Screening candidates for employment by conducting background and reference checks is a valuable way for 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.
There are many different steps an employer may take 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 steps discussed in the following paragraphs for conducting appropriate background investigations.
Conducting reference checks
In an effort to avoid possible defamation suits and/or other liability, employers are often reluctant to share information about an employee’s work product (see below, Protection for providing references). Nonetheless, a prospective employer should contact all of an applicant’s previous employers to check the applicant’s:
Additional questions to ask former employers include:
- how long they knew the applicant and in what capacity
- whether the applicant is eligible for rehire with the former employer, and if not, whether the former employer has a policy not to rehire
- the length of the employee's employment.
An employer should not ask references any question that it would not ask the applicant; the focus of any inquiries should remain on the applicant’s ability to perform the job functions required by the position. For instance, it is illegal to inquire into the following:
- prior workers' compensation claims
- any matters that might lead to a charge of discrimination by the applicant such as the applicant's age, marital status, disabilities, religion, etc.
In most cases, employers should check the personal and prior employment references listed by an applicant and document the information received, or, if not successful, the efforts made to do so. While the law does not require a written authorization from the applicant before references are called, employers normally should obtain such a broad authorization before conducting these reference checks. 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, a former employer may be willing to give more relevant information about their former employees. An employer also should make sure it has a fully completed application to use as a resource in the reference check, including:
- names of immediate supervisors
When contacting references, prospective employers should request basic information such as:
- circumstances surrounding discharge
In addition to asking relevant questions and listening closely to the answers, a prospective employer should take careful notes of the information provided by a reference, as well as all unsuccessful attempts made to contact references. The notes should contain only legal information, even if the reference has provided additional information that the employer cannot legally use in considering the employment application.
Providing references for former employees
When an employer is asked to provide information regarding a former employee, the employer should consider adopting a policy of providing only limited, factual information and data to avoid being sued by the former employee alleging claims of defamation, slander, breach of privacy, and/or retaliation. Under such a 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. As discussed below, Colorado law gives some protection to employers from liability. The protection afforded, however, is not absolute and, therefore, the safest course of action is to disclose only limited information regarding current and former employees to third parties.
Protection when providing references
Colorado has an employee reference statute that grants immunity from civil damages to employers who provide information about a current or former employee’s job history or job performance at the request of a prospective employer. This protection covers information about:
- the suitability of the employee for re-employment
- the employee's work-related skills, abilities, and habits as they relate to suitability for future employment
- the reason for an employee's separation.
The disclosing employer is not protected from liability, however, if the employee shows that the information disclosed was false and the disclosing employer knew or reasonably should have known that the information was false. Under this statute, the disclosing employer must provide the employee with a copy of any written information provided to the prospective employer upon the employee’s request. Employee discipline and reasons for termination should be well documented, and references that provide this type of information should be consistent with the documentation.
Informal Internet searches of applicants
With the advent of Google and search databases and various social networking sites (for instance, Facebook, Instagram, Twitter, etc.), many employers conduct background checks of job applicants and employees using informal information sources. Use of the public information posted on these sites is not illegal, so long as the employer does not use the information to improperly weed out potential candidates. For instance, many social networking sites will reveal a substantial amount of personal information about an applicant, such as an applicant’s:
Employers should be aware that when conducting a social media/Internet search about an applicant there is a risk of learning that the applicant falls into a protected status, which the employer would not have known otherwise. This risk should be considered when deciding whether to conduct a social media/Internet search. Once an employer has learned that an applicant has a protected characteristic, the employer cannot unlearn that fact and would no longer have a defense that they lacked knowledge of the applicant’s characteristic should a claim of discrimination arise. Employers should keep careful records demonstrating that employment decisions were based on unbiased, legal considerations and not on social media/Internet information that would otherwise be considered an illegal basis for an employment decision. If an employer decides to conduct social media/Internet searches on applicants, it is advisable to conduct searches on all applicants for a given job category rather than only performing a search for only select applicants for that job category.
Checking social media before hiring
See Social media for a discussion of social media and current employees.
As a general matter, there is no legal prohibition on employers reviewing publicly accessible information, such as information on public social networking sites or general public websites. Employers may want to review social networking sites to discover whether a job applicant’s use of social media reflects poor judgment, reveals information about illegal drug use, or otherwise contains postings that potentially could be embarrassing to the employer if the applicant were hired. If an employer chooses to review social media for applicants, it is imperative that the review be consistently conducted for all potential employees, with the same sites reviewed for each as discussed below.
As long as employers limit their review of social media and Internet sites to those that are publicly accessible and do not ask applicants for social media usernames or passwords, Colorado does not prohibit employers from accessing any information in the public domain about prospective employees. Employers should not have someone “friend” an applicant or employee on behalf of management in order to access this personal information. Not only could this have an adverse impact on employee relations, but it might open the employer to civil liability for invasion of privacy or other tort claims. Additionally, Colorado prohibits employers from requesting or requiring an applicant to provide any user name, password, or other means for accessing the individual’s personal account or service.
In looking at the use of social media in the employment context, it is helpful to start by looking at some of the basic legal limitations and duties applicable in this area for both employers and employees. Remembering these limitations and duties will help evaluate both the appropriateness of disciplinary action for employee conduct in the use of social media and the appropriateness of monitoring procedures and responses to employee use of social media.
Making discriminatory employment decisions
It is a basic principle of employment law that employers may not make employment decisions based on protected personal characteristics of an employee. (See Recruiting and hiring.) Just as employers cannot ask for information about such subjects as familial status, disability or religion during a job interview, the employer should not seek that type of information by gleaning it from the Internet. An employer exposes itself to the risk of liability by becoming aware of personal information about a job applicant that may not legally be used in the hiring process. For instance, reviewing a job applicant’s Facebook page may reveal that the applicant is disabled or otherwise show that the employee has some protected personal characteristic that the employer may not seek to know or consider in hiring. By doing these types of searches, one risk for employers is that potential employees may claim that they were the subject of an adverse employment decision – such as not being hired – because the employer discriminated against them based on the employee’s protected characteristics that the employer learned from reviewing social media or public Internet sites.
Employers are also generally prohibited from asking prospective employees for their usernames and passwords for their personal social media accounts.
At the hiring stage
If employers elect to review social media as part of their hiring process, they should conduct such a review consistently for all applicants for a particular job, rather than selectively for only certain applicants. The EEOC has issued informal guidance regarding Electronic Resumes with Video Clips. It is available at:
The EEOC guidance document notes that it is not illegal for an employer to learn the race, gender, or ethnicity; or disability status of an individual prior to an interview. Nevertheless, the EEOC strongly cautions that the knowledge about race, gender, or ethnicity; or disability status of an individual at this stage increases the risk of discrimination, or the appearance of discrimination. If an employer learns about such information, it should focus on the person’s qualifications for the job.
At the employment stage
Colorado state law parrots the federal EEOC’s protections regarding social media and clarifies exceptions for both applicants and employees already hired. Under a law passed in 2013, Colorado employers are generally prohibited from requesting or requiring any employee or applicant to disclose any username or password or in any other way provide the employer with access to a personal social media account through an electronic communications device. It also prohibits employers from compelling applicants to add anyone to their list of contacts or to change privacy settings associated with social networking accounts.
The law contains exceptions to allow an employer to conduct an investigation to ensure compliance with applicable securities or financial laws or regulatory requirements based on the receipt of information about the use of such accounts, or from investigating the unauthorized downloading of the employer’s proprietary information to such accounts. Employers who violate the law may be fined $1,000 for the first offense and up to $5,000 for each subsequent offense.
Criminal record checks
An employer in Colorado may not consider an applicant’s criminal record in its hiring decisions. The "Colorado Chance to Compete Act" prohibits employers from asking about an applicant's criminal history in an initial job application. The act also prohibits an employer from starting in an employment position advertisement that a person with a criminal history may not apply. In addition, there are federal and state laws and guidelines that employers must keep in mind when considering an applicant’s criminal record.
The EEOC issued “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions under Title VII.” In its guidance, the EEOC sets forth several best practices for employers when considering arrests and conviction records, including that employers should:
- Eliminate policies or practices that automatically exclude people from employment based on any criminal record.
- Develop a narrowly tailored written policy for criminal background screening that:
- identifies essential job requirements
- determines the specific offenses that may demonstrate the unfitness for performing such jobs
- determines the duration of exclusions for criminal conduct
Employers should also record the justification for the policy and keep a record of consultations and research considered in crafting the policy and procedures.
- Train managers, hiring officials, and decision makers about Title VII and its prohibition on employment discrimination and about the narrowly tailored written policy.
- When asking questions about criminal records, limit inquiries to records for which exclusion would be job related for the position in question and consistent with business necessity.
- Keep information about applicants’ and employees’ criminal records confidential and only use it for the purpose for which it was intended.
Under the EEOC’s guidance, background check practices or policies should be revised to include a targeted screening process that includes the consideration of three factors:
- the nature and gravity of the offense or conduct
- the time that has passed since the offense, conduct and/or completion of the sentence
- the nature of the job held or sought.
For any individuals “screened out” by this targeted screening process, the employer must then provide an opportunity for an individualized assessment. Under the EEOC’s guidance, an individualized assessment includes:
- notice to individual that he/she has been screened out because of criminal conviction
- opportunity to demonstrate that the exclusion should not be applied due to he/she particular circumstance
consideration by the employer as to whether the additional information provided by the individual warrants an exception to the exclusion and shows that the policy as applied is not job related and consistent with business necessity. Arrests are treated differently than convictions. According to the EEOC guidance, an arrest by itself may not be used to deny an employment opportunity. Under Colorado law, employers cannot require applicants to disclose information contained in sealed arrest or criminal record information.
Colorado employers are generally prohibited from advertising a position that indicates individuals with a criminal history may not apply. The Colorado Chance to Compete Act (CCCA) went into effect on September 1, 2019, to prevent employers from asking about an applicant's criminal background on an application.
Applicant's driving record
Employers should review the driving record of applicants for positions that would require the use of a company vehicle and/or for positions with an essential job requirement of driving.
In Colorado, due to privacy concerns, an individual cannot obtain a copy of someone else’s driving record without that person’s permission. Employers, however, can review a Requestor Release and Affidavit of Intended Use to determine if it meets any of the listed criteria to request the record. If the criteria are met, the employer can request the person’s driving record. The Requestor Release and Affidavit of Intended Use is available at the Department of Revenue Division of Motor Vehicles’ website:
As discussed later in "Applicants' consumer reports, if the employer uses a third-party company to obtain this information, the Fair Credit Reporting Act (FCRA) and the Colorado Consumer Credit Reporting Act may also be implicated.
Colorado’s Employment Opportunity Act restricts an employer’s ability to obtain and use consumer credit information for making employment decisions related to employees and applicants. An employer cannot use consumer credit information for an employment purpose unless the information is substantially related to the employee’s/applicant’s current or potential job. Employers cannot require an employee/applicant to consent to a request for a credit report as a condition of employment unless the employer is a bank or financial institution, the report is required by law, or the report is substantially related to the individual's current or potential job and the employer has a bona fide purpose for making the request or using the information, which is substantially related to the individual’s current or potential job and is disclosed in writing to the employee. “Substantially related to the employee’s current or potential job” means that the information in a credit report is related to the position for which the employee is being evaluated because the position:
- is for executive or management personnel (or officers or employees who are professional staff to such personnel), and the position involves:
- setting the direction or control of a business, division, unit, or an agency of a business
- fiduciary responsibility to the employer
- access to customers’, employees’, or the employer’s personal or financial information (other than information provided in a retail transaction)
- authority to issue payments, collect debts, or enter into contracts
- involves contracts with defense, intelligence, national security, space agencies or the federal government.
If an employer is able to obtain and use credit information based on the above and relies on consumer credit information to take adverse action, the employer must disclose that fact and the information relied upon to the employee. This disclosure must be made to employees in writing and made to applicants in the same manner in which the application was made. When the consumer credit information is substantially related to the employee’s/applicant’s current or potential job, an employer may make additional inquiries of the individual to give him/her the opportunity to explain circumstances that could make the credit information attributable to some factor other than poor money management skills.
There is no federal prohibition or restriction on an employer’s use of consumer credit information in making employment decisions, but the EEOC takes the position that credit checks may also have an adverse impact on minorities. Additionally, the Consumer Finance Protection Bureau (CFPB), the primary enforcer of the FCRA, requires employers to use particular forms when seeking or using credit checks in making employment decisions.
Typically, credit reports can only be obtained through third-party entities that prepare such reports for a fee. As a result, the provisions of the FCRA, discussed in the following paragraphs, govern employers that obtain credit reports and the necessary disclosures and provisions apply.
The Fair Credit Reporting Act (FCRA) and the Colorado Consumer Credit Reporting Act (CCCRA) include significant compliance requirements for employers who seek and/or use credit checks or consumer reports in making employment-related hiring, promotion and termination decisions.
In the employment context, a “consumer credit report” is broadly defined as any written, oral, or other communication from a consumer reporting agency bearing upon someone’s credit standing and/or credit capacity, which an employer will use to evaluate the individual. “Investigative consumer reports” are also covered by the FCRA and CCCRA. Investigative consumer reports are reports about someone’s character, reputation, personal characteristics, and/or mode of living. This information is obtained through personal interviews conducted by the consumer-reporting agency. These reports include records that are used in whole or in part to assess an individual’s qualifications for employment, such as:
The CCCRA limits the content of reports, including time limits related to bankruptcy cases, suits and judgments, paid tax liens, accounts placed for collection or charged to profit and loss, records of arrest, indictment, or conviction of a crime, and other adverse items of information. These limitations do not apply when the report is to be used in connection with the employment of an individual with an annual salary at or more than (or reasonably expected to be at or more than) $75,000. The CCCRA also prohibits including medical information in the report unless the consumer consents to the furnishing of the report.
These consumer reports must be generated by a consumer-reporting agency for the FCRA and the CCCRA to apply. A consumer-reporting agency is also defined quite broadly. It is essentially any third-party business hired by the employer to obtain the information described previously and could include private investigators, law firms, or any other business engaged to perform background checks.
Generally, the FCRA and CCCRA do not apply to an employer’s actions to conduct its own reference checks by contacting former employers or otherwise checking public records or documents.
The following guidelines summarize some of the principal requirements imposed by the FCRA when an employer uses a consumer report in making employment decisions. Failure to follow the requirements of the FCRA could result in lawsuits brought by applicants or employees. Negligent failure to comply with the FCRA requirements can lead to attorneys’ fees and damages. Willful failure to comply can lead to statutory damages, which are $4,111 per violation, attorneys’ fees and punitive damages.
Steps to take before obtaining a consumer report
Before obtaining a consumer report for the purpose of screening potential employees or in making promotion, demotion, or discharge decisions regarding existing employees based upon the contents of the consumer report, an employer must first:
- have an employment purpose for obtaining the consumer report (that is, the report is used for evaluating a consumer for employment, promotion, reassignment, or retention)
- give the affected individual written notice that is clear and conspicuous of the employer’s intention to obtain a consumer report in a document that consists solely of this notice
- obtain written permission from the affected individual to obtain a consumer report on that individual
- certify to the consumer reporting agency from which the employer seeks the consumer report that it has complied with all applicable provisions of the FCRA.
Taking adverse action after obtaining a consumer report
If an employer intends to rely in whole or in part on information from a consumer report to take adverse action against an applicant or employee (that is, declining to hire, promote, or retain an employee), the employer must follow a two-step procedure:
- send a pre-adverse action notice
- send an adverse action notice.
Pre-adverse action notice
The pre-adverse action notice is intended to provide the affected applicant or employee the chance to address and/or correct erroneous or incorrect information stated in the consumer report. If the employer is planning on taking adverse employment action based on information in the consumer report, the employer must provide the affected individual with:
- a notice that includes a copy of the consumer report relied upon
- the “A Summary of Your Rights Under the Fair Credit Reporting Act” form. This form became a requirement as of January 1, 2013, and reflects the fact that responsibility for interpreting the FCRA has been transferred from the Federal Trade Commission (FTC) to the Consumer Financial Protection Bureau (CFRB).
In May 2018, Congress passed the Economic Growth, Regulatory Relieve and Consumer Protection Act. The act added new language to the "Summary of Your Rights" form that explains that consumers may obtain a "security freeze" free of cost. A security freeze allows a consumer to freeze their account so that a CRA may not release information on a credit report without the consumer's authorization.
This form shows that consumers can obtain more information about their rights by contacting the CFRB or visiting the website at:
Adverse action notice
It is recommended that the employer allow the affected individual about a week to contact the consumer-reporting agency identified in the pre-adverse action notice before taking the adverse employment action. If the employer takes adverse employment action based on information in the consumer report, the employer must inform the affected individual of:
- the fact that the adverse action has been taken (that is, declined to hire, retain, or promote the individual)
- the name, address and phone number – the toll-free number, if there is one – of the consumer-reporting agency that provided the consumer report
- the fact that the consumer reporting agency that provided the consumer report played no part in the adverse action decision and therefore cannot provide the individual with the specific reasons why the adverse action was taken
- the fact that the individual has the right to a free copy of the consumer report in question from the consumer-reporting agency that provided the report if the request is made within 60 days from the date the action is taken
- the fact that the individual has the right to dispute the accuracy or completeness of the report furnished with the consumer reporting agency.
Retention of notice
Employers are required to keep copies of consumer reports they have received and notices sent for two years.
Employers who would like more information about the process and requirements for conducting credit checks on applicants and employees can visit: