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Legal Considerations of Background Checks for Texas Employers

Today, many Austin employers want to make an inquiry into an applicant’s background before offering a job with the company. Additionally, employers may want to confirm certain information such as a person’s educational credentials before making a decision to promote or transfer an employee from one department to another. Employee background checks can help accomplish these goals and can serve to protect employers from making a risky hiring decision. However, employers must be cognizant of what employee background checks consist of and how to remain compliant with the law in their use and application.

Employee Background Checks

Employee background checks can provide information about an applicant’s or an employee’s work history, education, financial history and criminal record. Some companies may also provide information about an employee’s or applicant’s use of social media.


When information gained from a background check is used to make an employment decision, Equal Employment Opportunity Commission laws and principles may be implicated. Title VII of the Civil Rights Act prohibits making an adverse employment decision based on a person’s race, national origin, religion, sex or color. Decisions not to hire someone or to terminate someone are regarded as adverse employment decisions. Other federal employment laws prohibit making an adverse decision based on a person’s age if he or she is at least 40, disability, pregnancy or genetic information.

To avoid possible legal implications of running an employee background check, the policy on its use should be clear and consistently applied. For example, running an employee background check only on people of a certain race may be evidence of discrimination. Additionally, selection decisions should be streamlined. For example, if people of a certain race are not rejected as applicants because of certain negative information in their financial history or a criminal record, individuals of other races should not be rejected because of these criteria. Employers also should not have blanket policies that reject applicants with any type of criminal record because it may be considered disparate impact discrimination. These blanket places are often outlawed by so called 'ban the box' laws.

Fair Credit Reporting Act

In addition to ensuring that employee background checks are not used to discriminate against employees or applicants, employers must also ensure their background check procedures comply with the rules of the Fair Credit Reporting Act. This law requires the employer to inform the employee in a separate written policy that he or she may use the information from the background check to make an employment decision. This policy should be signed by the employee. If the employer’s background check will include an investigative report that involves talking to people who know the applicant to learn about his or her character, lifestyle and reputation, the employee must be informed of this aspect of the background check. Any reputable employee background check vendor will guide an employer with these steps; however, employers must be savvy about the protocols because employers are responsible for unscrupulous vendor's mistakes investigating employee backgrounds. 

If an adverse action is taken against the employee because of the background check, the employer must provide the employee with a notice of the action, a copy of the background check and a copy of the publication “A Summary of Your Rights Under the Fair Credit Reporting Act.” Additionally, the employee must be given the opportunity to dispute the information in the report.