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EEOC Rules: Background Checks Require Caution

July 21, 2017

Employee fraud is something that many dealership owners think always happens to some other business. But every year, unsuspecting dealers find out that an employee they trusted implicitly has embezzled funds.

One of the best ways to guard against employee fraud is to conduct thorough background checks on all employees before they’re hired. But keep in mind that, if you use an applicant’s background information to make an employment decision, you must comply with federal and state laws that protect applicants from discrimination.

Nondiscrimination laws

Federal nondiscrimination laws are enforced by the Equal Employment Opportunity Commission (EEOC). According to the EEOC, it’s illegal to check the background of applicants to make a hiring decision based on:

• Gender,

• Religion,

• Disability,

• Age,

• Genetic information, or

• Race, color or national origin.

Being unable to use any of this information as part of a background check means you must treat all applicants equally, without regard to the factors above. And you must apply the same hiring standards to every applicant.

The EEOC urges employers to be especially careful when basing hiring decisions on background problems that may be more common among applications from a particular race, gender or religion. This can come into play if you uncover past criminal activity by an applicant.

According to the EEOC, you can’t exclude applicants with certain criminal records if this significantly disadvantages individuals of a particular race, national origin or other protected characteristic — and if it doesn’t accurately predict who’ll be a responsible, reliable or safe employee. Legally speaking, such a practice would have a “disparate impact” and wouldn’t be job-related or “consistent with business necessity.”

Check state laws, too

State laws also govern what can legally be used from a background check when making hiring decisions. For more details, consult an attorney who specializes in employment law.

© 2017