How to Handle a Candidate Who Fails A Background Check

It was an absolute shock: you offered your top candidate the job, only to find out in the background check that they have a rap sheet longer than the Mighty Mississippi. Now, you’re stuck in a precarious situation; you do not want to hire someone with a relevant criminal history, but you definitely don’t want to land in legal hot water by not moving from that point in a way that could violate the law. So, what can you do?

First, recognize that a background check hit is a sign that your screening process is working. As a small business owner, your priority is protecting yourself—both from potentially dangerous job applicants and from the litigation that can occur if you mismanage the hiring process. The best employees can improve productivity and increase your bottom line. Conversely, hiring an unsuitable candidate could jeopardize your business brand, workplace safety, company culture, and financial success.

As many savvy employers know, it is crucial to have a comprehensive employee screening policy. Using a comprehensive screening service like ShareAble® for Hires you can help identify candidates whose relevant criminal history could pose a threat to your livelihood.

Navigating a failed background check is a delicate process that takes precise action and strict adherence to federal, state, and local laws and regulations. However, it is far from impossible. In the article below, you can learn some general principles and methods on how to rescind a contingent job offer after a candidate has failed their background check. Please be mindful that we do not intend the information below to be complete or as legal advice (and you should not treat it as complete or legal advice) – you should check with your own legal counsel.

Consider Establishing Criteria for a Failed Background Check

First, you must establish your criteria for “failing” a background check. Refer to your employment screening policy to help determine what qualifies as acceptable and unacceptable for the position. Ask yourself: are the negative hits on the background check relevant to me? Do they disqualify the candidate from the position in my view? A traffic violation, for example, may not be significant enough to rescind a job offer after a background check, but a more serious offense could disqualify a candidate.

Employers generally do ask questions about an individual’s employment, financial, and criminal history when making hiring decisions. However, the way you treat the information must comply with l laws and regulations that protect applicants against unlawful discrimination.

The U.S. Equal Employment Opportunity Commission (EEOC) has guidelines for employers on how to use the background information obtained in a screening report. According to the EEOC, employers should:

  • Apply the same standard to everyone, regardless of their race, national origin, color, sex, religion, disability, genetic information, or age (40 or older).
  • Take special care when making employment decisions on background problems that are more common among people of certain demographics.
  • Be prepared to make exceptions for problems revealed during a background check that were caused by a disability.

For example, it is generally illegal to rescind a job offer after a background check if a candidate of one ethnicity has a criminal history, but to hire a candidate of a different ethnicity with the same criminal background. Another example: employers should not have a policy within their company handbook that excludes people with certain criminal records if the policy significantly disadvantages individuals of a particular race, national origin, or other protected group, which is known as a “disparate impact”.

72 percent of employers surveyed conduct background checks on applicants as part of the hiring process

According to data from ConsumerFinance.gov, 72 percent of employers surveyed conduct background checks on applicants as part of the hiring process. However, even though background checks are widely accepted and commonly performed, it’s important to pay special attention to the Federal Trade Commission (FTC) and EEOC parameters in place.

The Society for Human Resource Management (SHRM) offers additional advice on how to rescind a job offer after a background check reveals an applicant’s criminal history.

  • Stay current with state and federal regulations that govern the use of criminal records in background screening. For example, the National Employment Law Project reports that over 33 states and 150 cities nationwide have adopted “ban the box” ordinances. This provision is designed to prevent employers from considering criminal history prior to job qualification in an effort to combat discrimination. It may or may not be in effect where your business is located, so it’s wise to research all local, state, and federal laws when creating your screening policy.
  • Use a hiring matrix to make consistent decisions. A hiring matrix is a tool used to objectively identify the best job applicant. You should consider creating a matrix of candidates, skills, education, experience, and any other attributes that provide a clearer picture of the best candidate for the position. To avoid unintended bias, job qualifications should be specific to the position without blanket policies, and applied consistently to all candidates.
  • Assess applicants individually. In 2012, EEOC guidance on background screening added the requirement of individualized assessment. This was done in an effort to avoid a potentially discriminating impact in the event that a job offer is rescinded due to a background check. Here are some circumstantial factors employers and hiring managers are urged to consider:
    • Age and time of the offense
    • Rehabilitation efforts
    • Employment history before and after the offense
    • Character references
  • Stay in legal compliance by understanding the adverse action and record dispute processes. These are two rights generally endowed to a candidate who has failed a background check after a job offer or during the hiring process. We’ll take an in-depth look at these two processes in the sections below.

Consider the FCRA When Screening Job Candidates

It’s important for employers to take heed of the Fair Credit Reporting Act (FCRA), legislation that, in part, protects job candidates’ rights.

In addition to being aware of the relevant laws and regulations, it is wise to use a background screening service that is FCRA compliant. An FCRA-compliant screening service can help you avoid the legal headache that can come with inadvertently going afoul of employment legislation.

Consider Verifying the Failed Background Report Belongs to Your Candidate

Be careful not to rescind the job offer after a background check until you verify that the records actually belong to your candidate. Sometimes, you may encounter a false positive match between a great candidate and a criminal by the same name. Double-check the screening request for possible data-entry errors and ensure that you are using a reputable screening company that complies with applicable laws. Otherwise, your results may be inaccurate, incomplete, or in violation of certain laws.

Notifying the Candidate: Pre-Adverse Action

Even if you had a good gut feeling about the candidate and they looked great on paper, your employment screening process might turn up some potentially concerning criminal history. Depending on the offense, negative hits could leave you figuring out how to rescind a job offer after a background check or wondering how you didn’t notice such red flags in the first place.

In fact, finding a job candidate with a criminal record is more common that you may think; there are roughly the same number of Americans with college diplomas as there are with criminal records. This makes it especially important to run thorough background checks on anyone you want to hire.

what to do before you decide to rescinde job offer based on criminal background

Along with verifying the record belongs to the correct person, you generally need to notify the candidate of your findings (meaning, in particular, before you take adverse action). There are important steps you must follow in this process, including considering the crime and assessing its relevance to the duties of the position you’re hiring for.

For example, a job offer rescinded after a credit check generally corresponds with the position being financial in nature. In this situation, a weak credit history might indicate that the candidate is financially irresponsible and possibly reckless with money. That could negatively impact their performance in a role with financial responsibility. However, if a background check illuminates criminal history (rather than simply poor credit) it may be time to contemplate whether the applicant’s offense will interfere with the work they’re hired to perform.

If you decide to rescind the job offer, then you likely must provide the applicant with a “pre-adverse action notice”, (refer to the FCRA). The pre-adverse action notice informs the candidate of the situation and gives them a chance to explain their criminal history. This also gives them time to research your findings and dispute any inaccuracies because. Employers are generally required to provide this opportunity for rebuttal. During this step of the process, employers are also generally mandated to provide the candidate with:

To help simplify the process, make sure you use a background screening service that is FCRA compliant and makes official communication between you and your candidate easy to manage.

Communicate with the Candidate & Make a Final Decision

After you’ve provided the pre-adverse action notice, you are generally required to give your candidate time to read and review the results of their background check. Check the laws applicable to you for more information any specifically-required amount of time. Also check that there are no state-specific laws that apply to your business that require even longer periods of time.

During this time, the candidate might update their criminal record to correct any errors or contest any perceived inaccuracies. If you approve the outcome of their explanation or dispute, then you typically may move forward with the hiring process.

If the candidate does not dispute the findings and the criminal report stands, then you generally must then move to make a final decision. If you don’t hear anything from the candidate in a legally-specified or required number of days, you might then proceed to adverse action—formally rescinding the offer.

Rescind the Job Offer with an Adverse Action Notice

When a job offer is rescinded due to a background check, employers generally need to formally retract the offer in writing with an adverse action notice. The written statement should comply with applicable law (e.g. the FCRA) and typically will outline the reasons the decision was made, stating specifically that the offer is retracted per the result of a failed, undisputed background check. You also generally must provide the candidate a copy of the criminal report within the adverse action notice, as well as the name of the company that conducted the screening. Additionally, you might also have to inform the candidate of

  • The company that conducted the background check does not make the decision to pursue adverse action
  • The candidate may request a free second copy of their background report within 60 days
  • The candidate may still dispute the results of their background check

It’s wise to carefully document every step of the process when rescinding a job after a background check. Failure to follow these protocols may lead to an applicant filing an FCRA complaint with the FTC. We’ve seen that the annual amount of complaints filed has increased year by year. This means that employers should be especially mindful to adhere to regulations when rescinding job offers due to background checks. If done incorrectly, rescinding an offer could potentially be seen as a violation of an applicant’s rights.

As you learn more about how to rescind a job offer, remember that the formalities are incredibly important. Especially for small business, both FCRA and EEOC lawsuits should be avoided at all costs—as an employee lawsuit is costly and typically takes a long time to resolve. The stress and expense involved in a year-or-more-long legal battle can be a huge hit to employers—not to mention the precious time it can take away from running and expanding your business. And, if your screening practices are found to be non-compliant with FCRA or EEOC laws, you could be looking at huge fees and penalties that can further eat away at your bottom line.

Learn How to Run Effective Criminal Background Checks

Pre-employment screening is essential. Without it, you could fail to learn about a candidate’s violent history, which could lead to hiring a dangerous employee and potentially harm you, your team members, or your customers. In public-facing environments, you need to have faith that your employee will uphold your brand and values while delivering exemplary service.

High-quality background checks help prevent risks such as internal theft, property negligence, and dangerous behaviors. However, not all background checks—or even screening policies—are created equal. Learning how to conduct appropriate criminal background checks should be one of your top priorities. Poorly managed background checks can not only leave you vulnerable to litigation but can also be detrimental to a smooth hiring process—especially when it comes to trying to get great job candidates through the door.

Several companies offer some form of “background check” and you must be very selective when deciding which one to use. When looking at potential providers, ask yourself:

  1. Are the reports FCRA compliant?
  2. Does the company search all relevant federal and state-wide databases?
  3. Is the provider established, reliable, and trustworthy?
  4. Is the process of requesting reports easy?
  5. Are the results easy to read, share, and understand?
  6. How long does it take to get a completed background check?

The last question is especially important. Many companies take days or weeks to complete a background check request, which is bad for business and hiring. If it takes too long, then your great candidate might move on to different options. Meanwhile, you lose out on profit potential each day the position sits unfilled.

However, comprehensive background checks can be provided in as little as a few hours—or even a few minutes. Using a screening service like ShareAble for Hires lets you run FCRA-compliant background and credit checks and receive reports near instantly. Reliable, expedient results can help you decide out who might be potential risk to the company and who might be a great fit.

Make More Confident Decisions with Employee Screening

At the end of the day, if you choose to rescind a job offer after a background check, then the decision should be both well-documented and well-considered.

Knowledge is power, and ShareAble for Hires offers pre-employment screening that can help you feel more confident about your hiring decisions. Created for small business owners, ShareAble provides custom reports to show only the information you need to find great employees.

Employees are the backbone of small businesses, and it’s the employer’s responsibility to provide a safe working environment. FCRA-compliant background checks scour criminal databases—including the FBI and the National Sex Offender Public Registry, as well as federal and state-wide arrests, convictions, court actions, sentencings, and supervisions to check for records that match your candidate.

With built-in identity verification, ShareAble online background checks use sophisticated matching logic, which translates to more accurate results and fewer false positive matches. Employee credit checks help uncover past criminal actions that could prove harmful for your business—especially if the role involves financial oversight or accessing proprietary data. Reports are backed by TransUnion, a trusted credit bureau, so you can feel confident in the accuracy of information reported and see fewer false positives.

While it is not fun to discover your top candidate has a criminal record, it is far better than unknowingly hiring someone who could pose a threat to your business or employees. With ShareAble for Hires, you can filter through your stream of candidates and help ensure no nefarious actors slip through the cracks.

learn more about criminal background report with ShareAble for hires graphics

The information posted to this blog was accurate at the time it was initially published. We do not continue to guarantee the accuracy or completeness of the information provided. The information contained in the TransUnion Rental Screening Services, Inc. blog is provided for educational purposes only and does not constitute legal or financial advice. You should consult your own attorney or financial adviser regarding your particular situationFor complete details of any product mentioned, visit www.transunion.com. This site is governed by the TransUnion Rental Screening Privacy Policy Privacy Notice located at TransUnion Rental Screening Solutions, Inc. Privacy Notice | TransUnion.