Human Resource Blog

Background Screening Laws and Prohibitions

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When conducting a background screening for my North Carolina company, is there anything specific that I am prohibited from learning about a candidate?

Background screening laws are regulated by the federal government. As such, the laws that you have to follow when performing a background screening on a potential employee are the same laws that employers across the country follow and are not limited to North Carolina companies.

Most employers conduct background screenings in order to ensure that an employee does not have a criminal history. However, depending on your company, you may also run a credit check and background check to assess a candidate’s personal character. For example, many employers run background checks by looking at a candidate’s MySpace.com or Facebook.com account.

According to the Fair and Accurate Credit Transaction Act (FACT Act), when an employer seeks a consumer report, the employees or candidates do not have to be notified of the screening and prior consent does not bed to be obtained. The report results do not have to be disclosed to the employee or candidate unless adverse action was taken as a result of the report.

However, there is some information that you are prohibited from learning during your background screening. According to the Federal Credit Reporting Act, employers may not learn about the following:

A bankruptcy that is more than ten years old

A tax lien from more than seven years ago that has been paid

A civil suit or a civil court judgment from more than seven years ago

Collection accounts that are more than seven years old

The majority of the information that is withheld from potential employers is seven years old or more. However, there is no time limit for information when the applicant is applying for a position with an annual salary that is $75,000 or more. Also, there is no time limit when there has been a credit transaction involving $150,000 or more or when there has been an application for credit or life insurance for $150,000 or more.