When you’re an employer, doing background checks on future employees is important and necessary. It’s considered due diligence in the hiring process, but the specifics of what’s included in the check and the overall scope depends on what role the person is interviewing for and what industry your business is in.

Some of the topics that might be covered when an employer checks the background of a future or current employee include:

• Criminal and arrest record
• Filings such as bankruptcy records
• Employee and education verification
• Financial profiles
• Residence history
• Motor vehicle records

While it’s common and necessary for employers to do these records checks, they have to do so in a legal way.

The following are some things to know about checking the backgrounds of employees, and the legal issues of doing so.

Do You Have To Notify An Employee?

If you plan on conducting a check on an employee, do you have to let them know legally?

If you’re going to get a report through a third-party company, you do need to let the person know and ask for their consent. If you’re asking on your own—such as by contacting a previous employer—you don’t have to get consent from the employee.

If you decide that you’re not going to offer an employee the job because of something you see on their report, or you rescind a job offer, you have to provide the employee what’s called a pre-adverse action disclosure, which includes their consumer report and an explanation of the employees’ rights.

You also need to let the employee know what company you used to do the screening so they can contact that company if they choose.

Other things you need to make an employee aware of:

• You have to let the employee or applicant know that you may use the information you find out about them as you make an employment decision. You have to include notice of this individually, and it can’t be included on the application.
• If you’re doing an investigative report, which also includes personal interviews, you have totell the applicant or employee that he or she has a right to know the scope of the investigation and what will be included.
• If you’re using a third-party company to do the screening, you will have to let them know you’ve met all compliance requirements and you’ve notified the employee that you’re doing a background report.

What Can’t Be Included in a Background Check?

There are certain things that are not going to be included in an employee check such as bankruptcies after ten years, civil suits and judgments, and arrest records after seven years. Paid tax liens won’t show up after seven years, nor will accounts in collection after seven years. However, if the salary for the job is $75,000 or more, this isn’t the case.

Certain records require consent from the job candidate or employee such as school records and military service records.

Whether or not things like arrests show up on a background check depends on the state. For example, in some states, there are limitations on whether or not you as an employer can ask about arrest records or use them to make a hiring decision. An arrest doesn’t necessarily show guilt, so the idea is that it’s not fair to use them to determine employment.

Even if charges are dismissed, they may show up on a background check. This can be the case if there’s a not guilty verdict as well. If someone has their records sealed or expunged, they won’t show up on a background check or at least they shouldn’t.

Laws Enforced by the Equal Opportunity Employment Commission (EEOC)

The EEOC enforces certain laws related to checking an employees’ background and hiring an employee. The EEOC requires that businesses treat all candidates equally, and it’s illegal to make decisions on factors such as race, color, sex, disability, family medical history and age. As an example, if an employer were only to ask people who are a certain race about their criminal history, it’s illegal.

Finally, if you’re doing drug testing, you’ll need to check on state laws as to how to handle that. It is typically legal to do drug testing, but primarily in jobs or industries where there are safety concerns. An employee can refuse a drug test in some states, but they can also often be denied employment if they refuse. It’s similar for current employees in many states.