Avoid employment practices liability with legal background checks

By Higginbotham on April 07 , 2016

Employment Practices Liability

One of the biggest challenges you face as an employer is finding and keeping great employees. In fact, the ability to attract and retain talent can be the deciding factor in whether you reach your business goals or fall short of your company vision.

But in today’s world of terrorism threats and workplace violence, it’s more crucial than ever to play it safe when hiring new employees. On top of that, employment practices liability (EPL) lawsuits, including “negligent hiring” suits, are becoming more commonplace, so you can’t afford missteps in the hiring process.

Those are two good reasons to conduct thorough background checks. But beware – the process can be full of legal pitfalls and unexpected surprises.

Except for certain restrictions on obtaining medical and genetic information, it's perfectly legal and prudent for you to gather information about an applicant's work history, education, criminal record, financial history, medical history and use of social media. But anytime you use that information to make an employment decision, no matter how you got the information, you have to play by the rules enforced by the Equal Employment Opportunity Commission (EEOC). That means complying with federal laws that protect applicants and employees from discrimination based on race, color, national origin, sex, religion, disability, genetic information (including family medical history) or age.

Before you conduct your next background check, follow these five tips to help you avoid a costly mistake:

  1. Comply with the Fair Credit Reporting Act. Under the FCRA, you’re generally free to conduct an employment background check and use the information for a clear business interest such as hiring, retention or promotion, but you have to obtain the person’s written permission.
  1. Avoid negligent-hiring lawsuits. If you fail to do an employment background check on an applicant and that person harms a coworker or client after getting hired, you could be looking at a lawsuit. Employers have a legal “duty of care” to protect their workers.
  1. Question references carefully. You can’t ask an applicant’s former employer or other reference anything you can’t ask the applicant. Keep your questions job related and check all information provided by candidates without discrimination against any group.
  1. Choose third party screening firms wisely. There are nearly 1,000 different vendors across the country offering background screening services. But beware – there are many fly-by-night operations that offer inexpensive background checks in a matter of minutes, but they often merely restate old information bought from private data brokers, with no guarantee the information is current, complete or accurate.
  1. Guard against Internet-related liabilities. Before you jump on Google, Facebook, Twitter or YouTube to gather information about job candidates, carefully weigh the risks and benefits. While the Internet can reveal valuable information you might not otherwise find, you expose yourself to discriminatory failure-to-hire lawsuits and other legal risks. What if you Google only minorities or see a picture of someone in a wheelchair? Either of those scenarios could prompt a discrimination charge if you reject the applicant.

Helpful resources:

Background checks can be an invaluable tool for putting the best candidates on your workforce. But make sure you’re well informed about the laws and your responsibilities to avoid a costly lawsuit. And don’t forget to protect your business from these exposures with Employment Practices Liability Insurance (EPLI). Talk to the business insurance experts at Higginbotham Insurance to find out more.


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