Business Law Blog

The Perils of Employee Background Checks

Posted by Amanda Butler Schley | Feb 04, 2022 | 0 Comments

Are you one of the thousands of employers in Louisiana who is seeking to hire new employees? Finding the right candidate can be difficult, someone that you can not only trust to do a job well but also trust with confidential company information.

It can be tempting to run background checks on every applicant who applies but as an employer, there are federal and state laws in place that regulate the methods that can be used to lawfully screen potential employees, and the penalties for failing to follow the law can be steep.

What Qualifies As A Background Search?

In the state of Louisiana, the following searches are considered part of a background check:

  • Research into state or federal criminal history.
  • Research by any lawful means, including electronic means.
  • Social security status or verification.
  • Research under the USA Patriot Act, and for any permissible purpose allowed by the USA Patriot Act.
  • Research for any permissible purposes under the federal Fair Credit Reporting Act (FCRA).

What Are The Fair Credit Reporting Act And USA Patriot Act?

The FCRA and USA Patriot Act are federal laws that apply to an employer when they use a third-party to generate a background check for a job candidate.

These rules require that job applicants:

  • Be informed of a background check before it is performed;
  • Consent to run the background check;
  • Be provided the opportunity to review any information that relates to their personal or financial status;
  • Be allowed to correct any inaccuracies found in the report;
  • Be provided the opportunity to appeal decisions regarding the report.

What does this mean for employers? It requires employers to provide background searches that are fair, accurate, and transparent. There are specific requirements laid out by the Fair Trade Commission (FTC) for employers, detailing how to be fair, accurate, and transparent. Specifically, an employer must:

  1. Give a job applicant written notice that any information gathered in the report could be used for employment-related decisions;
  2. Obtain written permission from a job applicant to perform the background check;
  3. Provide the applicant with a copy of the report that was used to make the employment decision;
  4. Provide the applicant with a copy of the “Summary Of Your Rights Under the FCRA”;
  5. Give the applicant a reasonable amount of time to review the information provided in the report and dispute any issues that are discovered;

Failure to comply with the rules set forth by these federal laws can result in financial fines and put the company at risk for civil lawsuits. 

Louisiana Employee Background Check Laws

The state of Louisiana is considered a “fair chance” state, passing laws that provide job applicants a chance to prove their potential worth to an employer before a background check is performed.

For example, a “Ban the Box” law was passed in 2016 which prevented employers from requesting a background check or the disclosure of a criminal record on an initial application, providing applicants the opportunity to interview before providing that information.

Act No. 406 Affects Employers Conducting Background Checks

Most recently, Act No. 406 (HB 707) was passed and went into effect on August 1st, 2021. This act prevents employers from using an arrest that did not result in a conviction as a factor in the hiring decision. In cases where a criminal conviction took place, an employer must assess their hiring decision on a case-by-case basis.

Each case should be reviewed individually and employers are asked to determine if the criminal history would have a “direct and adverse relationship with the specific duties of the job”. Factors that should be reviewed include the nature of the crime committed, the job duties, and the time that has passed since the conviction.

Negligent Hiring: What Is It And How Can It Impact An Employer?

Despite encouraging employers to consider hiring those with a criminal conviction, Act No. 406, also makes it clear that employers need to do their due diligence during the hiring process. Any employer who fails to adequately inquire about an applicant's criminal history could be held liable for “negligent hiring”. This essentially means that an employer failed to do their part to keep others in their care safe.

For example, if an employer fails to perform a reasonable background search and fails to uncover a new hire's history of sexual assault convictions, then that new employee assaults a customer, the employer could be held liable for the losses sustained by the customer.

Mandatory Background Checks & Jobs With Specific Hiring Criteria Under Act No. 406

The law also provides a list of occupations for which background checks are required, most notably, those in the health and education industries. In fact, despite enacting “Fair Chance” laws, Louisiana does prohibit an employer from hiring hire any licensed ambulance personnel or non-licensed personnel who have been convicted of:

  • Murder
  • Assault
  • Sexual battery
  • Kidnapping
  • False Imprisonment
  • Burglary
  • Robbery
  • Extortion
  • Human trafficking
  • Theft of assets of the aged or disabled
  • Identity theft
  • Use of electronic means to maliciously and intentionally embarrass or intimidate a person with infirmities
  • Distribution or possession with the intent to distribute certain listed controlled dangerous substances

Any employer who provides care or services to those under the age of 21 are prohibited from hiring any personnel who have been found guilty of:

  • Felony carnal knowledge of a juvenile
  • Aggravated kidnapping of a child
  • Molestation of a juvenile or a person with a disability
  • Cruelty to a child

Employers Could Face Civil Lawsuits & Penalties For Improperly Using Background Checks

It's very important to follow the law and use a reliable third-party to conduct background checks, otherwise, the company could find itself named in a job discrimination lawsuit or background check lawsuit.

Act No. 406 states that any person who acquires a criminal history other than as permitted by the law, who withholds information, or provides false information could be subject to:

  • Minimum $500 fine;
  • Jail time - at most, 3 months.

These penalties are enforced per offense.

Questions About Background Checks For Employment? Contact The Business Law Group

If you are concerned that the new law might impact your hiring process contact our legal team today. We can audit your hiring process and make adjustments that will help to protect all of those involved. Call (504) 934-2020 today to get started.

About the Author

Amanda Butler Schley

Ranked as a Top Rated Business and Commercial Attorney, I have more than a decade of experience representing boutique hotels, family-owned businesses, privately owned restaurants, breweries, artists, executives and entrepreneurs.

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Business Law Group is a boutique business services law firm in New Orleans, Louisiana. Our focus is on understanding the legal pitfalls of your business and industry, as well as the secrets to maximizing your legal leverage at every opportunity and in every negotiation. We work selectively with clients that aren't ready for the overhead expense of an in-house general counsel, but understand the advantages of having a trusted legal advisor on their team. Amanda Butler has been ranked as Louisiana SuperLawyers.

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