Did you know pre-employment background checks have only existed for approximately 60 years? Since GroupOne Background Screening has been around for 37 of those years, we can proudly say we’ve existed for more than half the industry’s existence! So, let’s take a trip back into history.
While background checks had its first beginnings in the 1970s, today, it’s estimated 95% of U.S. companies utilize some form of screening before hiring employees. This business practice has become so common it is the norm rather than the exception.
Today, background checks are usually outsourced to a third-party provider such as GroupOne. Such screenings can range from criminal history searches to a more thorough investigation involving civil records, bankruptcy records, credit reports and driving records, especially for high-level positions.
But did you know the roots of background checks stem from several mid-20th-century negligent hiring cases? Specifically, a 1951 case created precedent that an employer may be found liable if “shown to have breached its duty of care in selecting and retaining only competent and safe employees.” This case involved an employee who delivered groceries and assaulted a woman in her house. He was hired without a reference check or character investigation.
But background screenings barely existed in the workplace before the 1970s. This changed with the passing of the federal Consumer Credit Protection Act of 1968 and the Fair Credit Reporting Act of 1970. The laws were created to protect consumers and organizations from occupational fraud. Soon, the market for third-party background checks grew quickly as many laws began requiring candidate and employee screenings.
In the 1970s and 80s, courts around the country affirmed employers’ broad right to inquire into employees’ criminal backgrounds. Courts held that appropriate background screening could reduce negligent hiring liability.
As background checks became common, tensions with civil rights efforts arose. In 1977, a federal court linked background checks with race discrimination, developing the Green Factors. These held that employers could not apply blanket policies against hiring people with criminal records and must weigh the: (1) nature and gravity of the offense/conduct; (2) time elapsed since the offense/conduct and/or completion of a sentence; and (3) nature of the job held or sought.
Additional lawmaking also increased employer responsibility in vetting employees. The Immigration Reform and Control Act of 1986 required employers to verify worker eligibility, standardizing employment verification practices. The Drug-Free Workplace Act of 1988 imposed new drug testing requirements and actions against employees with drug-related convictions. The percentage of large employers requiring pre-employment drug testing rose from 21% in 1987 to over 80% in the 2000s.
The 1990s marked the rise of computer databases allowing for more formalized checks on criminal history and credit. The Brady Handgun Violence Prevention Act of 1993 created the National Instant Criminal Background Check System, which was rolled out in 1998.
Sentiment for increased public safety rose significantly after the terrorist attacks of September 11, 2001. Civil requests for FBI checks doubled, and by 2006 the agency conducted more fingerprint reviews for civil purposes than for criminal ones. At the same time, data privacy became a concern. Federal agencies began enforcing protections more actively, and laws were soon passed to curb the improper use of data.
With changing attitudes towards criminal justice, innovations such as ban-the-box and clean slate laws sought to amend the collateral consequences that came with having a criminal record. In 2014, the Equal Employment Opportunity Commission (EEOC) created requirements that employers conduct “individualized assessments” of candidates with criminal histories.
Negligent hiring liability has historically decreased with the rise of legal background screenings of candidates. Today, liability tends to be concentrated in jobs with clear risks to vulnerable populations such as healthcare; access to customer homes such as housekeeping and maintenance; and motor vehicle operation such as trucking or Uber.
Employers have still been found liable for hiring practices. In 2023, Apple Inc. agreed to pay $25 million to settle claims by the U.S. Department of Justice that the tech giant illegally favored the hiring of immigrant workers over U.S. citizens. And in 2024, the EEOC recovered almost $700 million in fines from employers related to discrimination against 21,000 employees nationwide.
There’s your brief history on the growth and challenges of the background screening industry. Laws and trends are rapidly evolving, and GroupOne will continue to stay informed. As a consumer reporting agency, it’s our job.
Please do not hesitate to contact us should you have questions.