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Employment
Background Checks:
A Jobseeker's Guide
Whether you are hired or
promoted for a job may depend on the information revealed in a
background check. Job applicants and existing employees as well
as volunteers may be asked to submit to background checks. For
some jobs, screening is required by federal or state law. The
current emphasis on security and safety has dramatically
increased the number of employment background checks conducted.
In short, employers are being cautious. At the same time,
applicants and employees fear that employers can dig into the
past in ways that have nothing to do with the job.
This guide explains the why
and how of background checks. It also tells you what can
be covered in a background report, your rights under the Fair
Credit Reporting Act, and what you can do to prepare. For more
information, go to the References section at the end of this
guide.
Part 1.
Why Does an Employer Conduct a Background Check?
Part 2.
What Is Included in a Background Check?
Part 3.
What Cannot be in a Background Check Report?
Part 4:
Who Conducts a Background Check?
Part 5.
The Fair Credit Reporting Act and Background Checks
Part 6.
Background Checks and Your Credit Report
Part 7.
Investigative Consumer Reports – What Will Your Neighbors Say?
Part 8.
How to Prepare for a Background Check
Part 9.
References
Part 1. Why
Does an Employer Conduct a Background Check?
Employers check potential and
current workers for several reasons. The things an employer
wants to know about you can vary with the kinds of jobs you
might seek. Here are a few of the reasons for employment
screening.
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Negligent hiring
lawsuits are on the rise. If an employee’s actions hurt
someone, the employer may be liable. The threat of liability
gives employers reason to be cautious in checking an
applicant’s past. A bad decision can wreck havoc on a
company’s budget and reputation as well as ruin the career
of the hiring official. Employers no longer feel secure in
relying on their instinct as a basis to hire.
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Current
events have caused an increase
in employment screening.
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Child
abuse and child abductions
in the news in recent years have resulted in new laws in
almost every state that require criminal background checks
for anyone who works with children. The move to protect
children through criminal background checks now includes
volunteers who serve as coaches for youth sports
activities and scout troop leaders.
Terrorist
acts of September 11, 2001, have
resulted in heightened security and identity-verification
strategies by employers. Potential job candidates and
long-time employees alike are being examined with a new
eye following September 11, 2001.
Corporate
executives, officers, and directors now
face a degree of scrutiny in both professional and private
life unknown before the Enron debacle and other corporate
scandals of 2002.
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False or inflated
information supplied by job
applicants is frequently in the news. Some estimates are
that 30% to 40% of all job applications and resumes include
some false or inflated facts. Such reports make employers
wary of accepting anyone’s word at face value.
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Federal and state laws require
that background checks be conducted for certain jobs. For
example, most states require criminal background checks for
anyone who works with children, the elderly, or disabled.
The federal National Child Protection Act authorizes state
officials to access the FBI’s National Crime Information
Center (NCIC) database for some positions. Many state and
federal government jobs require a background check, and
depending on the kind of job, may require an extensive
investigation for a security clearance.
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The "information
age" itself may be a
reason for the increase in employment screening -- the
availability of computer databases containing millions of
records of personal data. As the cost of searching these
sources drops, employers are finding it more feasible to
conduct background checks.
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I don't have anything to
hide. Why should I worry?
While some people are not
concerned about background investigations, others are
uncomfortable with the idea of an investigator poking around in
their personal history. In-depth background checks could unearth
information that is irrelevant, taken out of context, or just
plain wrong. A further concern is that the report might include
information that is illegal to use for hiring purposes or which
comes from questionable sources.
Part 2. What
Is Included in a Background Check?
Background reports can range
from a verification of an applicant's Social Security number to
a detailed account of the potential employee's history and
acquaintances. Here are some of the pieces of information that
might be included in a background check. Note that many of these
sources are public records created by government agencies.
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Driving records
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Vehicle registration
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Credit records
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Criminal records
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Social Security No
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Education records
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Court records
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Workers' compensation
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Bankruptcy
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Character references
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Neighbor interviews
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Medical records
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Property ownership
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Military records
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State licensing
records
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Drug test records
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Past employers
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Personal references
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Incarceration records
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Sex offender lists
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Part 3. What
Types of Information Can't the Employer Consider?
The federal Fair Credit
Reporting Act (FCRA) sets national standards for employment
screening. Your state may have stronger laws, such as
California’s Investigative Consumer Reporting Agencies Act
(Civil Code §1786) and the California Consumer Credit
Reporting Agency Act (Civil Code §1785). In addition, many
state labor codes and state fair employment guidelines limit the
content of an employment background check. (For more on the FCRA,
see Part 5.)
Under the FCRA, a background
check report is called a "consumer report." This is
the same "official" name given to your credit report,
and the same limits on disclosure apply. The FCRA says the
following cannot be reported:
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Bankruptcies after 10
years.
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Civil suits, civil
judgments, and records of arrest, from date of entry, after
seven years.
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Paid tax liens after seven
years.
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Accounts placed for
collection after seven years.
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Any other negative
information (except criminal convictions) after seven years.
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The most recent change to the
FCRA made criminal convictions reportable indefinitely. But, twelve
states still follow the seven-year rule for reporting criminal
convictions (for example, California Civil Code §1786). Those
states are: CA, CO, KS, MD, MA, MT, NV, NH, NM, NY, TX, WA. Other
laws that should be considered:
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Arrest information.
Although arrest record information is public record, in
California and other states employers cannot seek from any
source the arrest record of a potential employee. However, if
the arrest resulted in a conviction, or if the applicant is out
of jail but pending trial, that information can be used.
(California Labor Code §432.7). In California, an
exception exists for the health care industry where any employer
who has an interest in hiring a person with access to patients
can ask about sex related arrests. And, when an employee may
have access to medications, an employer can ask about drug
related arrests.
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Criminal history.
In California, criminal histories or "rap sheets"
compiled by law enforcement agencies are not public record. Only
certain employers such as public utilities, law enforcement,
security guard firms, and child care facilities have access to
this information. (California Penal Code §§11105, 13300) With
the advent of computerized court records and arrest information,
however, there are private companies that compile virtual
"rap sheets." Employers need to use caution in
checking criminal records. Information offered to the public by
web-based information brokers is not always accurate or up to
date. This violates both federal and California law when
reported as such. Also, in California, an employer may not
inquire about a marijuana conviction that is more than two years
old.
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Workers' compensation.
In most states including California, when an employee's claim
goes through the state system or the Workers' Compensation
Appeals Board (WCAB), the case becomes public record. An
employer may only use this information if an injury might
interfere with one's ability to perform required duties. Under
the federal Americans with Disabilities Act, employers cannot
use medical information or the fact an applicant filed a
workers' compensation claim to discriminate against applicants.
(42 USC §12101). In California, employers may access workers’
compensation records after making an offer of employment. To
gain access, employers must register with the WCAB and confirm
that the records are being accessed for legitimate purposes.
Although the agency may not reveal medical information and the
employer may not rescind an offer due to a workers’
compensation claim (California Labor Code 132a), employers
sometimes discover that applicants have not revealed previous
employers where they had filed claims. In such situations,
employers often terminate the new hire because it appears they
falsified the application.
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Bankruptcies.
Bankruptcies are public record. However, employers cannot
discriminate against applicants because they have filed for
bankruptcy. (11 USC §525).
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Although these laws should
prevent an employer from considering certain information, there is
no realistic way for the applicant to determine whether such
information will be revealed in a background check. This is
particularly true for investigations conducted online where the
information obtained from web-based information brokers might not be
verified for accuracy or completeness.
For example, if you were arrested
but never convicted, a data search could reveal the arrest, but the
investigator who compiled the information might not delve further
into the public records to determine that you were acquitted or the
charges were dropped. Reputable employment screening companies
always verify negative information obtained from data base searches
against the actual public records filed at the courthouse.
Aren't some of my personal
records confidential?
The following types of
information may be useful for an employer to make a hiring decision.
However, under the federal Fair Credit Reporting Act, the employer
is required to get your permission before obtaining the records.
(See PRC Fact Sheet 11, "From Cradle to Grave: Government
Records and Your Privacy," www.privacyrights.org/fs/fs11-pub.htm)
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Education records.
Under both federal and California law, transcripts,
recommendations, discipline records, and financial information
are confidential. A school should not release student records
without the authorization of the adult-age student or parent.
However, a school may release "directory information,"
which can include name, address, dates of attendance, degrees
earned, and activities, unless the student has given written
notice otherwise. (20 USC §1232g, www.ed.gov/offices/OM/fpco/ferpa/index.html)
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Military service records.
Under the federal Privacy Act, service records are confidential
and can only be released under limited circumstances. Inquiries
not authorized by the subject of the records must be made under
the Freedom of Information Act. Even without the applicant's
consent, the military may release name, rank, salary, duty
assignments, awards, and duty status. (5 USC §§552, 552a) For
more on military records, visit the National Archives and Records
Administration web site: www.archives.gov/facilities/mo/st_louis/military_personnel_records.html
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Medical records.
In California and many states, medical records are confidential.
There are only a few instances when a medical record can be
released without your knowledge or authorization. The FCRA also
requires your specific permission for the release of medical
records. If employers require physical examinations after they
make a job offer, they will have access to the results. The
Americans with Disabilities Act allows a potential employer to
inquire only about your ability to perform specific job functions.
(42 USC §12101)
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There are other questions such as
age, marital status, and certain psychological tests that employers
cannot use when interviewing. These issues are beyond the scope of
this fact sheet. If you have further questions, contact the
resources at the end of this fact sheet. The federal Equal
Employment Opportunity Commission and the fair employment agencies
in the states handle these issues.
What can my former employer say
about me?
Often a potential employer will
contact an applicant's past employers. A former boss can say
anything [truthful] about your performance. However, most employers
have a policy to only confirm dates of employment, final salary, and
other limited information. California law prohibits employers from
intentionally interfering with former employees' attempts to find
jobs by giving out false or misleading references. (California Labor
Code §1050)
Under California law and the laws
of many other states, employees have a right to review their own
personnel files and make copies of documents they have signed. If
you are a state or federal employee, your personnel file is
protected under the California Information Practices Act or the
federal Privacy Act of 1974 and can only be disclosed under limited
circumstances. (California Civil Code §56.20; California Labor Code
§§432, 1198.5; 5 USC §552a)
Jobs such as truck driver
positions fall under regulations of the federal Department of
Transportation. Employers are required to accurately respond to an
inquiry from a prospective employer about whether you took a drug
test, refused a drug test, or tested positive in a drug test with
the former or current employer. (49 CFR §40.25, 49 CFR §382.413.
Federal
Motor Carrier Safety Administration Regulations)
Part 4. Who Conducts Background
Checks?
There are many companies that
specialize in employment screening. It is outside the purpose of
this fact sheet to identify background checking companies by name.
The most important thing to keep in mind is that companies
conducting background checks fall into several broad categories.
This can range from individuals commonly known as "private
investigators," to companies that do nothing but employment
screening, and to online data brokers.
Corporations that employ large
numbers of people may have an established relationship with a
third-party background checking company or may even use an
affiliated company for their employment screening. Other background
checking companies may work on a less formal basis with employers.
There are about 10 major companies that conduct employment screening
and thousands others nationwide, including private investigators.
With the information age upon us,
it is easy for employers to gather background information
themselves. Much of it is computerized, allowing employers to log on
to public records and commercial databases directly through dial-up
networks or via the Internet. Finding one of these online companies
is as easy as using an Internet search engine to find web sites that
specialize in "background checks." Employers should beware
of companies advertising on the Internet that they can "find
everything about anyone." They are not necessarily going to be
in strict compliance with federal and state laws, especially the
provisions that require accuracy of background check reports.
Part 5. Fair Credit Reporting Act
and Background Checks
The federal Fair Credit Reporting
Act (15 USC §1681 et seq.) does not require employers to
conduct employment background checks. But the law sets a national
standard that employers must follow in employment screening. State
laws may give an employee more rights than the FCRA.
Do I have a right to know when a
background check is requested?
Yes. Amendments to the FCRA, in
effect September 30, 1997, increase the disclosure and consent
requirements of employers who use "consumer reports." Such
reports might consist only of a credit check. (See Part 6) More
extensive reports might include criminal histories, driving records,
and interviews with neighbors, friends and associates.
To be covered by the FCRA, the
Federal Trade Commission (FTC) says that a report must be prepared
by an outside company -- a "consumer reporting agency" or
business that "for monetary fees, dues, or on a cooperative
nonprofit basis, regularly engages in ... assembling ... information
on consumers for the purpose of furnishing consumer reports to third
parties." (FCRA §603f)
Under the FCRA, the employer must
obtain the applicant’s written authorization before the background
check is conducted. The authorization must be on a document separate
from all other documents such as an employment application. In
California, at the time an employer obtains permission for a
background check, the applicant or employee should also be told that
he or she may request a copy of the report. The FCRA, in
contrast, says the subject is entitled to a copy of the report if
a pre-adverse notice is given.
Under federal law, if the
employer uses information from the consumer report for an
"adverse action" – that is, denying the job applicant,
terminating the employee, rescinding a job offer, or denying a
promotion – it must take the following steps, which are explained
further in the Federal Trade Commission’s web site, www.ftc.gov/bcp/conline/pubs/buspubs/credempl.htm
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Before
the adverse action is taken, the employer must give the applicant
a "pre-adverse action disclosure." This includes a copy
of the report and an explanation of the consumer's rights under
the FCRA.
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After
the adverse action is taken, the individual must be given an
"adverse action notice." This document must contain
the name, address, and phone number of the employment screening
company, a statement that this company did not make the adverse
decision, rather that the employer did, and a notice that the
individual has the right to dispute the accuracy or completeness
of any of the information in the report.
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Modified disclosure and adverse
action procedures under the FCRA (§604(b)(3)(B)) apply to positions
subject to U.S. Department of Transportation (DOT) regulations such
as truck drivers. The DOT has independent authority to set
qualifications for workers in transportation industries. (49
USC §31502)
Does the FCRA fall short?
The federal law has two
significant loopholes. First, if the employer does not use a
third-party screening company but, rather conducts the background
check itself, it is not subject to the notice and consent
provisions of the FCRA. Second, the employer might tell the rejected
applicant that its adverse decision was not based on the
contents of the background investigation, but, rather that the job
pool was so exceptional that it made its hiring decision based on
the fact that there were individuals more qualified than the
applicant.
In both of these situations, the
applicant would not have the ability to obtain a copy of the
background check to find out what negative information it contained.
We have learned of situations where the individual remained
unemployed for years, not knowing that wrongful criminal records
which resulted from identity theft were the reason for the
individual’s failure to find employment. (Read "Identity
Theft: The Growing Problem of Wrongful Criminal Records," www.privacyrights.org/ar/wcr.htm.)
Recent amendments to
California’s "investigative consumer reporting" law have
closed those loopholes. California law now requires that individuals
who are subject to employment screening are able to obtain a copy of
the background check whether or not an adverse action has been
taken. And applicants have the same rights to notice and consent
whether the employer hires an outside company to conduct the
investigation or does the background check itself. (California Civil
Code §1786). And now in California when an individual requests a
copy of their report from the consumer reporting agency, the agency
must explain their rights in a document written in both English and
Spanish.
Part 6.
Investigative Consumer Reports: What Will Your Neighbors Say?
Can an employer ask my friends
and neighbors about me?
Yes. Under the FCRA, a background
check that includes interviews with "neighbors, friends, or
associates" about your "character, general reputation,
personal characteristics, or mode of living" is called an
"investigative consumer report." (The term
"investigative consumer report" has a different meaning
under California Law. See www.leginfo.ca.gov,
Civil Code §1786.)
When information about you is
gathered from interviews, the FCRA requires a separate disclosure.
You are also entitled to know the "nature and scope" of an
investigative consumer report, but you have to ask. For more on how
the FTC staff interprets the term "investigative consumer
report" and other keys topics under the FCRA, visit the FTC web
site www.ftc.gov/os/statutes/fcra/index.htm
Part 7. Background Checks and Your
Credit Report
An employment background check
often includes a copy of your credit report. The three major credit
reporting agencies (Experian, TransUnion, and Equifax) provide a
modified version of the credit report called an "employment
report." An "employment report" includes information
about your credit-payment history and other credit habits from which
current or potential employers might draw conclusions about you.
An employment report provides
everything a standard credit report would provide. However it
doesn’t include your credit score or date of birth. Nor does it
place an "inquiry" on your credit file that may be seen by
a company looking to issue you credit. Having too many credit
inquiries tends to lower your credit score.
My job doesn’t require handling
money. Why does the employer do a credit check?
Often employers use your credit
history to gauge your level of responsibility. Whether a valid
assumption or not, some employers believe if you are not reliable in
paying your bills, then you will not be a reliable employee.
Unfortunately, a bad credit report can work against you in your
search for employment. For more on how a credit record can affect
your job search, see the FTC’s fact sheet on this topic, www.ftc.gov/bcp/conline/pubs/alerts/ngcrdtalrt.htm
In addition to your payment
history, a credit report typically includes information about your
former addresses and previous employers. Employers can use this as
one way to verify the accuracy of information you provide on an
application or resume.
I never use credit. Can an
employer hold that against me?
Yes. The employer might be
looking for someone who has an established record of paying bills on
time. The FCRA says only that certain things like negative
information more than seven years old cannot be considered.
The absence of a credit history can also be considered. But if this
bit of information means you don’t get the job, the employer has
to give you an adverse notice decision. For more on an employer’s
responsibility under the FCRA, see www.ftc.gov/bcp/conline/pubs/buspubs/credempl.htm
Part 8. What Can I Do to Prepare?
When you know you are going to be
on the job market, take the following steps to reduce the chances
that you and/or the potential employer will be "surprised"
by information found in the background check process:
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Order a copy of your credit
report. If there is something you do
not recognize or that you disagree with, dispute the information
with the creditor and/or credit bureau before you have to explain
it to the interviewer. Another individual’s name may appear on
your credit report. This happens when someone mistakenly writes
down the wrong Social Security number on a credit application
causing that name to appear on your file. Or you might be a victim
of identity theft. (See PRC Fact Sheet 6 on your credit reporting
rights, www.privacyrights.org/fs/fs6-crdt.htm,
and Fact Sheet 17a on identity theft, www.privacyrights.org/fs/fs17a.htm.)
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Check court records.
If you have an arrest record or have been involved in court
cases, go to the county where this took place and inspect the
files. Make sure the information is correct and up to date.
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Reporting agencies often report
felony convictions when the consumer truly believes the crime was
reduced to a misdemeanor, or that it was reported as a misdemeanor
conviction when the consumer thought the charge was reduced to an
infraction. Court records are not always updated correctly. For
example, a signature that was needed to reduce the charges might
not have been obtained or recorded by the court. Don’t rely on
what your attorney may have told you. If you think the conviction
was expunged or dismissed, get a certified copy of your report
from the court.
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Check DMV records.
Request a copy of your driving record from the Department of
Motor Vehicles, especially if you are applying for a job that
involves driving.
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Many employers ask on their
application if you were ever convicted of a crime. Or they might
word the question to ask whether you have ever been convicted of a
felony or misdemeanor. Typically, the application says you do not
have to divulge a case that was expunged or dismissed, or that was a
minor traffic violation.
Don’t be confused. A DUI
(driving under the influence) or DWI (driving while intoxicated)
conviction is not considered a minor traffic infraction.
Applicants with a DUI or DWI who have not checked "yes" on
a job application may be denied employment for falsifying the form
-- even when the incident occurred only once or happened many years
before. The employer perceives this as dishonesty, even though the
applicant might only have been confused by the question.
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Do your own background check.
If you want to see what an employer’s background check might
uncover, hire a company that specializes in such reports to
conduct one for you. That way, you can discover if the data
bases of information vendors contain erroneous or misleading
information. (Consult the Yellow Pages under
"Investigators.") Or, you can use one of the many
online search services to find out what an employer would learn
if conducting a background check in this way.
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Ask to see a copy of your
personnel file from your old job.
Even if you do not work there anymore, state law might enable
you to see your file. Under California law, you can access your
file until at least a year from the last date of employment. And
you are allowed to make copies of documents in your file that
have your signature on them. (California Labor Code §432.) You
may also want to ask if your former employer has a policy about
the release of personnel records. Many companies limit the
amount of information they disclose.
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Read the fine print
carefully. When you sign a job
application, you will be asked to sign a consent form if a
background check is conducted. Read this statement carefully and
ask questions if the authorization statement is not clear.
Unfortunately, jobseekers are in an awkward position, since
refusing to authorize a background check may jeopardize the
chances of getting the job.
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Notice of a background check
has to be on a separate form. The only other information this form
can include is your authorization and information that identifies
you. Neither the notice of a background check nor any other form
should ask questions like "race," "sex,"
"full date of birth," or "maiden name." Such
questions violate the federal Equal Employment Opportunity laws.
And, you should not be asked to sign any document that waives your
right to sue a screening company or the employer for violations of
the law.
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Tell neighbors and work
colleagues, past and present, that
they might be asked to provide information about you. This helps
avoid suspicion and alerts you to possible problems. In
addition, their prior knowledge gives them permission to
disclose information to the investigator. Forewarning others
speeds up the process and helps you get the job faster.
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Part 9. References
Laws on Background Checks
Laws on Workplace Discrimination
Equal Employment Opportunity
Commission (EEOC), www.eeoc.gov/qs-employees.html
The EEOC was established by Title VII of the
Civil Rights Act of 1964. It enforces the following laws:
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Title VII of the Civil Rights
Act of 1964 (Title VII), which
prohibits employment discrimination based on race, color,
religion, sex, or national origin. 42 USC §2000e, www.eeoc.gov/laws/vii.html.
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Equal Pay Act of 1963,
which protects men and women who perform substantially equal
work in the same establishment from sex-based wage
discrimination. 29 USC §206(d), www.eeoc.gov/laws/epa.html.
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Age Discrimination in
Employment Act of 1967 (ADEA), which protects individuals who
are 40 years of age or older. 29 USC §621, www.eeoc.gov/laws/adea.html.
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Americans with Disabilities
Act of 1990 (ADA), which prohibits
employment discrimination against qualified individuals with
disabilities in the private sector, and in state and local
governments. 42 USC §12101, www.eeoc.gov/laws/ada.html.
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Contacting Government Agencies
U.S. Equal Employment Opportunity
Commission (EEOC)
1801 L Street, N.W.
Washington, D.C. 20507
Phone: (202) 663-4900
TTY: (202) 663-4494
Web: www.eeoc.gov
EEOC Field Offices
To be automatically connected with the nearest EEOC field office,
call:
Phone: (800) 669-4000
TTY: (800) 669-6820
Federal Trade Commission (FTC)
Consumer Response Center, CRC-240
Washington, D.C. 20580
Phone: (877) FTC-HELP (877-382-4357)
TTY: (866) 653-4261
Web: www.ftc.gov
FTC Publications
California Department of Fair
Employment and Housing
The Department of Fair Employment and
Housing does not currently accept complaints through the Internet or
by mail. For information on how to file an employment-related
complaint, call one of the numbers below.
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(800) 884-1684 (Within
California)
(916) 227-0551 (Outside California)
Web site: www.dfeh.ca.gov
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