Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
Under the federal Fair Credit Reporting Act (FCRA), background screening companies (or consumer reporting agencies) are generally prohibited from reporting certain types of derogatory information that the FCRA considers to be too old to be useful, i.e., obsolete. For example, background screening companies typically cannot report certain bankruptcies that are older than 10 years and civil suits and civil judgments that are older than seven years.
The FCRA’s name is somewhat misleading, because while it uses the term “credit” in its title, it also applies to criminal records and bars background screening companies from reporting “records of arrest that, from date of entry, antedate the report by more than seven years. . . .” The FCRA also includes a catchall that bars background screening companies from reporting “[a]ny other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years.” What this means for employers is that the FCRA allows background screening companies to report convictions in background check reports regardless of the age of the conviction, although arrests and other records short of conviction, such as dismissed cases or even charges within a case with a conviction that are older than seven years, will be omitted from the report when it is provided to the employer. Although not discussed here, there are some exceptions to these general rules, such as an exception for certain salaried positions.
The FCRA, however, is only one part of the equation, because local laws may apply as well. A handful of states, including California and Massachusetts, have state fair credit reporting statutes that expand the types of obsolete criminal records that background screening companies cannot report to include convictions that are older than seven years, i.e., these local laws are more restrictive of the information the background screening company can share with the employer than the FCRA. It is important to note that these state laws restrict what information the background screening company can report to the employer; these same laws do not state outright that employers cannot consider convictions that are older than seven years (although there are separate state and local laws, such as in New York City and San Francisco, that do restrict the types of criminal information an employer can consider). Thus, while the FCRA may allow a background screening company to report convictions that are older than seven years, some states do not allow such reporting.
Up until recently, one of those states with a seven-year reporting rule for both arrests and convictions was Nevada. Specifically, Nevada’s fair credit reporting statute stated: “A reporting agency shall periodically purge from its files and after purging shall not disclose . . . a report of criminal proceedings, or other adverse information which precedes the report by more than 7 years.” However, on June 9, 2015, Nevada Governor Brian Sandoval signed Senate Bill 409, which modified the statute to prohibit the reporting of “a report of criminal proceedings, or other adverse information, excluding a record of a conviction of a crime, which precedes the report by more than 7 years.” In other words, Senate Bill 409 “remove[d] the prohibition against disclosing a record of a conviction of a crime which is more than 7 years old, meaning that there is no limitation of time for which such a record may be disclosed.”
The technical reporting provisions of these fair credit reporting laws impact what information an employer can learn about an applicant’s prior convictions, even for very serious sexual or violent crimes. As a result, it is important for all employers, particularly those with nationwide operations, to have a sense of the interplay between their criminal record screening guidelines and the fair credit reporting laws and also to have a firm understanding of what information may or may not be included in their job applicants’ background check reports. For example, a background screening company may be able to report a 10-year old felony conviction for burglary to an employer operating in one state, but may not be able to report the same conviction to the same employer in a different state. Employers operating in the handful of states that only allow background screening companies to report convictions within the last seven years may still want to know about, and even be legally entitled to consider, older convictions. Employers that wish to arm themselves with as much information about job applicants before allowing them access to customers, financial information, employees and property should consider reviewing their criminal record-based screening policies and procedures to assess whether there are opportunities to otherwise learn about criminal records that may not appear in a background report.
At the same time, however, employers also should consider reviewing their screening policies, including those that consider credit reports, to assess whether they are consistent with Title VII, given the Equal Employment Opportunity Commission’s focus on credit and criminal-record based screening policies1 as well as fair credit reporting laws such as the FCRA and state equivalents.2 Of course, employers who consider criminal records and/or credit history information for employment purposes also must be mindful of state and local fair employment laws restricting inquiries into, and the use of, credit history and criminal records, including new ban-the-box and credit report laws in New York City.3
1 See Rod Fliegel and Jennifer Mora, Sixth Circuit Upholds Dismissal of EEOC Suit Against Employer Screening Applicants Based on Credit History Information, Littler Insight (Apr. 17, 2014).
2 See Rod Fliegel, Jennifer Mora and William Simmons, The Swelling Tide of Fair Credit Reporting Act (FCRA) Class Actions: Practical Risk-Mitigating Measures for Employers, Littler Report (Aug. 1, 2014).
3 See Jennifer Mora, David Warner, and Rod Fliegel, N ew York City Council Bans the Box, Littler Insight (Jun. 12, 2015); See Jennifer Mora, David Warner and Rod Fliegel, New York City Council Passes the First Citywide Bill Restricting Employers from Using Credit Information in Employment Decisions, Littler Insight (Apr. 21, 2015).