Editorial · August 8, 2026
Employment Background Checks: FCRA Steps for Employers
Employment background checks are legal, but federal law sets clear steps for how you run them. If you hire through a screening company, the Fair Credit Reporting Act (FCRA) adds three duties: tell the person in writing, get their written consent, and follow set steps before you turn anyone down. This guide walks through each step in order.
Know which law covers which part
Two agencies share the job. The Federal Trade Commission (FTC) enforces the FCRA. The Equal Employment Opportunity Commission (EEOC) enforces the anti-discrimination laws. The two agencies wrote one joint guide for employers, and it is the best plain-language starting point.
The FCRA applies when you get a report from a company that compiles background information. That includes credit reports and criminal record reports. It is found at 15 U.S.C. 1681 and the sections that follow. If you check a public court record yourself, the FCRA steps may not apply, but the anti-discrimination rules still do.
Some states and cities add their own limits on background reports. Check your local rules too, because they can be stricter than the federal ones.
Steps 1 and 2: Notice, permission and certification
Step 1: Give a stand-alone written notice.
Before you order a report, tell the applicant or employee in writing that you may use it for hiring or job decisions. The notice must stand on its own. It cannot be buried inside the job application.
You may add a short note that describes what a consumer report is. Do not add anything that confuses the reader or pulls attention from the notice. If you ask for an investigative report, one based on interviews about a person's character or lifestyle, you must also tell the person they can ask about the nature and scope of that inquiry.
Step 2: Get written permission and certify.
Next, get the person's written permission to run the check. It can sit on the same page as the notice. If you want to pull reports again during employment, the form must say so clearly.
Then certify to the screening company that you did three things. You gave the notice and got permission. You followed the FCRA. And you will not use the report in a way that breaks equal opportunity laws. Most screening companies ask for this before they release a report.
Step 3: Apply the same standard to everyone
Treat every candidate for the same job the same way. Asking only some people about their criminal or money history is evidence of discrimination. The joint guide lists race, color, national origin, sex, religion, disability, genetic information and age (40 or older) as protected traits.
Watch for rules that look neutral but hit one group harder. A blanket ban on any criminal record is the common example. If a policy excludes many people in a protected group and does not predict who will be a safe or reliable worker, it may be unlawful. The legal test is whether the policy is job related and consistent with business necessity.
In its 2012 guidance, the EEOC says an arrest alone does not prove that someone did anything wrong. A rule that rejects people for an arrest, by itself, is not job related. You may look at the conduct behind an arrest if that conduct makes the person unfit for the role. A conviction is usually enough proof that the conduct happened.
The EEOC also points to three factors for judging a conviction: the nature and seriousness of the offense, how much time has passed, and the nature of the job. It suggests a short, fair chance for the person to explain before you decide. Also, do not ask medical questions before a conditional job offer.
Step 4: Follow the adverse action steps
An adverse action means you reject an applicant, fire a worker or take a similar step based on the report. The FCRA sets two moments.
Before you act, give the person a copy of the report you relied on. Include the document called A Summary of Your Rights Under the Fair Credit Reporting Act, which the screening company should have given you. This gives the person time to read the report and explain or correct anything wrong.
After you act, tell the person, by phone, in writing or electronically, four things:
- They were turned down because of information in the report.
- The name, address and phone number of the screening company.
- That the screening company did not make the decision and cannot give the reasons for it.
- They have the right to dispute the report and to get a free extra copy within 60 days.
Skipping the first notice is a common mistake. A person who sees the report before the final decision can point out an error while it still matters.
Step 5: Keep and destroy records the right way
Keep hiring records, including applications of people you did not hire, for one year after the record was made or the action was taken, whichever is later. The EEOC extends this to two years for schools and for state and local governments. Federal contractors with at least 150 employees and a contract of at least $150,000 also keep records for two years. If a charge of discrimination is filed, keep the records until the case ends.
After that, you may dispose of the reports. The law says to do it securely. Shred, burn or pulverize paper, and wipe electronic files so they cannot be read or rebuilt.
A short checklist
- Send a stand-alone written notice before you order the report.
- Get written permission, and say so if you will check again later.
- Certify your compliance to the screening company.
- Use the same standard for every candidate.
- Send the report and the rights summary before any adverse action.
- Send the after-action notice with the four required items.
- Keep records for the required time, then destroy them securely.
This is a general overview, not legal counsel. Before you screen a real candidate, talk with an employment lawyer.
Sources
- Federal Trade Commission and U.S. Equal Employment Opportunity Commission, Background Checks: What Employers Need to Know, ftc.gov.
- Federal Trade Commission, Fair Credit Reporting Act, 15 U.S.C. 1681 to 1681x, ftc.gov.
- U.S. Equal Employment Opportunity Commission, Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions under Title VII of the Civil Rights Act, April 25, 2012, eeoc.gov.