Background checks — Minnesota

Conducting background checks

Screening candidates for employment by conducting background and reference checks is a valuable way for Minnesota employers to discover relevant information about potential employees. The information discovered may indicate whether an applicant will be a good fit for a position. On the other hand, the information discovered may suggest that an applicant is not qualified. An important benefit associated with thoroughly checking into the applicant’s background is that an employer may protect itself from potential liability associated with negligent hiring and negligent retention claims. Recent surveys show that nearly all employers perform some form of background check before hiring a new employee.

There are many different methods an employer may use to check into an applicant’s background. Depending on the nature of the position in question, employers may choose to use a few or all of the methods that follow for conducting appropriate background investigations. For certain positions, Minnesota law mandates that a background check be conducted.

Conducting reference checks

In most cases, it is advisable that Minnesota employers check the personal and prior employment references listed by an applicant and document the information received, or, if not successful, the efforts made. While the law does not always require a written authorization from the applicant, obtaining an authorization before conducting these reference checks may streamline the process and reduce any potential risks. Additionally, employers might consider requesting a waiver from an applicant that releases former employers and the requesting employer from any claims relating to the reference check. With this type of waiver in place, former employers may be more willing to give more relevant information about their former employees. An employer also should make sure it has a fully completed application and/or resume to use as a resource in the reference check, including past employment history, references, names of immediate supervisors, and educational background.

When contacting references, prospective employers should request basic information such as:

• dates of employment

• job duties

• performance assessments

• discipline record

• circumstances surrounding termination

• eligibility for rehire.

Although a former employer may not be willing to respond on all of these topics, a prospective employer may shield itself from negligent hiring and subsequent negligent retention claims simply by asking appropriate questions and making notes of the responses given. While many employers are reluctant to provide references for fear of being sued, Minnesota law provides immunity for such lawsuits in most circumstances. An employer that provides information about a former or current employee’s job performance is protected from civil liability for such disclosure or its consequences unless the employee can prove by “clear and convincing evidence” that the former employer provided “false and defamatory” information and that the former employer knew or should have known that the information was false and “acted with malicious intent to injure the current or former employee.” In addition to asking relevant questions and listening closely to the answers, a prospective employer should take careful notes of information given by a reference, as well as all unsuccessful attempts made to contact references.

Conversely, when an employer is asked to provide information regarding a former employee, the employer should consider adopting a policy to provide only “name, rank, and serial number” information about former employees. Under this type of policy, employers should decline to volunteer any subjective, speculative, and/or undocumented information and provide only the dates of employment and the positions held by the employee. Most employers provide only this limited information in connection with reference checks for fear of a later lawsuit by the former employee alleging claims of defamation, slander, breach of privacy, and/or retaliation.

Social networks, Internet websites and background checks

Internet searches and social networking sites offer employers the opportunity to quickly and inexpensively learn a great deal about job seekers. While searching Internet and social media sources can offer useful insight into the background of an applicant, it can also turn up information that is false, either because it concerns someone with a similar name or was posted by someone with malicious intent. Moreover, this type of search could reveal information it would be better for an employer not to know. Often demographic information and personal data is easily accessible on social networking sites such as Facebook, Instagram, and Twitter. When a candidate is rejected for a job, it may be possible for a claim to be made that the rejection was on the basis of some protected status that was revealed on the Internet, such as having a disability, being in a relationship with someone of a different race or being active in a union. Employers that use any form of subterfuge on the Internet to find out about a candidate also face potential civil and criminal liability. This could occur, for example, if the hiring manager has someone attempt to “friend” or “follow” the applicant under false pretenses to find out data that is not open generally to the public.

Companies that are interested in using the information gathering power of the Internet as a step in their background checking might consider setting up some filter or barrier to ensure that the hiring decision is made by someone who does not have access to sensitive information of the type employers should not seek as described in Recruiting and hiring. An additional caution arises under the Genetic Information Nondiscrimination Act, which generally prohibits an employer from seeking to acquire genetic information about employees or applicants. Under regulations issued by the Equal Employment Opportunity Commission (EEOC), conducting an Internet search in a way that is likely to result in obtaining genetic information would be treated as a violation of the statute.

Criminal record checks

Minnesota employers may consider an applicant’s criminal record in making a hiring decision. However, as of January 1, 2014, Minnesota’s “Ban the Box” legislation requires employers that want to conduct a criminal background check to wait and do so only after a job applicant has either been selected for an interview or has been extended a conditional job offer. Inquiries into an applicant’s criminal history can no longer be made at the initial job application stage. This limitation applies to all Minnesota employers, regardless of size, although there are some limited exceptions for employers who are specifically required to conduct a criminal background check, such as schools.

With respect to criminal convictions, the EEOC has taken the position that employment decisions based on the mere existence of a criminal conviction has an unlawful adverse impact on minorities and that an applicant may be excluded based on a conviction only if job related and consistent with business necessity. The EEOC's guidance provides that employers should consider the following factors in each case:

• nature and gravity of the offense or conduct

• time that has passed since the offense, conduct or completion of the sentence

• nature of the job sought and how it relates to the offense or conduct

• an individualized assessment, including an opportunity for an applicant to provide further information or context before a final employment decision is made based on a criminal record.

The EEOC also maintains that it is a best practice to not inquire about an applicant's criminal history on the application for employment, but to wait until later in the hiring process, such as after a contingent offer has been made, to conduct a narrowly tailored inquiry based on the job duties.

Moreover, the EEOC’s position is that the consideration of arrests has an adverse impact on minorities, which can expose employers to potential discrimination claims. The EEOC has been aggressive in pursuing its position through the issuance of policy guidance and even taking employers to court. 

In April 2012, the EEOC issued its enforcement guidance on how Title VII applies to the use of arrest and conviction records in employment decisions. The EEOC maintains than an employer must show that its policy on the use of those records “operates to effectively link specific criminal conduct and its dangers with the risks inherent in the duties of a particular position.” The EEOC wants employers to use an individualized assessment for each particular applicant and avoid overarching rules that broadly disqualify any applicant with a certain history. The EEOC believes that its approach is required under Title VII. The EEOC also believes that any state or local laws requiring or permitting an act that violates the EEOC guidance constitutes an unlawful employment practice prohibited by Title VII. The EEOC has filed a number of suits – with varying results – to enforce its guidance and require employers to conduct individualized assessments of applicants with an arrest or criminal background history.

Driving record checks

Employers should review the driving record of applicants for positions that would require the use of a company vehicle or a personal vehicle for company business. Driving record checks should be conducted at the time an applicant is hired and then periodically throughout employment. When checking the driving record of an applicant, employers should confirm that an applicant has a valid driver’s license and review any driving violations, particularly past violations involving reckless driving and driving under the influence of alcohol. However, keep in mind that under the ADA, alcohol-related convictions cannot be used to discriminate against an applicant perceived to be an alcoholic or with a record of alcoholism. As discussed later, if the employer uses a third-party company to obtain this information, it must comply with the procedural requirements of the federal Fair Credit Reporting Act (FCRA) (more information to follow). 

If the employee is hired to drive a commercial motor vehicle, then the employer will be required by the Federal Motor Carrier Safety Regulations to examine the individual’s driving record for a three-year period, to verify license information and to inquire about prior accidents.

Credit checks

Credit checks may be performed for positions that involve financial responsibilities; however, the EEOC’s position is that credit checks may have an adverse impact on minorities. Therefore, it is a good employment practice to limit the use of credit checks to positions for which there is a legitimate business necessity. For example, a credit check for a restaurant cook with no financial responsibilities may be unnecessary, while a credit check for a controller or accounts payable clerk might be closely tied to the requirements for the position. Credit checks should be performed for all applicants for a particular position. Typically, credit reports can only be obtained through third-party entities that prepare such reports for a fee. Employers who purchase credit reports from third parties must comply with the FCRA.

Complying with the Fair Credit Reporting Act

The FCRA imposes procedural requirements on employers who use a “consumer reporting agency” to obtain and use “consumer reports” in making employment-related hiring, promotion, and termination decisions. The term “consumer report” is defined very broadly by the FCRA. It includes reports on criminal background information, credit history, and driving records prepared by background check vendors, private investigators and detective agencies.

Companies using a consumer reporting agency to procure background history information are required to adhere to FCRA’s steps for compliance, including disclosure and authorization, certification and advance notice of adverse action. This includes:

• Providing written disclosure to the employee/applicant explaining that a consumer report and/or investigative consumer report will be obtained. This disclosure statement must be in a separate, "stand-alone" document and cannot be combined with other employment application forms.

• Securing the employee’s signed authorization for the background check in a document separate from an employment application or an employee handbook. This authorization form can be combined with the disclosure form.

• Certifying to the consumer reporting agency that the previous steps have been followed and that the employer is complying with the FCRA. 

• Providing a pre-adverse action notice of any intended adverse action to the applicant/employee and providing him or her a copy of the background check report, along with the “Summary of Your Rights under the Fair Credit Reporting Act” written by the Consumer Financial Protection Bureau. The purpose is to give the individual an opportunity to dispute or explain any inaccurate or incomplete information in the background check report. 

• Supplying the applicant/employee with an adverse action notice that includes a copy of the report, the “Summary of Your Rights” document, the contact information for the consumer reporting agency that furnished the report, and a statement that the consumer reporting agency did not make the adverse decision and cannot explain why it was made. While there is no time period specifically required in the FCRA, guidance suggests that employers should wait a minimum of five business days after sending the pre-adverse action notice and before sending the final adverse action notice. Updated versions of the form may be obtained from the Consumer Financial Protection Bureau at:
  • http://www.consumerfinance.gov/learnmore/

Penalties

Failure to comply with the FCRA provisions can subject employers to damages. Employers may also be liable for fines and/or imprisonment if they knowingly and willfully obtain a consumer report under false pretenses.

Where to go for more information

“Background Checks: What Employers Need to Know”

• https://www.eeoc.gov/eeoc/publications/background_checks_employers.cfm

"Using Consumer Reports: What Employers Need to Know"

• http://www.ftc.gov/tips-advice/business-center/guidance/using-consumer-reports-what-employers-need-know

The form notices that are provided in the files tab of this chapter are examples for educational purposes only. Employers should consult with legal counsel and their consumer reporting agency regarding the required contents of any consumer protection notices to employees, which are subject to change.