My Prospective Employee Failed the Background Check. Now What?

---

​     You spend a considerable amount of time trying to find just the right candidate for the job.  You filter through applications and resumes, conduct interviews, and way pros and cons. You’ve offered the job contingent on passing the background check.  Just when you think you’re ready to hire the perfect candidate, a red flag goes up upon receiving the background check results.  What do you do now?  Legally there are steps you must take if you are considering rescinding the job offer due to a criminal conviction.  Background checks, including criminal convictions, are regulated by the FCRA (Federal Credit Reporting Act). The intent of the FCRA is to provide and fair and accurate summary of this data for consumers and applicants.
     Let’s say you discover a criminal conviction.  Before you decide to deny an applicant, you must determine how that conviction affects the job, known as an “individualized assessment”.  The intent of the individualized assessment is to determine if the conviction has a direct and adverse relationship with the specific job duties that justifies the employer denying employment. What is the nature and gravity of the offense? How long ago did it happen?  Was it job-related or would it impact the specific job you are offering the candidate?  For example, it may not make sense to decline a candidate with a felony DUI conviction if their role in the company doesn’t include any driving activities. However, you could easily justify denying a candidate with an embezzlement conviction for a job as your CFO. This is also the time to engage with the applicant to hear their side of the story. There may have been extenuating circumstances or a narrative of personal growth and rehabilitation since the conviction.
     After this consideration, if you still feel the conviction may be a deal-breaker, the next step is the notice requirement.  There are two parts.  The first notice, the pre-adverse action notice, is a letter stating that the background check results are being reviewed and a decision is pending.  Include a copy of the report and a “summary of your rights under the fair credit reporting agency act”, informing them that they have an opportunity to respond and the deadline.  Keep copies of everything.  Then wait at least five business days for a response.  This gives the applicant a chance to explain or dispute the findings.  You must consider any response before making a final decision.   If they notify you within those five days that they are collecting evidence or working on their response, you must give them five additional days.
     So, now it’s been five days since the first notice letter was sent.  Either there has been no response, or you have received an explanation from the applicant arguing his case.  You considered all the available information and have decided that you still want to rescind the job offer.  Now you must send the second notice, the Adverse Action Notice.  This must specifically express denial of employment and that it was due (or partially due) to the results of the background check.  You should also include the contact information for the vendor that performed the background check on your behalf. Include procedures for challenging the decision or requesting reconsideration and notice of the right to file a complaint with the California Department of Fair Employment and Housing.  Keep copies of everything.
     It would be a shame to lose a prospective applicant due to an unfortunate blemish on a background check.  We would all love to be the giver of second chances, but sometimes it isn’t a sensible decision for your business. By making sure you follow the Fair Credit and Report Act, you can protect yourself from legal action and know that you’ve done the right thing.