OILFIELD BUSINESS: HUMAN RESOURCES
Important Facts about Background Checks
Improper Administration May Actually Increase Your Company’s Liability
Companies conduct background checks of applicants, and at times existing employees, for a variety of reasons including, the desire to:
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Avoid exposure to negligent hiring/retention lawsuits;
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Increase the security of the company’s assets and employees;
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Reduce liability from inconsistent hiring or screening practices;
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Proactively reduce the risk of employee-related loss; and
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Mitigate the likelihood of an adverse incident occurring on company property that could jeopardize customer or employee confidence.
However, many employers do not realize their background check policies and processes may actually subject them to increased liability.
Background checks are subject to close scrutiny by both the Equal Employment Opportunity Commission (EEOC) and the Federal Trade
Commission (FTC). If your company uses a third party private company to perform background checks on prospective or existing employees, this is considered a consumer report governed by the Fair Credit Reporting Act (FCRA).
The FCRA provides for the recovery of statutory damages of $100 to $1,000 per violation from employers who fail to comply with the processes discussed below in conducting a background check. The FCRA also allows prevailing parties to seek punitive damages and recover
their attorneys’ fees. Attorneys are increasingly bringing class action suits against employers for violations of the FCRA. Likewise, the EEOC
has filed actions in federal court seeking damages for violation of Title VII of the Civil Rights Act of 1964 against employers, alleging the
employer’s background check policies have a discriminatory effect on minorities and/or male applicants.
Recent EEOC and FTC Guidance
The EEOC and the FTC recently published guidance about how the laws administered by these agencies apply to employment background
checks.
The EEOC believes an employer’s unfettered use of criminal background checks causes a disparate impact to minorities applying for employment. In accordance with this guidance, the EEOC urges employers not to make an inquiry about applicants’ criminal backgrounds until
after the decision has been made to offer employment. Once that decision has been made, the employer may, in certain circumstances,
condition an applicant’s employment on successfully passing a background check.
If your company’s employment application still requires applicants to disclose whether or not they have been convicted of a criminal offense,
include disclaimer language that makes it clear that a past criminal conviction will not automatically disqualify an applicant’s employment.
If your company routinely performs criminal background checks of job applicants, it is wise to have a written policy governing those checks.
The policy should include a list of factors the company may consider in determining the applicant’s suitability for employment, such as:
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Relevance of the crime to the position sought or held;
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The nature of the work to be performed or being performed;
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Time since the conviction;
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Age of the candidate/employee at the time of the offense;
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Seriousness and specific circumstances of the offense;
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The number of offenses;
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Whether the applicant/employee has pending charges;
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Any relevant evidence of rehabilitation or lack thereof; and
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Any other relevant information, including information submitted by the candidate/employee or reasonably requested by the company.
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