As we have noted in a number of prior posts here, here, and here, background checks can be a helpful tool for management, especially during the hiring process, but they can also be a ripe source for potential liability on a number of fronts.  While there has been a lot of attention to suits recently filed by the Equal Employment Opportunity Commission (EEOC) alleging discriminatory employment decisions based on background check results, the pitfalls come into play even before an employment decision is made and/or communicated under the Fair Credit Reporting Act (FCRA), as Swift Transportation Company was recently reminded.  Indeed, the trucking company has found itself the subject of a federal lawsuit in which the plaintiff, on behalf of himself and all similarly situated individuals, alleges that Swift routinely failed to follow proper procedures both before and after obtaining and then relying upon background checks.

In the class action lawsuit brought in the U.S. District Court for the Eastern District of Virginia, the plaintiff asserts that he applied for a commercial truck driver position with Swift and that, without proper authorization, the company obtained a background check report on him from a third party.  According to the complaint, Swift decided not to hire the plaintiff based on his criminal background report, but failed to follow the FCRA two-step process before doing so.  The plaintiff seeks to recover statutory and punitive damages as well as attorney’s fees and costs.

So what can be learned from this suit, and what can employers do to reduce the risk of legal exposure?

Ensure practices are compliant with federal law—The FCRA, imposes a number of procedural requirements on employers using a third party to conduct background checks on applicants and employees as well as when employers take adverse action against them based on such checks.  For example, the FCRA requires that employers obtain an applicant’s or employee’s written authorization to conduct the background check, and the content of that authorization is key.  Moreover, the FCRA requires that a two-step forms process (pre-adverse action notices and notices of adverse action) be followed in connection with an employer taking an adverse action against an applicant or employee (e.g., declining to hire, or terminating).  Here again, the content of those forms is of the utmost importance to ensure compliance with the law.  The FCRA also requires that certain disclosures, containing certain specified language, be provided to applicants and employees at various points throughout a background check process.

In addition, the FCRA prohibits in background check reports the inclusion of certain types of information and certain records.  Employers should be aware that third-party reporting services may make mistakes in the reports they generate.  A class action lawsuit, for example, was recently brought in California under federal and state law against a reporting company that allegedly supplied an employer with a report containing outdated information on a job applicant.  Thus, it is important for employers to understand the limitations imposed by state laws on what information can be used in taking an adverse action against an applicant or employee, rather than simply relying on what is provided to them by the third-party vendor, who may not have adhered to those limitations in running its search.  For example, if a third party vendor returns a background check report to an employer contanining criminal conviction history for an applicant going back 10 years in a state in which the law restricts an employer from relying upon a conviction more than 7 years old, the employer may be at risk of liability for violating that state law if it takes an adverse action based, in whole or in part, on, for example, a 9-year old conviction that appears on the report.

Consider state law—Many states also have their own laws relating to background checks, requiring additional procedural steps and/or substantive restrictions.  New York, for example, buried within a corrections law requires employers to consider eight factors it deems relevant before taking any adverse action against an applicant or employee based, in whole or in part, on a criminal background check.  Thus, it is imperative that employers revisit, on a regular basis, their general policies and forms on background checks to ensure compliance with the state(s) in which they do business, as many of these states impose requirements above and beyond those set forth in the FCRA.

Account for EEO—Background checks on applicants and employees also have important implications for equal employment opportunity.  The EEOC has issued extensive guidance on criminal background checks.  And as covered elsewhere in the Employment Law Spotlight, as re-linked above, the EEOC has taken an aggressive stance against employers whose policies it claims have a discriminatory impact.  Recently, though, at least one employer prevailed against the EEOC, winning a motion for summary judgment in a federal action in Maryland.  For an analysis of this case, including an assessment of the features of the employer’s background check program that ultimately helped it win in court, go here.


This area of employment law is receiving a great deal of attention, and employers would be remiss if they did not take a moment to review their policies and practices with employment counsel.  Awareness of state and federal laws regarding background checks and their interplay is critical.  Employers should make sure that they have effective lawful policies in place, use forms that fully comply with their federal and state obligations, and consider only appropriate and current background information on applicants and employees.  

BakerHostetler remains available to assist with federal and state law compliance in this area.