The FCRA covers more than just credit reports, because it applies to any company that is a "reporting agency"—that means anyone who supplies information that could be used that way even if it is gleaned from public records. The law was also written to cover reports about a person's "character, general reputation, personal characteristics, or mode of living" that could be used to make any decisions about either credit or employment.
"Anytime you do a background check to make an employment decision, it falls under those laws," said Donna Ballman, a Florida-based attorney specializing in employment law and the author of "Stand Up for Yourself Without Getting Fired."
Background checks were once limited to people working in specific professions—with children, for example, or law enforcement. But as the Internet grew and companies became more concerned about workplace violence and liability, background checks started to appear even in relatively menial jobs. It's now almost a given that there's a check box on an application that asks, "Have you ever been convicted of a crime?"
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The Society for Human Resource Management says about 69 percent of employers use criminal background checks to screen applicants. Sixty-two percent do the checks when an offer is made; 32 percent do so after the interview; another 4 percent when an application is filled out.
Ballman said sometimes an employer will discover information they weren't seeking but which can have serious repercussions—for example, going through a social media site, one might see a picture of an applicant in a wheelchair. A physically handicapped employee is in a protected class, which means there are grounds for an antidiscrimination suit if they can show their handicap might have influenced the hiring decision. The same applies to race and gender and can even involve less obvious characteristics, including age.
The Equal Employment Opportunity Commission issued guidelines in April 2012 to help employers decide whether a background check is relevant and legal. The agency has three criteria: the nature of the offense, the amount of time since it occurred and the nature of the job.
The FCRA states that candidates should be told that they are having a background check conducted and that they must approve it. In addition, employers must provide a way for the candidate to challenge the information that a background report produces.