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Employment Background Checks:
A Jobseeker's Guide
Whether you are hired or promoted for
a job may depend on the information revealed in a background check. Job
applicants and existing employees as well as volunteers may be asked to
submit to background checks. For some jobs, screening is required by
federal or state law. The current emphasis on security and safety has
dramatically increased the number of employment background checks
conducted. In short, employers are being
cautious. At the same time, applicants and employees fear that employers
can dig into the past in ways that have nothing to do with the job.
This guide explains the why
and how of background checks. It also tells you what can be
covered in a background report, your rights under the Fair Credit
Reporting Act, and what you can do to prepare. For more information, go
to the References section at the end of this guide.
Part 1. Why Does
an Employer Conduct a Background Check?
Part 2.
What Is Included in a Background Check?
Part 3.
What Cannot be in a Background Check Report?
Part 4:
Who Conducts a Background Check?
Part 5.
The Fair Credit Reporting Act and Background Checks
Part 6.
Background Checks and Your Credit Report
Part 7.
Investigative Consumer Reports – What Will Your Neighbors Say?
Part 8.
How to Prepare for a Background Check
Part 9.
References
Part 1. Why Does an
Employer Conduct a Background Check?
Employers check potential and current
workers for several reasons. The things an employer wants to know about
you can vary with the kinds of jobs you might seek. Here are a few of
the reasons for employment screening.
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Negligent hiring
lawsuits are on the rise. If an employee’s actions hurt someone, the
employer may be liable. The threat of liability gives employers reason
to be cautious in checking an applicant’s past. A bad decision can
wreck havoc on a company’s budget and reputation as well as ruin the
career of the hiring official. Employers no longer feel secure in
relying on their instinct as a basis to hire.
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Current events have
caused an increase in employment screening.
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Child abuse and child abductions
in the news in recent years have resulted in new laws in almost
every state that require criminal background checks for anyone who
works with children. The move to protect children through criminal
background checks now includes volunteers who serve as coaches for
youth sports activities and scout troop leaders.
Terrorist acts of September 11, 2001, have
resulted in heightened security and identity-verification strategies
by employers. Potential job candidates and long-time employees alike
are being examined with a new eye following September 11, 2001.
Corporate executives, officers, and directors
now face a degree of scrutiny in
both professional and private life unknown before the Enron debacle
and other corporate scandals of 2002.
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False or inflated information supplied
by job applicants is frequently in the news. Some estimates are that
30% to 40% of all job applications and resumes include some false or
inflated facts. Such reports make employers wary of accepting
anyone’s word at face value.
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Federal and state laws require
that background checks be conducted for certain jobs. For example,
most states require criminal background checks for anyone who works
with children, the elderly, or disabled. The federal National Child
Protection Act authorizes state officials to access the FBI’s
National Crime Information Center (NCIC) database for some positions.
Many state and federal government jobs require a background check, and
depending on the kind of job, may require an extensive investigation
for a security clearance.
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The "information age"
itself may be a reason for the increase in employment screening -- the
availability of computer databases containing millions of records of
personal data. As the cost of searching these sources drops, employers
are finding it more feasible to conduct background checks. |
I don't have anything to hide. Why
should I worry?
While some people are not concerned
about background investigations, others are uncomfortable with the idea
of an investigator poking around in their personal history. In-depth
background checks could unearth information that is irrelevant, taken
out of context, or just plain wrong. A further concern is that the
report might include information that is illegal to use for hiring
purposes or which comes from questionable sources.
Part 2. What Is
Included in a Background Check?
Background reports can range from a
verification of an applicant's Social Security number to a detailed
account of the potential employee's history and acquaintances. Here are
some of the pieces of information that might be included in a background
check. Note that many of these sources are public records created by
government agencies.
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Driving records
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Vehicle registration
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Credit records
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Criminal records
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Social Security No
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Education records
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Court records
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Workers' compensation
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Bankruptcy
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Character references
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Neighbor interviews
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Medical records
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Property ownership
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Military records
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State licensing records
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Drug test records
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Past employers
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Personal references
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Incarceration records
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Sex offender lists
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Part 3. What Types
of Information Can't the Employer Consider?
The federal Fair Credit Reporting Act
(FCRA) sets national standards for employment screening. Your state may
have stronger laws, such as California’s Investigative Consumer
Reporting Agencies Act (Civil Code §1786) and the California
Consumer Credit Reporting Agency Act (Civil Code §1785). In addition,
many state labor codes and state fair employment guidelines limit the
content of an employment background check. (For more on the FCRA, see
Part 5.)
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:
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Bankruptcies after 10 years.
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Civil suits, civil judgments, and records of
arrest, from date of entry, after seven years.
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Paid tax liens after seven years.
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Accounts placed for collection after seven
years.
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Any other negative information (except criminal
convictions) after seven years. |
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The most recent change to the FCRA
made criminal convictions reportable indefinitely. But, twelve states
still follow the seven-year rule for reporting criminal convictions (for
example, California Civil Code §1786). Those states are: CA, CO, KS,
MD, MA, MT, NV, NH, NM, NY, TX, WA. Other laws that should be
considered:
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Arrest information.
Although arrest record information is public record, in California and
other states employers cannot seek from any source the arrest record
of a potential employee. However, if the arrest resulted in a
conviction, or if the applicant is out of jail but pending trial, that
information can be used. (California Labor Code §432.7). In California, an exception exists
for the health care industry where any employer who has an interest in
hiring a person with access to patients can ask about sex related
arrests. And, when an employee may have access to medications, an
employer can ask about drug related arrests.
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Criminal history.
In California, criminal histories or "rap sheets" compiled
by law enforcement agencies are not public record. Only certain
employers such as public utilities, law enforcement, security guard
firms, and child care facilities have access to this information.
(California Penal Code §§11105, 13300) With the advent of
computerized court records and arrest information, however, there are
private companies that compile virtual "rap sheets." Employers need to use caution in
checking criminal records. Information offered to the public by
web-based information brokers is not always accurate or up to date.
This violates both federal and California law when reported as such.
Also, in California, an employer may not inquire about a marijuana
conviction that is more than two years old.
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Workers' compensation.
In most states including California, when an employee's claim goes
through the state system or the Workers' Compensation Appeals Board (WCAB),
the case becomes public record. An employer may only use this
information if an injury might interfere with one's ability to perform
required duties. Under the federal Americans with Disabilities Act,
employers cannot use medical information or the fact an applicant
filed a workers' compensation claim to discriminate against
applicants. (42 USC §12101). In California, employers may access
workers’ compensation records after making an offer of employment.
To gain access, employers must register with the WCAB and confirm that
the records are being accessed for legitimate purposes. Although the
agency may not reveal medical information and the employer may not
rescind an offer due to a workers’ compensation claim (California
Labor Code 132a), employers sometimes discover that applicants have
not revealed previous employers where they had filed claims. In such
situations, employers often terminate the new hire because it appears
they falsified the application.
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Bankruptcies.
Bankruptcies are public record. However, employers cannot discriminate
against applicants because they have filed for bankruptcy. (11 USC §525). |
Although these laws should prevent an
employer from considering certain information, there is no realistic way
for the applicant to determine whether such information will be revealed
in a background check. This is particularly true for investigations
conducted online where the information obtained from web-based
information brokers might not be verified for accuracy or completeness.
For example, if you were arrested but
never convicted, a data search could reveal the arrest, but the
investigator who compiled the information might not delve further into
the public records to determine that you were acquitted or the charges
were dropped. Reputable employment screening companies always verify
negative information obtained from data base searches against the actual
public records filed at the courthouse.
Aren't some of my personal records
confidential?
The following types of information
may be useful for an employer to make a hiring decision. However, under
the federal Fair Credit Reporting Act, the employer is required to get
your permission before obtaining the records. (See PRC Fact Sheet 11,
"From Cradle to Grave: Government Records and Your Privacy," www.privacyrights.org/fs/fs11-pub.htm)
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Education records.
Under both federal and California law, transcripts, recommendations,
discipline records, and financial information are confidential. A
school should not release student records without the authorization of
the adult-age student or parent. However, a school may release
"directory information," which can include name, address,
dates of attendance, degrees earned, and activities, unless the
student has given written notice otherwise. (20 USC §1232g, www.ed.gov/offices/OM/fpco/ferpa/index.html)
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Military service records.
Under the federal Privacy Act, service records are confidential and can
only be released under limited circumstances. Inquiries not authorized
by the subject of the records must be made under the Freedom of
Information Act. Even without the applicant's consent, the military may
release name, rank, salary, duty assignments, awards, and duty status.
(5 USC §§552, 552a) For more on military records, visit the National
Archives and Records Administration web site: www.archives.gov/facilities/mo/st_louis/military_personnel_records.html
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Medical records. In
California and many states, medical records are confidential. There are
only a few instances when a medical record can be released without your
knowledge or authorization. The FCRA also requires your specific
permission for the release of medical records. If employers require
physical examinations after they make a job offer, they will have access
to the results. The Americans with Disabilities Act allows a potential
employer to inquire only about your ability to perform specific job
functions. (42 USC §12101)
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There are other questions such as
age, marital status, and certain psychological tests that employers
cannot use when interviewing. These issues are beyond the scope of this
fact sheet. If you have further questions, contact the resources at the
end of this fact sheet. The federal Equal Employment Opportunity
Commission and the fair employment agencies in the states handle these
issues.
What can my former employer say about
me?
Often a potential employer will
contact an applicant's past employers. A former boss can say anything
[truthful] about your performance. However, most employers have a policy
to only confirm dates of employment, final salary, and other limited
information. California law prohibits employers from intentionally
interfering with former employees' attempts to find jobs by giving out
false or misleading references. (California Labor Code §1050)
Under California law and the laws of
many other states, employees have a right to review their own personnel
files and make copies of documents they have signed. If you are a state
or federal employee, your personnel file is protected under the
California Information Practices Act or the federal Privacy Act of 1974
and can only be disclosed under limited circumstances. (California Civil
Code §56.20; California Labor Code §§432, 1198.5; 5 USC §552a)
Jobs such as truck driver positions
fall under regulations of the federal Department of Transportation.
Employers are required to accurately respond to an inquiry from a
prospective employer about whether you took a drug test, refused a drug
test, or tested positive in a drug test with the former or current
employer. (49 CFR §40.25, 49 CFR §382.413. Federal
Motor Carrier Safety Administration Regulations)
Part 4. Who Conducts Background
Checks?
There are many companies that
specialize in employment screening. It is outside the purpose of this
fact sheet to identify background checking companies by name. The most
important thing to keep in mind is that companies conducting background
checks fall into several broad categories. This can range from
individuals commonly known as "private investigators," to
companies that do nothing but employment screening, and to online data
brokers.
Corporations that employ large
numbers of people may have an established relationship with a
third-party background checking company or may even use an affiliated
company for their employment screening. Other background checking
companies may work on a less formal basis with employers. There are
about 10 major companies that conduct employment screening and thousands
others nationwide, including private investigators.
With the information age upon us, it
is easy for employers to gather background information themselves. Much
of it is computerized, allowing employers to log on to public records
and commercial databases directly through dial-up networks or via the
Internet. Finding one of these online companies is as easy as using an
Internet search engine to find web sites that specialize in
"background checks." Employers should beware of companies
advertising on the Internet that they can "find everything about
anyone." They are not necessarily going to be in strict compliance
with federal and state laws, especially the provisions that require
accuracy of background check reports.
Part 5. Fair Credit Reporting Act and
Background Checks
The federal Fair Credit Reporting Act
(15 USC §1681 et seq.) does not require employers to conduct
employment background checks. But the law sets a national standard that
employers must follow in employment screening. State laws may give an
employee more rights than the FCRA.
Do I have a right to know when a
background check is requested?
Yes. Amendments to the FCRA, in
effect September 30, 1997, increase the disclosure and consent
requirements of employers who use "consumer reports." Such
reports might consist only of a credit check. (See Part 6) More
extensive reports might include criminal histories, driving records, and
interviews with neighbors, friends and associates.
To be covered by the FCRA, the
Federal Trade Commission (FTC) says that a report must be prepared by an
outside company -- a "consumer reporting agency" or business
that "for monetary fees, dues, or on a cooperative nonprofit basis,
regularly engages in ... assembling ... information on consumers for the
purpose of furnishing consumer reports to third parties." (FCRA §603f)
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. In
California, at the time an employer obtains permission for a background
check, the applicant or employee should also be told that he or she may
request a copy of the report. The FCRA, in contrast, says the subject is
entitled to a copy of the report if a pre-adverse notice is
given.
Under federal law, if the employer
uses information from the consumer report for an "adverse
action" – that is, denying the job applicant, terminating the
employee, rescinding a job offer, or denying a promotion – it must
take the following steps, which are explained further in the Federal
Trade Commission’s web site, www.ftc.gov/bcp/conline/pubs/buspubs/credempl.htm
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Before the adverse
action is taken, the employer must give the applicant a
"pre-adverse action disclosure." This includes a copy of the
report and an explanation of the consumer's rights under the FCRA.
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After the adverse
action is taken, the individual must be given an "adverse action
notice." This document must contain the name, address, and phone
number of the employment screening company, a statement that this
company did not make the adverse decision, rather that the employer
did, and a notice that the individual has the right to dispute the
accuracy or completeness of any of the information in the report. |
Modified disclosure and adverse
action procedures under the FCRA (§604(b)(3)(B)) apply to positions
subject to U.S. Department of Transportation (DOT) regulations such as
truck drivers. The DOT has independent authority to set qualifications
for workers in transportation industries. (49 USC §31502)
Does the FCRA fall short?
The federal law has two significant
loopholes. First, if the employer does not use a third-party
screening company but, rather conducts the background check itself, it
is not subject to the notice and consent provisions of the FCRA.
Second, the employer might tell the rejected applicant that its adverse
decision was not based on the contents of the background
investigation, but, rather that the job pool was so exceptional that it
made its hiring decision based on the fact that there were individuals
more qualified than the applicant.
In both of these situations, the
applicant would not have the ability to obtain a copy of the background
check to find out what negative information it contained. We have
learned of situations where the individual remained unemployed for
years, not knowing that wrongful criminal records which resulted from
identity theft were the reason for the individual’s failure to find
employment. (Read "Identity Theft: The Growing Problem of Wrongful
Criminal Records," www.privacyrights.org/ar/wcr.htm.)
Recent amendments to California’s
"investigative consumer reporting" law have closed those
loopholes. California law now requires that individuals who are subject
to employment screening are able to obtain a copy of the background
check whether or not an adverse action has been taken. And applicants
have the same rights to notice and consent whether the employer hires an
outside company to conduct the investigation or does the background
check itself. (California Civil Code §1786). And now in California when
an individual requests a copy of their report from the consumer
reporting agency, the agency must explain their rights in a document
written in both English and Spanish.
Part 6.
Investigative Consumer Reports: What Will Your Neighbors Say?
Can an employer ask my friends and
neighbors about me?
Yes. Under the FCRA, a background
check that includes interviews with "neighbors, friends, or
associates" about your "character, general reputation,
personal characteristics, or mode of living" is called an
"investigative consumer report." (The term "investigative
consumer report" has a different meaning under California Law. See www.leginfo.ca.gov,
Civil Code §1786.)
When information about you is
gathered from interviews, the FCRA requires a separate disclosure. You
are also entitled to know the "nature and scope" of an
investigative consumer report, but you have to ask. For more on how the
FTC staff interprets the term "investigative consumer report"
and other keys topics under the FCRA, visit the FTC web site www.ftc.gov/os/statutes/fcra/index.htm
Part 7. Background Checks and Your
Credit Report
An employment background check often
includes a copy of your credit report. The three major credit reporting
agencies (Experian, TransUnion, and Equifax) provide a modified version
of the credit report called an "employment report." An
"employment report" includes information about your
credit-payment history and other credit habits from which current or
potential employers might draw conclusions about you.
An employment report provides
everything a standard credit report would provide. However it doesn’t
include your credit score or date of birth. Nor does it place an
"inquiry" on your credit file that may be seen by a company
looking to issue you credit. Having too many credit inquiries tends to
lower your credit score.
My job doesn’t require handling
money. Why does the employer do a credit check?
Often employers use your credit
history to gauge your level of responsibility. Whether a valid
assumption or not, some employers believe if you are not reliable in
paying your bills, then you will not be a reliable employee.
Unfortunately, a bad credit report can work against you in your search
for employment. For more on how a credit record can affect your job
search, see the FTC’s fact sheet on this topic, www.ftc.gov/bcp/conline/pubs/alerts/ngcrdtalrt.htm
In addition to your payment history,
a credit report typically includes information about your former
addresses and previous employers. Employers can use this as one way to
verify the accuracy of information you provide on an application or
resume.
I never use credit. Can an employer
hold that against me?
Yes. The employer might be looking
for someone who has an established record of paying bills on time. The
FCRA says only that certain things like negative information more than
seven years old cannot be considered. The absence of a credit
history can also be considered. But if this bit of information means you
don’t get the job, the employer has to give you an adverse notice
decision. For more on an employer’s responsibility under the FCRA, see
www.ftc.gov/bcp/conline/pubs/buspubs/credempl.htm
Part 8. What Can I Do to Prepare?
When you know you are going to be on
the job market, take the following steps to reduce the chances that you
and/or the potential employer will be "surprised" by
information found in the background check process:
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Order a copy of your credit report.
If there is something you do not recognize or that you disagree with,
dispute the information with the creditor and/or credit bureau before
you have to explain it to the interviewer. Another individual’s name
may appear on your credit report. This happens when someone mistakenly
writes down the wrong Social Security number on a credit application
causing that name to appear on your file. Or you might be a victim of
identity theft. (See PRC Fact Sheet 6 on your credit reporting rights, www.privacyrights.org/fs/fs6-crdt.htm,
and Fact Sheet 17a on identity theft, www.privacyrights.org/fs/fs17a.htm.)
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Check court records.
If you have an arrest record or have been involved in court cases, go
to the county where this took place and inspect the files. Make sure
the information is correct and up to date. |
Reporting agencies often report
felony convictions when the consumer truly believes the crime was
reduced to a misdemeanor, or that it was reported as a misdemeanor
conviction when the consumer thought the charge was reduced to an
infraction. Court records are not always updated correctly. For
example, a signature that was needed to reduce the charges might not
have been obtained or recorded by the court. Don’t rely on what your
attorney may have told you. If you think the conviction was expunged
or dismissed, get a certified copy of your report from the court.
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Check DMV records.
Request a copy of your driving record from the Department of Motor
Vehicles, especially if you are applying for a job that involves
driving. |
Many employers ask on their
application if you were ever convicted of a crime. Or they might word
the question to ask whether you have ever been convicted of a felony or
misdemeanor. Typically, the application says you do not have to divulge
a case that was expunged or dismissed, or that was a minor traffic
violation.
Don’t be confused. A DUI (driving
under the influence) or DWI (driving while intoxicated) conviction is not
considered a minor traffic infraction. Applicants with a DUI or DWI who
have not checked "yes" on a job application may be denied
employment for falsifying the form -- even when the incident occurred
only once or happened many years before. The employer perceives this as
dishonesty, even though the applicant might only have been confused by
the question.
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Do your own background check.
If you want to see what an employer’s background check might
uncover, hire a company that specializes in such reports to conduct
one for you. That way, you can discover if the data bases of
information vendors contain erroneous or misleading information.
(Consult the Yellow Pages under "Investigators.") Or, you
can use one of the many online search services to find out what an
employer would learn if conducting a background check in this way.
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Ask to see a copy of your personnel file from
your old job. Even if you do not work
there anymore, state law might enable you to see your file. Under
California law, you can access your file until at least a year from
the last date of employment. And you are allowed to make copies of
documents in your file that have your signature on them. (California
Labor Code §432.) You may also want to ask if your former employer
has a policy about the release of personnel records. Many companies
limit the amount of information they disclose.
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Read the fine print carefully.
When you sign a job application, you will be asked to sign a consent
form if a background check is conducted. Read this statement carefully
and ask questions if the authorization statement is not clear.
Unfortunately, jobseekers are in an awkward position, since refusing
to authorize a background check may jeopardize the chances of getting
the job. |
Notice of a background check has to
be on a separate form. The only other information this form can
include is your authorization and information that identifies you.
Neither the notice of a background check nor any other form should ask
questions like "race," "sex," "full date of
birth," or "maiden name." Such questions violate the
federal Equal Employment Opportunity laws. And, you should not be
asked to sign any document that waives your right to sue a screening
company or the employer for violations of the law.
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Tell neighbors and work colleagues,
past and present, that they might be asked to provide information
about you. This helps avoid suspicion and alerts you to possible
problems. In addition, their prior knowledge gives them permission to
disclose information to the investigator. Forewarning others speeds up
the process and helps you get the job faster. |
Part 9. References
Laws on Background Checks
Laws on Workplace Discrimination
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Equal Employment Opportunity Commission
(EEOC),
www.eeoc.gov/qs-employees.html
The EEOC was established by Title VII of the Civil
Rights Act of 1964. It enforces the following laws:
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Title VII of the Civil Rights Act of 1964
(Title VII), which prohibits employment discrimination based on
race, color, religion, sex, or national origin. 42 USC §2000e, www.eeoc.gov/laws/vii.html.
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Equal Pay Act of 1963,
which protects men and women who perform substantially equal work in
the same establishment from sex-based wage discrimination. 29 USC §206(d),
www.eeoc.gov/laws/epa.html.
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Age Discrimination in Employment Act of 1967
(ADEA), which protects individuals
who are 40 years of age or older. 29 USC §621, www.eeoc.gov/laws/adea.html.
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Americans with Disabilities Act of 1990 (ADA),
which prohibits employment discrimination against qualified
individuals with disabilities in the private sector, and in state
and local governments. 42 USC §12101, www.eeoc.gov/laws/ada.html. |
Contacting Government Agencies
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U.S. Equal Employment Opportunity
Commission (EEOC)
1801 L Street, N.W.
Washington, D.C. 20507
Phone: (202) 663-4900
TTY: (202) 663-4494
Web: www.eeoc.gov
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EEOC Field Offices
To be automatically connected with the nearest EEOC field office,
call:
Phone: (800) 669-4000
TTY: (800) 669-6820
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Federal Trade Commission (FTC)
Consumer Response Center, CRC-240
Washington, D.C. 20580
Phone: (877) FTC-HELP (877-382-4357)
TTY: (866) 653-4261
Web: www.ftc.gov |
FTC Publications
California Department of Fair
Employment and Housing
The Department of Fair Employment and
Housing does not currently accept complaints through the Internet or by
mail. For information on how to file an employment-related complaint,
call one of the numbers below.
(800) 884-1684 (Within
California)
(916) 227-0551 (Outside California)
Web site: www.dfeh.ca.gov
Fair Employment Agencies in the 50
States
The following web sites list fair
employment agencies in the 50 states:
The Privacy Rights Clearinghouse
has revised and updated this guide with funding assistance
from the Rose Foundation Consumer Privacy Rights Fund.
We acknowledge the assistance of Barry Nadell,
InfoLink Screening Services, in developing this guide, www.infolinkscreening.com.
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