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.
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:
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.
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.
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:
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.
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 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.
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:
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.
“Background Checks: What Employers Need to Know”
"Using Consumer Reports: What Employers Need to 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.
|Type of Business||Contact|
A. Banks, Savings associations, and credit unions with total assets of over $10 billion and their affiliates.
B. Such affiliates that are not banks, savings associations, or credit unions also should list, in addition to the CFPB
A. Consumer Financial Protection Bureau
1700 G. Street, NW
Washington, DC 20552
Phone: (855) 411-2372
B. Federal Trade Commission: Bureau of Consumer Protection
600 Pennsylvania Avenue, NW
Washington, DC 20580
Phone: (877) 382-4357
A. National banks, federal savings associations, and federal branches and federal agencies of foreign banks.
B. State member banks, branches and agencies of foreign banks (other than federal branches, federal agencies, and Insured State Branches of Foreign Banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act.
C. Nonmember Insured Banks, Insured State Branches of Foreign Banks, and insured state savings associations.
D. Federal Credit Unions
A. Office of the Comptroller of Currency
Customer Assistance Group
1301 McKinney Street, Suite 3450
Houston, TX 77010-9050
Phone: (800) 613-6743
B. Federal Reserve Consumer Help Center
P.O. Box 1200
Minneapolis, MN 55480
Phone: (888) 851-1920
C. FDIC Consumer Response Center
1100 Walnut Street, Box #11
Kansas City, MO 64106
Phone: (877) 275-3342
D. National Credit Union
Administration Office of Consumer Protection (OCP)
Regional Office Serving Minnesota:
Region IV - AUSTIN
4807 Spicewood Springs Rd., Suite 5200
Austin, TX 78759-8490
Phone: (512) 342-5600
Assistant General Counsel for Aviation Enforcement and Proceedings
Aviation Consumer Protection Division
Department of Transportation
1200 New Jersey Avenue, S.E.
Washington, DC 20590
Phone: (202) 366-4000
Creditors Subject to the Surface Transportation Board
Surface Transportation Board
Office of Proceedings, Department of Transportation
395 E. Street, S. W.
Washington, DC 20423
Phone: (202) 245-0245
Creditors Subject to the Packers and Stockyards Act, 1921
|Nearest Packers and Stockyards Administration area supervisor.|
Small Business Investment Companies
Associate Deputy Administrator for Capital Access
United States Small Business Administration
409 Third Street, SW, 8th Floor
Washington, DC 20416
SBA Answer Desk: (800) 827-5722
Brokers and Dealers
Securities and Exchange Commission
100 F. Street, NE
Washington, DC 20549
Federal Land Banks, Federal Land Bank Associations, Federal Intermediate Credit Banks, and Production Credit Associations
Farm Credit Administration
1501 Farm Credit Drive
McLean, VA 22102-5090
Phone: (703) 883-4056
Retailers, Finance Companies, and All other Creditors Not Listed Above
FTC Regional Office for regions in which the creditor operates or Federal Trade Commission: Consumer Response Center - Bureau of Consumer Protection
600 Pennsylvania Avenue, NW
Washington, DC 20580
Phone: (877) 382-4357