The Fair Credit Reporting Act sets time limits on how far back a background check can go, but there are several exceptions to these standards.
Many employers conduct background checks on all new employees. This can provide the employer with valuable information, but it can also violate the privacy rights of employees if not conducted according to federal and state laws. Time limits on background checks are subject to regulation by the federal government, and employers and employees should know their rights and responsibilities in this area.
Most small and medium-sized businesses use outside companies such as GroupOne Background Screening, called consumer reporting agencies, to perform background checks. The federal Fair Credit Reporting Act (FCRA) sets national standards on time limits for any checks performed by such companies.
The FCRA sets some time limits on what can be reported. Bankruptcies cannot be reported after 10 years; tax liens cannot be reported more than seven years after payment; accounts placed for collection cannot be reported after seven years; civil suits, civil judgments and any other negative information, after seven years. However, these restrictions do not apply to applicants for any job with a salary of $75,000 or more per year.
Criminal convictions are an exception to the FCRA time limits. The FCRA allows criminal convictions to be reported at any time with no time limits. Some states, however, follow the seven-year rule. For example, Texas does not allow reporting of criminal convictions more than seven years after disposition, release or parole. In Texas, the seven-year restriction does not apply to applicants to jobs with an annual salary of $75,000 or more.
Permission – Important!
The FCRA requires employers to get an employee’s written permission before asking a consumer reporting agency such as GroupOne to conduct a background check on that person. Employers must also notify the employee in writing–in a letter that contains only this information–that a background check may be made and may be used for employment purposes.
Time limits do not generally apply to minors. For example, juvenile criminal convictions cannot be reported, and credit bureaus do not generally keep records on minors. Also, because minors cannot legally give consent to a contract, any permission a minor gives to an employer to conduct a background check is invalid. For example, in Texas, contracts with minors are voidable, so any permission given to conduct a background check would not be valid.