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Employee Background Checks: Duties And Limitations On The Employer

Conducting background checks is both a necessary and risky venture that employers take on when hiring and retaining employees. Employers are increasingly finding themselves in litigation challenging the use of background checks as part of the screening process when hiring new employees. In light of this litigation trend coupled with recent local and state restrictions on the content and scope of background checks, in order to avoid litigation, employers need to be aware of their rights, duties and limitations with respect to conducting background checks.

  • The Basics Of Background Checks

When conducting background checks on prospective employees, employers must keep in mind the position for which prospective employees are applying in determining the scope of the background check as well as hiring decisions based upon the background check. For example, an employer hiring a school bus driver would certainly want to check the driving record and criminal backgrounds of any prospective hires and avoid hiring an applicant with a pattern of serious traffic violations or a criminal history involving endangerment or harm to a child. However, employers must keep in mind that the Equal Employment Opportunity Commission generally frowns upon automatically rejecting applicants for an arrest or conviction, especially when a past crime is not related to the job duties of the position being filled, since such practices disproportionately prevent minorities from obtaining employment. Such practices could conceivably subject employers to violations of Title VII of the Civil Rights Act or other discrimination-based litigation.

Recently, some states have placed limitations or complete restrictions on criminal background inquiries for most job positions. In California, New York and Massachusetts, employers are prohibited from inquiring about past arrests that did not result in convictions. In Ohio, Hawaii and the District of Colombia, employers are only permitted to inquire as to convictions less than ten years old. In Texas, employers only have the right to obtain certain background information for the previous seven years when a prospective employee is applying for a non-insurance business position earning less than $75,000 per year. Tex. Bus. & Comm. Code § 20.05.

While limitations have been placed on background checks in many states, some of those same states have passed laws requiring background checks for certain job positions. In Texas, for example, state law mandates that companies providing services in or delivering products to a home must conduct background checks on prospective employees who will enter a customer's home. Tex. Civ. Prac. & Rem. Code §§ 145.002-.004. Employers need to be aware of the limitations and restrictions in place in the jurisdictions in which they operate.

  • The Application Of The Fair Credit Reporting Act

Employers must also keep in mind the regulations contained in the Fair Credit Reporting Act (FCRA) which, contrary to its name, does not just regulate credit background checks by employers, but also regulates any other records such as driving histories or criminal records obtained from a consumer reporting agency. Although employers are generally free to conduct background checks pursuant to the FCRA and use the information obtained for a clear business interest, employers should inform the prospective employee of the intention to conduct a background check and receive written permission from the prospective employee before obtaining a report. There are also notice and disclosure obligations on an employer if the employer intends to take any negative action against the employee or candidate based upon information obtained in the background check.

  • Potential Liability For Negligent Hiring

Finally, employers are increasingly being hit with negligent hiring lawsuits. To avoid this, performing background checks is important for certain higher-risk positions. Most jurisdictions, including Texas, recognize that an employer has a duty of care to protect fellow employees and customers from unfit individuals. Conducting background checks can be a valuable tool in both weeding out unqualified employees and defending a negligent hiring lawsuit.

However, failing to conduct a background check, in itself, is not necessarily evidence of negligence on the part of an employer in a negligent hiring or retention lawsuit. Several weeks ago, the Fourteenth Court of Appeals in Houston affirmed summary judgment granted by a Brazoria County trial court to an employer in a lawsuit brought by an employee assaulted by a co-worker at a job site. In Ramiro Najera v. Recana Solutions, LLC, 2015 WL 4985085 (Tex. App. – Houston [14th Dist.] Aug. 20, 2015), the Appellant, Mr. Najera, sued his employer for negligence, gross negligence and under the doctrine of respondeat superior. More specifically, Mr. Najera alleged that his employer, Recana Solutions, breached its duty to hire, supervise and retain competent and nonviolent employees. Recana Solutions sought summary judgment from a Brazoria County trial court, alleging, in part, that Mr. Najera (1) had no evidence in support of his negligent hiring, retention, supervision or training causes of action; and (2) was unable to establish, as a matter of law, that Recana Solutions had a duty to perform a criminal background check on the employee who assaulted Mr. Najera. The trial court granted summary judgment in favor of Recana Solutions.

On appeal, Mr. Najera argued that Recana Solutions' failure to perform a criminal background check on the co-worker who assaulted him was evidence of negligent hiring and retention. After considering cases in which a failure to perform background checks did and did not constitute negligent hiring or retention, the Court concluded that when there is not a situation that foreseeably creates a peculiar risk or harm to others by reason of the employment duties, no legal duty is owed beyond that of providing a competent employee. Because of this, Recana Solutions' failure to perform a background check on the assaulting employee did not constitute evidence of negligence.

  • Tips for Employers

Employers should carefully consider the job requirements of the position for which they are hiring when determining whether to conduct a criminal background check. Courts are likely to place more scrutiny on employers who do not perform background checks for jobs involving heightened confrontation or particularly dangerous tools or weapons than on jobs involving unskilled labor or unforeseeable harm to others. Employers who do not currently consider criminal history as part of their pre-hire screening process should consider implementing a background check program depending on the job duties of the prospective employee and the nature of the employer's business. However, employers must be careful to comply with federal, state and local laws impacting the use of criminal and other background reports in the hiring process.