Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681, et seq., and State Background Check Laws. When an employer conducts a background search on an applicant entirely in-house using only the employer’s staff, background check laws generally do not apply. However, when an employer uses an outside entity for a fee to obtain a criminal background check or to otherwise obtain a background report or investigate an applicant’s background for employment purposes, the employer must comply with background check laws, including FCRA and any applicable state law. FCRA establishes a number of legal requirements for obtaining a background report, including notice, consent, and various procedural steps that must be followed before acting on background check information to withdraw a job offer. Although the legal landscape of online searches is still evolving, it is likely that an employer who pays an outside entity or uses a fee-based online service to obtain online background information on an applicant must comply with FCRA and any applicable state background check laws. While background checks arise most often in the hiring context, employers sometimes pay outside entities to obtain criminal background information about or to otherwise investigate a current employee. In these situations, FCRA and state background check laws may still apply. Disparate Impact Claims . In recent years, the EEOC announced its E-RACE Initiative (“Eradicating Racism and Colorism in Employment”) which is aimed at reducing race discrimination in hiring. The EEOC has sued employers in several high-profile cases for policies and practices that the EEOC believes lead to systemic discrimination in hiring. Although the cases so far have involved employer use of background checks, the EEOC has also announced its intent to pursue employers that require the use of video resumes or other technological application processes. According to the EEOC, these practices lead to “disproportionate exclusion of applicants of color who may not have access to broadband-equipped computers or video cameras.” Given the EEOC’s very public statements about technology and disparate impact claims, employers should take care to ensure that their hiring policies and practices in hiring do not result in systemic discrimination.
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