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Pre-employment screening: HR issues

Pre-employment screening: HR issues

Pre-employment screening can be a thorny legal issue for your HR department and it's important to fully understand the rules before embarking on the screening process.

Background checks can be used to evaluate individuals for hiring, firing, promotion or reassignment. Employers can be sued if employees are not screened and another person suffers an injury because of it. For example, a company that hires a substance abuser as a commercial driver would be liable if the driver caused an accident.


Pre-employment screening carried out by in-house staff is not covered by the Fair Credit Reporting Act (FCRA) but a check carried out by a consumer reporting agency must abide by the Act's rules. In either case it is good practice to follow the rules as it minimizes the risk of litigation. By outsourcing your background checks to a professional services company you get further protection from legal proceedings.

According to the FCRA when carrying out pre-employment screening an employer must disclose their intent to the individual and obtain written permission for the check to be carried out. It is not sufficient to state in the job application that consumer reports may be obtained.

If you intend to undertake an investigative consumer report (one which includes personal interviews with friends, neighbors or associates) there are additional regulations imposed. Your intention to seek information about an individual's reputation, character or mode of living must be disclosed in writing along with a summary of the individual's consumer rights and a statement outlining how the applicant can get more detailed information on the nature of the inquiry.

You cannot discriminate against a candidate because he or she has previously filed for bankruptcy or has an adverse credit report. Laws vary from state to sate and it is very important to thoroughly understand the regulations in your area.

If the information contained in the pre-employment screening check influences your decision not to hire an individual you must give the applicant a copy of the report and a written summary of their rights as set down by the Fair Trade Commission (FTC).

A second notice must include the reasons why the individual has not been hired as well as the name, address and phone number of the agency that provided the report, and information on how to dispute the contents of the report. Employers cannot keep any of the information from the report on file and must keep the results confidential.

Willful non-compliance with the procedures set out in the FCRA could result in the employer being forced to pay actual damages, punitive damages, costs and attorneys' fees for the individual concerned.

Providing information for background checks on past employees

If your HR department is asked to provide information on a former employee for another company's pre-employment screening process there are a number of other legal issues to take into account. Some states allow employers to sue other employers if important information is omitted in the background check and the new employee commits a serious offence.

However, ex-employers can also be sued if misleading or erroneous information is passed on during a background check. You can limit your risk by instructing employees to be careful about what they say as part of background checks or to pass all enquiries on to the HR department.

Rather than avoiding the potential for legal nightmares by limiting the amount of information you provide to others, make the effort to understand the laws that apply to your department. It's the safest way of protecting you and your company from legal action.