Conducting a background check on an employee or job candidate requires following a specific legal process before you ever pull a report. Federal law, primarily the Fair Credit Reporting Act (FCRA), sets mandatory steps for disclosure, consent, and notification that apply to every employer in the country. Skip any of these steps and you expose your company to lawsuits, even if the background check itself turns up nothing concerning.
Here’s how to handle the process correctly from start to finish.
Understand What the FCRA Requires
The FCRA governs any time you use a third-party company (called a “consumer reporting agency”) to pull background information on someone. That includes criminal records, credit reports, driving records, employment history, and education verification. If you’re paying a screening company to run a check, the FCRA applies to you.
Before ordering the report, you must complete two things. First, give the applicant or employee a written notice that you may use a consumer report in making employment decisions. This notice has to be a standalone document. You cannot bury it inside a job application or bundle it with other paperwork. Second, get the person’s written permission to run the check. The consent form can be on the same page as the disclosure notice, but the disclosure itself must stand on its own.
You also have to certify to your screening provider that you’ve notified the person, obtained their consent, and that you’ll comply with all FCRA requirements and applicable anti-discrimination laws. This certification is typically a form your screening company provides when you set up an account.
Check Your State’s Fair-Chance Hiring Laws
Many states and cities restrict when you can ask about criminal history during the hiring process. These “ban the box” laws, named for the checkbox on job applications asking about convictions, generally require you to delay criminal history inquiries until after you’ve made a conditional job offer.
Fifteen states currently extend this requirement to private employers, and 37 states plus over 150 cities and counties have adopted fair-chance policies for public-sector hiring. Federal agencies and most federal contractors face similar restrictions. The strongest versions of these laws also require you to consider how relevant a conviction is to the job, how much time has passed since the offense, and any evidence of rehabilitation before making a hiring decision.
If your state or city has a fair-chance law that applies to private employers, running a criminal background check too early in the process, or automatically disqualifying someone based on a conviction, can result in penalties. Review your local rules before you build your screening timeline.
Choose What to Screen For
Background checks aren’t one-size-fits-all. The components you include should match the responsibilities of the role. A basic screening typically covers a criminal records search and identity verification. More comprehensive packages add employment history verification, education verification, credit checks, driving records, professional license confirmation, and searches across multiple jurisdictions.
Credit checks are most relevant for positions involving financial responsibility or access to sensitive data. Driving record checks matter for roles that require operating a vehicle. Drug testing, reference checks, and professional license verification each serve specific purposes depending on the industry. Running checks that have no connection to the job can raise legal concerns under anti-discrimination laws, so be intentional about what you include and why.
Select a Screening Provider
Most employers use a third-party background check company rather than running searches themselves. These companies have access to court records databases, employment verification networks, and other tools that make the process faster and more thorough than pulling records on your own.
When evaluating providers, look at what’s included in their standard packages, how they handle records from different jurisdictions, whether they’re FCRA-compliant in their own processes, and what their turnaround times look like. Some providers specialize in certain industries like healthcare, transportation, or financial services, where regulatory requirements dictate specific screening components.
Costs and Turnaround Times
Standard pre-employment screenings typically cost between $30 and $100 per candidate. Basic criminal searches start around $20 to $40, while comprehensive packages that include employment verification, education checks, and multi-jurisdictional criminal records can run $100 to $200 or more per candidate. Highly specialized or extensive checks can push costs above $500.
Standard turnaround is three to seven business days, though it varies based on the components you’ve selected and how accessible records are in the relevant jurisdictions. Some counties still require manual courthouse searches, which take longer. If you need results faster, expedited services promising 24 to 48 hours typically add 25 to 50 percent to the base cost. Premium rush services completing within 24 hours can double the price.
Review Results Carefully
When the report comes back, review it in the context of the specific role. A conviction from 15 years ago for an offense unrelated to the job responsibilities carries different weight than a recent conviction directly relevant to the position. Many state and local laws explicitly require this kind of individualized assessment rather than blanket disqualification policies.
Also verify that the information in the report actually belongs to your candidate. Background check errors are not uncommon, particularly with common names or when records are pulled from multiple jurisdictions. Mismatched records, outdated information, or records that belong to someone else entirely can all appear in a report.
Follow the Adverse Action Process
If you decide not to hire someone, or to take any negative employment action, based partly or entirely on what the background check revealed, the FCRA requires a specific three-step process.
Step one: send a pre-adverse action notice. Before making a final decision, provide the candidate with a copy of the full background check report and a document called “A Summary of Your Rights Under the Fair Credit Reporting Act.” This gives the person a chance to see what was reported and dispute any errors.
Step two: wait. The FTC recommends waiting at least five business days after sending the pre-adverse action notice before finalizing your decision. This waiting period gives the candidate time to respond, correct inaccuracies, or provide context.
Step three: send a final adverse action notice. If you proceed with the decision after the waiting period, you must send a final notice within three business days. This notice must confirm that you took adverse action based in whole or in part on the consumer report, and it must include the name, address, and phone number of the screening company that provided the report. You should also inform the person that the screening company did not make the employment decision and that they have the right to dispute the accuracy of the report and request a free copy.
Skipping any of these steps is one of the most common FCRA violations employers commit, and it’s also one of the easiest to avoid. Plaintiff attorneys actively look for employers who skip the pre-adverse action notice or don’t wait long enough before making a final decision.
Keep Records and Apply Checks Consistently
Document your screening policy, including which checks you run for which positions and how you evaluate results. Apply the same screening criteria to every candidate for a given role. Inconsistent application, running more extensive checks on some candidates than others for the same position, creates discrimination risk.
Retain copies of disclosure forms, consent forms, and background check reports according to your record-retention policy. Federal anti-discrimination laws generally require keeping hiring records for at least one year after a hiring decision, and longer if a charge of discrimination has been filed. Store these records securely, since they contain sensitive personal information.