Background checks are one of the most important and most mismanaged parts of the hiring process. Done correctly, they help employers verify that candidates are who they say they are and identify information relevant to job safety and suitability. Done incorrectly, they create legal liability, trigger discrimination claims, and slow down hiring unnecessarily.
This guide covers what background checks can and cannot reveal, what employers are legally required to do before running them, and how to build a compliant, consistent background check process.
What a Background Check Can Include
The term “background check” refers to any process of verifying or investigating information about a job candidate. Depending on what you authorize and what the candidate consents to, checks can include:
- Criminal history search: Searches county, state, and federal criminal court records for convictions and pending charges. The most commonly requested component.
- Employment verification: Confirms that the dates, titles, and employers listed on a resume are accurate.
- Education verification: Confirms degrees, certifications, and graduation dates listed by the candidate.
- Credit report: Provides a credit history summary. Legally restricted to roles with specific financial responsibilities in most jurisdictions.
- Motor vehicle record (MVR): Reviews driving history. Standard for roles that require operating a vehicle.
- Professional license verification: Confirms that licenses listed by the candidate are current and in good standing.
- Sex offender registry search: Checks national and state sex offender databases. Common for roles working with vulnerable populations.
- Reference checks: Conversations with former managers and colleagues. Technically not a database check but often included under the background screening umbrella.
Federal Law: The Fair Credit Reporting Act
When you use a third-party background check company (called a Consumer Reporting Agency or CRA under the FCRA), you are subject to the Fair Credit Reporting Act’s employer requirements. These are non-negotiable federal obligations:
Before Ordering the Check
- Provide the candidate with a clear and conspicuous disclosure that you may obtain a consumer report for employment purposes. This must be a standalone document — it cannot be buried in an application or employment agreement.
- Obtain the candidate’s written authorization to run the check. Electronic signatures are acceptable.
If You Plan to Take Adverse Action
“Adverse action” means declining to hire, rescinding an offer, or taking any other employment action based on the background check results. Before doing so:
- Provide the candidate with a copy of the background check report
- Provide a written summary of the candidate’s rights under the FCRA
- Give the candidate a reasonable time to dispute inaccurate information (typically at least five business days)
- After the waiting period, if you still intend to take adverse action, provide a final adverse action notice that includes the name and contact information of the CRA and notice that the CRA did not make the hiring decision
Skipping these steps is one of the most common — and most expensive — compliance mistakes employers make. FCRA class action lawsuits have resulted in multi-million dollar settlements against employers who failed to follow the proper adverse action process.
State and Local Law: The Ban-the-Box Patchwork
Beyond federal law, an expanding set of state and local laws impose additional restrictions on when and how employers can consider criminal history. These laws are commonly called “ban-the-box” laws because many prohibit asking about criminal history on the initial job application.
Key restrictions vary by jurisdiction but may include:
- Prohibiting criminal history questions until after a conditional offer of employment
- Restricting consideration of arrests that did not lead to convictions
- Limiting how far back criminal history searches can go (commonly seven years)
- Requiring individualized assessment — a written analysis of whether a conviction is actually related to the job before adverse action is taken
- Mandatory wait periods and written notices before rescinding an offer based on criminal history
As of 2025, more than 30 states and 150 cities and counties have enacted ban-the-box or fair chance hiring laws. If you operate in multiple states or hire remotely, you must comply with the laws of each jurisdiction where your employees are located — not just where your company is headquartered.
Credit Checks: When They Are Permitted
Most states restrict employer use of credit checks. Using a credit check for a role where it is not legally justified — or running one without meeting the state’s specific permission requirements — creates liability. As a general rule:
- Credit checks are most defensible for roles with direct financial responsibility: CFOs, controllers, treasury staff, roles with signatory authority over significant financial accounts.
- Running credit checks on all applicants across all roles is not defensible and may violate multiple state laws.
- Several states (California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, Washington) broadly restrict or prohibit employer credit checks except for specific role types.
Drug Testing
Pre-employment drug testing is legal in most US states for private employers, but the rules have changed significantly in states that have legalized marijuana. Important considerations:
- Several states (California, Colorado, New Jersey, New York, and others) now prohibit employers from rejecting candidates based solely on a positive marijuana test for most roles.
- Safety-sensitive roles and roles regulated by federal law (Department of Transportation, federal contractors) may still require and enforce marijuana testing regardless of state law.
- Some states require written advance notice to candidates before conducting drug tests.
- Random drug testing of existing employees is subject to additional state-by-state rules beyond pre-employment testing.
Building a Compliant Background Check Process
A few practices ensure your process holds up:
- Use a reputable Consumer Reporting Agency. A good CRA will help you stay compliant with FCRA and state law requirements and will carry insurance against errors in their reports.
- Apply background check policies consistently. Run the same checks for everyone in the same role type. Running checks only on certain demographic groups or applying results inconsistently creates disparate treatment claims.
- Document your individualized assessment process. When a background check reveals a potentially disqualifying result, document how you analyzed its relevance to the specific role before making a decision.
- Keep adverse action records. FCRA requires you to retain documentation of adverse actions for specified periods. Build this retention into your process.
- Review your process annually. State and local laws in this area change frequently. What was compliant in your state last year may not be compliant this year.
For workers who want to understand their own rights when a background check affects a job offer, the article on background checks and screening for temp workers covers the candidate-side perspective.
Returning seasonal staff raise a related paperwork question about employment eligibility; our article on rehiring seasonal employees and the Form I-9 explains when a new form is needed.
Background Checks for Staffing Agency Placements
When you use a staffing agency, the agency typically conducts background checks before placing workers with you. Understand clearly what their standard screening includes — not all agency checks are equally thorough. Depending on the sensitivity of your role, you may want to request enhanced screening beyond the agency’s default process, or confirm that the agency’s check covers the specific components you require.
Frequently Asked Questions
Can I run a background check before making a job offer?
Federally, yes — the FCRA does not require waiting until after an offer. However, many states with ban-the-box laws require that you not conduct a criminal history check until after a conditional offer has been made. Check your state’s specific rules.
How far back does a criminal background check go?
FCRA generally limits consumer reports to seven years for criminal records (except convictions), and most states follow a similar framework. Convictions often have no statutory limit, though state law variations exist. Your CRA can explain the lookback period applicable to each jurisdiction.
What if the background check reveals a conviction? Do I have to reject the applicant?
No. Having a conviction does not automatically disqualify a candidate. EEOC guidance and many state laws require an individualized assessment: considering the nature of the crime, how long ago it occurred, and its relevance to the job before making a decision. Blanket policies excluding anyone with any conviction can violate Title VII’s disparate impact provisions.
How long does a background check typically take?
Standard criminal checks typically complete within 1–3 business days for most jurisdictions. Counties with manual courthouse records can take 5–10 days or longer. Employment and education verifications depend on how quickly prior employers and institutions respond, typically 3–7 business days. Build this timeline into your offer and start date planning.
Do I need consent to check a candidate’s references?
Reference checks between employers do not require the same formal FCRA consent as a report from a Consumer Reporting Agency. However, if you use a third-party reference checking service, FCRA requirements apply. Direct reference calls by your own staff fall outside FCRA’s scope but are still governed by anti-discrimination principles in how you use the information gathered.