find past convictions, and weren’t equivalent to checks to which taxi drivers are subjected.
After learning of this case you’d think that all companies should be doing background checks, but you’d be wrong. Employers may be barred for doing certain types of background checks or punished for not doing some. Here are some of the confusing rules that apply to background checks.
As a general rule, it’s not illegal for an employer to do a background check (other than medical or genetic history). Thus, under federal law employers can check a job applicant’s work history, education, criminal record, financial history, and social media postings. However, the information obtained cannot be used to discriminate against a job applicant on the basis of race, color, national origin, sex or sexual orientation, religion, age, or genetic information. The EEOC outlines general rules for background checks.
When does padding a resumé cross the line into fraud? Some job applicants simply lie about their credentials; it’s called education fraud. Some famous individuals committed this fraud, including the Dean of Admissions for MIT, the chief spokesperson for Walmart, and the CEO of Bausch & Lomb. Others may have degrees from “diploma mills” so their claimed education is essentially worthless. Because education fraud is so prevalent, it’s wise to check out claimed degrees.
You can check an applicant’s education claims as part of an overall background search. A separate check can be made through the National Student Clearinghouse.
Some states restrict this type of background check for employees in general but require them for certain occupations (e.g., daycare workers). Determine your state’s rules regarding background checks. Then comply with legal rules, such as giving an applicant notice before doing the check and allowing the applicant to correct erroneous information. Check what you’re allowed to ask; you may be restricted by state law to crimes relevant to a job.
Be sure to distinguish between asking about arrests and convictions. For example, depending on your state, you may not be allowed to ask about an arrest if the matter is no longer pending.
Caution: Don’t adopt a blanket rule that you’ll never hire anyone with a criminal record. The EEOC has said that this could be viewed as discriminatory against African Americans and Latinos who have a disproportionately higher number of convictions.
You can seek information about an applicant’s credit history. You may find this relevant if the job entails handling company funds. However, in doing so, be sure to comply with the Fair Credit Reporting Act (FCRA), which requires you to obtain the applicant’s permission to do a background check.
The credit report cannot reveal certain information, including a personal bankruptcy, unless the job that the applicant is seeking has a salary of $75,000 or more. Again, state law may restrict what the credit check can reveal.
Invest the money upfront to check out a job applicant before you put him or her on the payroll. The small cost of a background check is considerably lower than legal exposure for wrongs committed by a worker or the need to replace an inept worker you didn’t check thoroughly before hiring.