How State Privacy Laws Affect Your Background Screening

When conducting background screening, HR leaders must navigate a complex landscape of state-specific laws designed to protect job applicants’ rights. 

Background screening is essential for many businesses, particularly those operating in sectors where trust and security are paramount. However, the challenges of conducting thorough and compliant background screening can vary significantly from state to state. California, Michigan, New Jersey, New York, and Washington each have unique regulations employers must follow. 

These regulations affect how companies access and use criminal records and other personal data during hiring.

Understanding these laws is crucial for ensuring compliance, minimizing risk, and promoting fair hiring practices.

• California has established itself as a leader in employee privacy rights, with several laws that tightly regulate the use of personal information. For instance, the California Fair Chance Act restricts employers from inquiring about criminal history until a conditional job offer has been made. It aims to give all candidates a fair shot at employment regardless of their past.
• In Michigan, the legal framework around background screening has yet to reach the restrictiveness seen in California. Still, trends suggest a shift towards increasing privacy protections, which may complicate the screening process soon. 
• The Fair Credit Reporting Act in New Jersey aligns closely with the federal FCRA, with additional state-specific provisions that HR leaders must heed. These provisions ensure the accuracy, fairness, and privacy of information used in consumer reports.
• New York’s Article 23-A of the Correction Law aims to reduce the discrimination faced by individuals with criminal records. 
• And, in Washington, the Fair Chance Act, similar to New Jersey’s Ban the Box law, prohibits employers from asking about criminal history on job applications.

Understanding and adapting to regulations is critical for companies navigating these legal landscapes. This means staying updated on legislative changes, leveraging various background screenings, and working with knowledgeable screening providers to ensure compliance. 

California’s Complex Legal Landscape

In California, several laws and judicial decisions have created a unique and challenging environment for conducting background screening:

1. Ban the Box Laws and the Fair Chance Act prohibit employers from inquiring about an applicant’s criminal history until a conditional job offer has been made. This law is designed to allow candidates to be evaluated on their qualifications first, without the stigma of a criminal record.
2. SB-731: This law automatically seals certain felony records, making it difficult for employers and screening agencies to access relevant criminal history. The law applies to non-violent, non-sex offender-related felonies under specific conditions, limiting the available data for background screening.
3. Restrictions on Credit Checks: California restricts the use of credit history in employment decisions except for certain financial positions, adding another layer of complexity to the background screening process.
4. Redaction of Personal Identifiers: A significant court decision mandated the redaction of birth dates and driver’s license numbers from court records, which complicates the verification process for criminal records since these identifiers are crucial for ensuring accuracy.
5. Los Angeles County Fair Chance Ordinance: Designed to enhance employment opportunities for individuals with criminal records. This ordinance builds on the existing Fair Chance Act by imposing additional requirements on employers in unincorporated areas of Los Angeles County.

These regulations are designed to protect job applicants from discrimination based on their criminal history. They include rules against inquiring about arrest records that did not lead to a conviction and other specific limitations on reporting and using criminal history.​ 

Los Angeles County Fair Chance Ordinance

• Timing of criminal history inquiries: LA County employers must wait until after the applicant has a copy of their background report to inquire about post-offer criminal history.
• Job postings: LA County employers must state that qualified applicants with a criminal history are considered and include a list of material job duties that criminal history may affect—potentially leading to the withdrawal of—a conditional job offer.
• Offer letters: LA County employers must include a statement that a conditional offer is contingent upon a clearly stated justification for reviewing the candidate’s criminal history.
• Prohibited criminal history information: The ordinance expands California’s Labor Code to include convictions older than seven years (unless an exception applies), driving infractions unless driving is a key job duty, decriminalized conduct convictions, and diversions and deferrals, regardless of completion.
• Adverse action: LA County employers must now provide the results of individualized assessments, including initial and reassessment, to the applicant as appropriate in the pre-adverse and adverse process. Candidates must be notified of the right to file a complaint with the Los Angeles County Department of Consumer and Business Affairs. Adverse letters must be sent by mail and email (if known), and the deadlines to respond must be in bold, caps, or underlined. Candidates are now offered 15 business days to respond and may present their information by phone, in person, or virtually.

Michigan’s Background Screening Limitations

Michigan has yet to enact laws as restrictive as those in California. Still, the general trend in privacy laws nationally is toward more restrictions on employer access to criminal records, which can complicate the screening process. 

They have implemented several “clean slate” laws that affect how criminal records can be accessed and used. These laws include the automatic expungement of certain criminal records, which may limit the availability of such records for background checks. The state aims to make criminal records less of a barrier to employment for individuals with past criminal justice involvement.

Like many other states, Michigan emphasizes fairness in employment, which might eventually lead to tighter regulations similar to California’s.

New Jersey’s Fair Credit Reporting Act

The primary purpose of the NJ FCRA is to ensure the accuracy, fairness, and privacy of information used in consumer reports. As with federal requirements, employers must obtain written consent from candidates before running background checks and provide them with a copy of their rights under the NJ FCRA.

Suppose an adverse action is taken based on the report. In that case, employers must provide the applicant with a copy of the report, a summary of their rights, and the contact information of the consumer reporting agency that provided the report. Failure to comply with these requirements can result in legal repercussions and damage to the company’s reputation.

New Jersey’s Opportunity to Compete Act

New Jersey also has the Opportunity to Compete Act, known as the “Ban the Box” law. This restricts employers from inquiring about an applicant’s criminal history during the early stages of the hiring process. Employers are prohibited from asking about criminal records on job applications or during the first interview.

After the initial employment application process, employers can inquire about criminal history, but they must also consider several factors before deciding based on this information. These factors include the nature of the offense, how much time has passed since the offense, and the nature of the job.

New York Article 23-A

New York’s Article 23-A of the Correction Law aims to reduce the discrimination faced by individuals with criminal records. Employers must evaluate several factors before making an employment decision based on a criminal conviction. These include the relationship between the offense and the job, the time elapsed since the offense, the individual’s age at the time of the offense, and evidence of rehabilitation.

Employers must provide applicants with a written statement if they are denied employment based on their criminal history. This statement must include the reasons for the denial and inform the applicant of their rights under Article 23-A.

Washington State’s Fair Chance Act

Washington State’s Fair Chance Act, similar to New Jersey’s Ban the Box law, prohibits employers from asking about criminal history on job applications. Employers can only inquire about an applicant’s criminal record after determining that the applicant is otherwise qualified.

The law also requires employers to consider the nature of the crime, the time elapsed, and the relevance to the job before making a hiring decision based on criminal history. This act aims to give individuals with criminal records a fair chance at employment.

The WFCRA In Washington State

Washington State also has the Fair Credit Reporting Act, which ensures that the use of credit reports in employment decisions is fair and accurate. Like the federal FCRA, the WFCRA requires employers to obtain written consent from the applicant before conducting a credit check. If an adverse action is taken based on the credit report, the employer must provide the applicant with a copy of the report, a summary of their rights, and contact information for the reporting agency.

Additionally, employers must clearly explain why the credit information is relevant to the job. This is particularly important in roles involving financial responsibilities or sensitive information access.

Tips for HR Leaders

Understanding individual state laws is always good practice, even if you don’t do business there. As with federal regulations, they provide information on what you might expect in the forthcoming years. 

Here are some additional things to consider:

1. Stay Informed and Updated: HR leaders must stay informed about the latest changes to state-specific laws regarding background screenings and fair hiring practices. Subscribing to industry newsletters, attending webinars, and consulting legal experts can keep one’s knowledge current.
2. Implement Comprehensive Training: Training hiring managers and HR staff on state-specific regulations is crucial. This ensures that everyone involved in the hiring process understands the legal requirements and the importance of compliance.
3.  Develop Clear Policies and Procedures: Establishing clear policies and procedures for conducting background checks and handling criminal history information is essential. Ensure that these policies are documented and easily accessible to all relevant personnel.
4. Use Consent Forms and Provide Notices: Always obtain written consent from applicants before conducting background checks. Provide applicants with the necessary disclosures and summaries of their rights under state and federal laws.
5. Consider Individual Circumstances: When evaluating criminal history information, consider the individual circumstances of each case. Factors such as the nature of the offense, time elapsed, and evidence of rehabilitation should be regarded to make fair and informed decisions.
6. Communicate Transparently: Be transparent with applicants about the background screening process and how their information will be used. Clear communication helps build trust and demonstrates your commitment to fair hiring practices.
7. Monitor and Audit Compliance: Regularly monitor and audit your background check processes to ensure compliance with state and federal regulations. This proactive approach can help identify and address potential issues before they escalate.

Navigating State Laws for Background Screening

HR leaders are responsible for navigating the intricacies of state-specific laws regarding background screening and fair hiring practices. By understanding the requirements of individual states, HR professionals can ensure compliance, minimize risks, and promote a fair and inclusive hiring process. Comprehensive training, clear policies, and transparent communication will help build a robust and legally sound hiring framework that benefits the organization and its prospective employees.

While this list isn’t exhaustive for all state regulations, we do publish up-to-date information on our blog.

S2Verify does not provide legal advice; this article is only intended for educational purposes.

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