Perspectives

Understanding Background Check Compliance

News WFJ Law Firm

Conducting background checks is one of the most effective ways employers can protect their business, employees, and customers-but doing so incorrectly can create costly legal risk. Between overlaping state laws, federal regulations, and applicant rights, it’s critical for employers to know how to navigate this process the right way.

At Wagner, Falconer & Judd, we help employers build compliant hiring practices that support safety and fairness while minimizing exposure to litigation. Below is a practical overview of what you need to know before your next background check.

Why Conduct Background Checks?

A well-executed background check helps employers:

  • Ensure workplace safety and protect customers and employees
  • Safeguard company assets from theft, fraud, or reputational damages
  • Verify applicant information to confirm experience and integrity
  • Reduce exposure to negligent hiring claims that can arise when an employee’s history should have raised red flags

Example: Hiring a shuttle van driver without verifying driving or criminal history can expose a company to a negligent hiring claim if that driver later causes harm while intoxicated on the job.

Key Legal Frameworkds

Minnesota Law

Minnesota’s background check requirements are detailed and unique:

Consumer Reports

  • If a written employment application is used, a consumer report disclosure must accompany it.
  • Employers must provide a checkbox for applicants to request a copy of the report
  • If requested, the employer is required to obtain and share that copy with the applicant

“Ban the Box”

Employers cannot inquire about criminal history until:

  • The applicant is selected for an interview or
  • A conditional offer of employment has been made (if no interview occurs)

Appicants don’t have a private right to sue under this law, but they can file complaints with the Minnesota Department of Human Rights or under administrative procedure.

Federal Law- The Fair Credit Reporting Act (FCRA)

The FCRA governs how employers use background and consumer reports for hiring, promotion, or retention.

Key employer requirements include:

  • Clear disclosure and written consent before obtaining a report
  • Pre-adverse action notice if the report could lead to a negative employment decision
  • Final adverse action notice after a decision is made, including the applicant’s right to dispute the report’s accuracy.

Violations can be costly-up to $1,000 per violation, plus attorney’s fees, punitive damages, and potential federal enforcement actions. 

Applicant Rights Under the Law

Applicants have the right to:

  • Consent before a report is obtained
  • Be informed if the report influences an employment decision
  • Dispute inaccurate information with the consumer reporting agency

While having a criminal record is not a protected class under Title VII, employers can face liability if their background check policies result in disparate treatment or impact against a protected group.

Avoiding Discrimination: Title VII and EEOC Guidance

To comply with EEOC guidance, employers should:

  • Conduct individualized assessments rather than automatic rejections.
  • Consider:
    • The nature and gravity of the offense
    • The time elapsed since the offense or sentence
    • The relevance to the specific job
  • Give applicants the chance to explain or provide context for their record
  • Maintain documentation of how hiring decisions are made and train hiring staff on compliance

Best Practices for Employers

  • Use a stand-alone disclosure form for FCRA compliance
  • Wait at least five business days after a pre-adverse action notice before issuing a final decision
  • Work only with certified consumer reporting agencies that require FCRA compliance verification
  • Avoid illegal application questions, such as:
    • “Have you ever been arrested or convicted?”
    • “Have you been convicted of a felony?”
    • “Have you had any driving violations?”
  • Document your decision-making process and ensure policies are job-related and consistent with business necessity.

Common Employer Mistakes

  • Combining state disclosures with federal FCRA notices
  • Rejecting candidates automatically due to any criminal record
  • Failing to provide copies of reports when requested
  • Overlooking the need for individualized assessment or applicant discussion

Even well-intentioned hiring decisions can lead to exposure if procedures aren’t compliant. 

Final Takeaway

Background checks are essential for protecting your business-but they must be handled with precision. Employers who understand the interplay between Minnesota law, the FCRA, and EEOC guidance are better positioned to hire confidently and defensibly.

At Wagner, Falconer & Judd, our Employment Law team works closely with employers to create compliant background check procedures and hiring policies that stand up to scrutiny.

Need a compliance check up? 

WFJ can help review your forms, update your policies, and train your HR staff to avoid costly missteps.

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