This guide provides general compliance information, not legal advice. Review the Fair Credit Reporting Act and consult the U.S. Equal Employment Opportunity Commission for primary federal resources. Background-check rules can also vary by state, county, city, industry, and job type. Confirm current requirements locally before ordering or using a report.
A background check can help an employer make a better-informed hiring decision, but the process is not simply “run a search and read the results.” When an employer obtains a consumer report for employment purposes through a screening company, the Fair Credit Reporting Act, commonly called the FCRA, may apply. The law creates duties for employers, screening companies, and applicants.
The practical goal is straightforward: use a lawful process, collect only information connected to the job, give applicants the notices and opportunities required by law, and make decisions consistently. The following field guide explains the basics and identifies points that deserve local confirmation.
What is the FCRA?
The FCRA is a federal law governing consumer reports and the companies that prepare them. In employment screening, a consumer report may include information such as criminal records, employment history, education, driving history, or credit information, depending on the service ordered and the job involved.
The law generally applies when an employer obtains a report from a consumer reporting agency for employment purposes. A consumer reporting agency may be a national screening company, a specialty database provider, or another business that assembles or evaluates information about individuals for specified purposes.
The FCRA does not give an employer unlimited permission to investigate applicants. It sets conditions for obtaining and using reports, including disclosure, authorization, certifications, and procedures before adverse action.
When does a background check trigger FCRA duties?
FCRA duties commonly arise when a third-party screening company provides information about an applicant or employee for hiring, promotion, reassignment, retention, or another employment decision. The label used by the vendor does not control the legal analysis. A service called a “verification,” “public-record search,” or “risk report” may still involve a consumer report.
An employer should ask the vendor what information it collects, where the information comes from, how it is matched to a person, and whether the service is a consumer report under federal law. If the employer is uncertain, it should pause before ordering the report and obtain advice from qualified counsel.
What must the applicant be told before the report is obtained?
Before obtaining a consumer report for employment purposes, the employer generally must provide a clear and conspicuous written disclosure that a consumer report may be obtained for employment purposes. The disclosure must be in a document that consists solely of the disclosure, apart from limited authorization language.
Do not bury the disclosure in a lengthy job application, employee handbook, arbitration agreement, or general release. A clean, stand-alone document is easier for the applicant to understand and easier for the employer to administer consistently.
The disclosure should accurately describe the employer’s process. If the employer may obtain reports during employment, the wording should address that possibility. Have counsel review the form for federal, state, and local requirements before use.
How should written authorization work?
The applicant generally must authorize the employer to obtain the consumer report. The authorization may be on the same document as the stand-alone disclosure, but it should not be hidden among unrelated terms.
Use a process that records the applicant’s consent, the date of authorization, the version of the disclosure, and the identity of the employer or entity obtaining the report. Electronic signatures may be appropriate, but the employer should ensure that the applicant can access, understand, and retain the document.
An authorization is not a substitute for a lawful purpose. It also does not eliminate duties that may arise if the employer is considering adverse action based on the report.
What does the employer have to tell the screening company?
Before obtaining a report, the employer generally must certify to the consumer reporting agency that it has provided the required disclosure, obtained the applicant’s authorization, and will use the report for a permissible employment purpose.
The employer should give the vendor accurate instructions about the position, jurisdiction, search types, and timing. It should not ask for information that is unrelated to the job or order a broad package merely because it is available.
Keep a record of the vendor selected, services ordered, certifications made, and policies used. Good documentation helps demonstrate that the employer followed a consistent process rather than improvising after receiving unfavorable information.
What information should an employer order?
Order information that has a reasonable relationship to the position and the risks the employer is trying to evaluate. A driving record may be relevant for a delivery role. License verification may be relevant for a regulated profession. Employment or education verification may be relevant where experience or credentials are material to the job.
More information is not automatically better. Broad searches can create matching errors, stale information, irrelevant details, and inconsistent treatment of applicants. Before selecting a package, write down the job-related reason for each search component.
Credit information deserves particular caution. It may be restricted or regulated by state or local law, and it is not appropriate for every position. Confirm local rules and consider whether the information is genuinely necessary for the job.
How can an employer reduce identity-matching errors?
A report should not be treated as proof that every record belongs to the applicant. Names can be shared. Dates of birth can be incomplete or wrong. Addresses can overlap. Database information can be outdated, incomplete, or associated with the wrong person.
Use a vendor that explains its matching and quality-control methods. Provide identifying information lawfully and securely, and avoid collecting unnecessary sensitive information. If a report contains a potentially disqualifying record, give the applicant a meaningful opportunity to explain whether the record belongs to them and whether the information is accurate.
Do not make a final decision from a database label alone. Review the underlying record, available identifiers, the job-related context, and the applicant’s response.
What is the pre-adverse action process?
If the employer may take adverse action, such as refusing to hire or withdrawing an offer, based in whole or in part on information in a consumer report, the FCRA generally requires a pre-adverse action step.
Before taking the action, the employer should provide the applicant with:
- A copy of the consumer report relied upon.
- A copy of the federal document that describes the applicant’s rights under the FCRA.
- A meaningful opportunity to review the information and dispute errors.
The employer should not treat this as a formality. The applicant may identify a mixed file, an expunged or sealed record, an incorrect disposition, mistaken identity, or information that does not relate to the position. The employer should establish a reasonable review period and follow its policy consistently.
The FCRA does not prescribe one universal waiting period for every situation. State and local laws may impose additional timing or process rules. Confirm the appropriate procedure locally and with counsel.
What happens after the employer makes an adverse decision?
After the employer takes final adverse action based in whole or in part on a consumer report, it generally must provide an adverse action notice. The notice should identify the consumer reporting agency that supplied the report, include the agency’s contact information, and explain that the agency did not make the employment decision and cannot explain why the employer made it.
The notice should also explain the applicant’s right to dispute the accuracy or completeness of information with the consumer reporting agency and obtain an additional free copy of the report in the circumstances described by federal law.
Employers should use a documented workflow that separates preliminary review from final decision-making. Do not send the final notice before the pre-adverse process is complete. Store proof of delivery and the final decision record securely.
Can an employer reject everyone with a record?
A blanket rule that rejects every applicant with any criminal record can create legal and practical problems. The relevance of a record depends on factors such as the nature of the conduct, how much time has passed, the duties of the position, and evidence of rehabilitation or changed circumstances.
Federal equal employment principles also matter. The EEOC provides federal guidance and enforcement information concerning employment discrimination. Employers should assess whether a screening policy disproportionately excludes applicants based on protected characteristics and whether the policy is job-related and consistent with business necessity under the applicable legal framework.
Local fair-chance, ban-the-box, sealing, expungement, and individualized-assessment rules may add specific requirements. Confirm the rules for each location where applicants work, not merely the location of the company’s headquarters.
How does the EEOC fit into background screening?
The FCRA governs important parts of the consumer-report process, but it is not the only compliance concern. The EEOC addresses discrimination issues that may arise when employers use criminal history, credit information, medical information, or other screening criteria.
Employers should apply the same screening policy to similarly situated applicants, avoid asking prohibited medical or disability-related questions before a conditional offer where applicable, and keep protected information separate from ordinary hiring materials. Screening criteria should be reviewed for job relevance and disparate impact.
Use the EEOC website for current federal information, and confirm state and local requirements before relying on a policy.
How much does a background check usually cost?
Pricing varies by vendor, jurisdiction, search type, turnaround time, and whether the employer orders a package or individual services. For planning purposes only, a basic employment screening package may fall in a broad range of approximately $20 to $100 per applicant. Fingerprint-based checks, driving records, professional-license verification, international searches, courthouse retrieval, or rush service may add separate charges.
These are typical planning ranges, not guaranteed prices or legal fees. Request a written quote that identifies each component, any pass-through charges, reinvestigation fees, recurring-monitoring charges, and cancellation terms. Confirm current prices directly with the vendor before budgeting or promising reimbursement.
How long should employers keep screening records?
Retention requirements can depend on federal, state, and local law, the employer’s industry, litigation holds, and other recordkeeping duties. Employers should maintain enough documentation to show what was disclosed, what was authorized, what report was received, how the decision was made, and whether the pre-adverse and adverse action steps were completed.
Keep sensitive information in access-controlled systems. Limit access to people who need it for a defined business purpose. Do not leave reports in open email accounts, shared drives, desks, or applicant files accessible to unauthorized staff.
When records are no longer required, dispose of them securely. The FCRA includes disposal expectations for consumer-report information. Confirm the applicable method and retention period with counsel and the vendor.
What should a workable screening checklist include?
- Identify the position and document why each search is job-related.
- Confirm federal, state, county, and city requirements for the work location.
- Select a reputable consumer reporting agency and review its procedures.
- Provide a clear, stand-alone disclosure.
- Obtain written authorization before ordering the report.
- Certify the permissible employment purpose to the vendor.
- Review the report for matching quality, relevance, completeness, and accuracy.
- If adverse action may follow, provide the report and required rights summary before making the final decision.
- Allow a meaningful opportunity to dispute or explain the information.
- Send the final adverse action notice when required.
- Document the decision and retain records securely.
- Audit the policy periodically for consistency and discriminatory effects.
When should an employer get legal advice?
Obtain advice before launching a new screening program, using credit reports, screening applicants in multiple jurisdictions, relying on criminal history, taking adverse action, responding to a dispute, or changing a policy after a complaint.
A careful process is usually less expensive than correcting a rushed one. Vendor promises do not transfer the employer’s responsibilities. The employer remains responsible for understanding what it orders, why it orders it, how it uses the information, and whether applicants receive the notices and opportunities required by law.
Use the FTC’s FCRA resource and the EEOC’s federal employment guidance as starting points. Then confirm current local requirements, vendor terms, and job-specific rules before running the next background check.