Background checks are utilized by companies today to decide whether or not you will be permitted to work for them. Information in these reports can reveal many things about you to a prospective employer; it is critical that you be aware of what a company may uncover via a background check before one is conducted. You need to be aware of what steps you must take to protect yourself should negative information about you be uncovered.

Background checks [or reports] can range from a corroborating an applicant's Social Security number to a detailed description of the prospective employee's history and friends. There are several bits of information that might be included in a background check. Please note that many of these sources are created by governmental agencies and are, in fact, public records:

Bankruptcy; Character References; Court Records; Credit Records;

Criminal Records; Driving Records; Drug Test Records;

Education Records; Incarceration Records; Medical Records;

Military Records; Neighbor Interviews; Past Employers;

Personal References; Property Ownership; Sex Offender Lists;
Social Security No.; State Licensing Records;

Vehicle Registration; Workers' Compensation

The federal Fair Credit Reporting Act (FCRA) sets national standards for employment screening. This law, however, only applies to background checks performed by an outside company, called a "consumer reporting agency" under the FCRA. The law does not apply in situations where the employer conducts background checks internally.¹

Depending on in which state you reside you may have stronger laws than what the federal government mandates. One example can be found in California with their Investigative Consumer Reporting Agencies Act  (Civil Code Sections 1786 - 1786.6) and the California Consumer Credit Reporting Agency Act  (Civil Code §1785). Your state may have similar fair employment guidelines and labor codes in place that can put a limit on the content of an employment background check. Google a search for "consumer reporting agencies" and "your state's name" to find out this information.


Under the FCRA, a background check report is called a "consumer report." This is the same "official" name given to your credit report, and the same limits on disclosure apply. The FCRA says the following cannot be reported:²

* Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.

* Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.

* Paid tax liens which, from date of payment, antedate the report by more than seven years.

* Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.

* Any other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years.

You have every right to know before a background check is being performed that one will be done. Under the FCRA, the employer must obtain the applicant's written authorization before the background check is conducted. The authorization must be on a document separate from all other documents such as an employment application.

The company may not perform its own credit report, rather the report must be prepared by an outside company [such as those listed on the right side of this page]. The term "consumer reporting agency" means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports. (FCRA §603f)³

If you believe that the information obtained by the company was incorrect you need to inform your potential employer immediately. Request copies of all documentation and make sure that any incorrect information is expunged from your account. Will any of this effect whether you are hired or not? I cannot give you a clear yes/no answer. Much depends on the content of the report, how it is interpreted, and whether or not the information contained therein can be construed as damaging to you.
 

Sources:

1 Privacy Rights Clearing Act

2 Federal Trade Commission, FCRA Paragraph 607

3 Federal Trade Commission, FCRA Paragraph 603