Part 3. What Cannot Be in a Background Check Report?

The federal Fair Credit Reporting Act (FCRA) sets national standards for employment screening. However, the law 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 inhouse.

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:

• Bankruptcies after 10 years.
• Civil suits, civil judgments, and records of arrest, from date of entry, after seven years.
• Paid tax liens after seven years.
• Accounts placed for collection after seven years.
• Any other negative information (except criminal convictions) after seven years.

The most recent change to the FCRA made criminal convictions reportable indefinitely. California still follows the seven-year rule (CA Civil Code 1786.18) as do some other states. To find the limit for reporting criminal convictions in your state, contact your state employment agency or office of consumer affairs. Other laws that should be considered:

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.

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.

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.

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.



Can an employment application ask about things that should not be reported?

The FCRA does not prohibit an employer from asking questions in an employment application. See FTC letters to Nadell and Sum:

www.ftc.gov/os/statutes/fcra/nadell.htm
www.ftc.gov/os/statutes/fcra/sum.htm

For example, an employment application might ask if you have "ever" been arrested. The FCRA says a consumer reporting agency cannot report an arrest that from date of entry was more than seven years ago. It does not say the employer cannot ask the question.

How to handle such questions on an employment application is of real concern to many people, especially those concerned with a youthful mistake from the distant past.

State employment laws may limit the questions an employer includes on a job application. For example, in California an application may ask "job related questions about convictions except those that have been sealed, or expunged, or statutorily eradicated," but applications cannot ask "general questions regarding an arrest." www.dfeh.ca.gov/Publications/DFEH%20161.pdf

It is important to remember, however, that even the restrictions on reporting imposed by the FCRA do not apply to jobs with an annual salary of $75,000 or more a year. (FCRA §605(b)(3).