Employment Background Checks:
A Jobseeker's Guide

Whether you are hired or promoted for a job may depend on the information revealed in a background check. Job applicants and existing employees as well as volunteers may be asked to submit to background checks. For some jobs, screening is required by federal or state law. The current emphasis on security and safety has dramatically increased the number of employment background checks conducted.

In short, employers are being cautious. At the same time, applicants and employees fear that employers can dig into the past in ways that have nothing to do with the job.

This guide explains the why and how of background checks. It also tells you what can be covered in a background report, your rights under the Fair Credit Reporting Act, and what you can do to prepare. For more information, go to the References section at the end of this guide. The PRC does not perform background checks.

Part 1. Why Does an Employer Conduct a Background Check?
Part 2. What Is Included in a Background Check?
Part 3. What Cannot be in a Background Check Report?
Part 4: Who Conducts Background Checks?
Part 5. Fair Credit Reporting Act and Background Checks
Part 6 FCRA Update: Workplace Investigations and Annual File Disclosures
Part 7. Background Checks and Your Credit Report
Part 8. Investigative Consumer Reports - What Will Your Neighbors Say?
Part 9. How to Prepare for a Background Check
Part 10. References

Part 1. Why Does an Employer Conduct a Background Check?

Employers check potential and current workers for several reasons. The things an employer wants to know about you can vary with the kinds of jobs you might seek. Here are a few of the reasons for employment screening.

Negligent hiring lawsuits are on the rise. If an employee's actions hurt someone, the employer may be liable. The threat of liability gives employers reason to be cautious in checking an applicant's past. A bad decision can wreck havoc on a company's budget and reputation as well as ruin the career of the hiring official. Employers no longer feel secure in relying on their instinct as a basis to hire.
Current events have caused an increase in employment screening.
Child abuse and child abductions in the news in recent years have resulted in new laws in almost every state that require criminal background checks for anyone who works with children. The move to protect children through criminal background checks now includes volunteers who serve as coaches for youth sports activities and scout troop leaders.
Terrorist acts of September 11, 2001, have resulted in heightened security and identity-verification strategies by employers. Potential job candidates and long-time employees alike are being examined with a new eye following September 11, 2001.
Corporate executives, officers, and directors now face a degree of scrutiny in both professional and private life unknown before the Enron debacle and other corporate scandals of 2002.
False or inflated information supplied by job applicants is frequently in the news. Some estimates are that 30% to 40% of all job applications and resumes include some false or inflated facts. Such reports make employers wary of accepting anyone's word at face value.
Federal and state laws require that background checks be conducted for certain jobs. For example, most states require criminal background checks for anyone who works with children, the elderly, or disabled. The federal National Child Protection Act authorizes state officials to access the FBI's National Crime Information Center (NCIC) database for some positions. Many state and federal government jobs require a background check, and depending on the kind of job, may require an extensive investigation for a security clearance.
The information age itself may be a reason for the increase in employment screening -- the availability of computer databases containing millions of records of personal data. As the cost of searching these sources drops, employers are finding it more feasible to conduct background checks.
I don't have anything to hide. Why should I worry?

While some people are not concerned about background investigations, others are uncomfortable with the idea of an investigator poking around in their personal history. In-depth background checks could unearth information that is irrelevant, taken out of context, or just plain wrong. A further concern is that the report might include information that is illegal to use for hiring purposes or which comes from questionable sources.

Part 2. What Is Included in a Background Check?

Background reports can range from a verification of an applicant's Social Security number to a detailed account of the potential employee's history and acquaintances. Here are some of the pieces of information that might be included in a background check. Note that many of these sources are public records created by government agencies.

Driving records
Vehicle registration
Credit records
Criminal records

Social Security no.
Education records
Court records
Workers' compensation

Bankruptcy
Character references
Neighbor interviews
Medical records

Property ownership
Military records
State licensing records
Drug test records

Past employers
Personal references
Incarceration records
Sex offender lists


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 re