Payment for Background Checks: Who Is Responsible?

August 14, 2018

Successful staffing agencies know the responsibility they have to their clients to select the right candidate for the right job placement. The wrong fit not only costs the client valuable time and money but also has the potential to weaken the brand and reputation of the staffing agency. Staffing agencies that can successfully place candidates usually have a greater potential to attract new business by cultivating trust with their clients.

Comprehensive background screening is a valuable tool that staffing agencies should use during the vetting process as it can reveal potential information about a candidate that could pose a risk, such as previous criminal behavior or a history of substance abuse. This is especially true for clients in certain industries looking to fill positions working with vulnerable individuals. With an increasing emphasis on workplace safety, background checks are a necessity.

Payment for Background Checks

Staffing agencies, especially those with a high volume of applicants or high placement turnover, may be tempted to reduce costs by requiring applicants to pay for their own background checks. While the Fair Credit Reporting Act (FCRA) does not prohibit employers from requiring applicants to pay, there are several state laws that explicitly prohibit employers from requiring applicants to bear the cost of their own criminal background checks, medical examinations, drug tests, etc. Some of these laws, however, apply only to specific types of checks such as a criminal search run through a particular state agency.

For example, in Iowa, if an employer requires a record check to be completed on a prospective employee, Iowa state law requires employers to pay for the criminal record check only if it is run through Iowa’s Division of Criminal Safety Investigations, a subdivision of Iowa’s Department of Public Safety. All other background searches may be conducted at cost to the applicant if the employer chooses.

However, Kentucky state law offers employers less leeway as it pertains to charging applicants. Under the law, it is “unlawful for any employer to require any employee or applicant for employment to pay for the cost of medical examination or the cost of furnishing any records required by the employer as a condition of employment.” (Emphasis added). This law applies to both current and prospective employees and covers the cost of medical examinations in addition to all other background checks.

Other potentially impact laws on the topic may be found in Louisiana, Massachusetts, Minnesota, and Vermont.

From an employment perspective, it is considered best practice to have the employer pay for background checks, especially since the background check is often a condition of employment. Consultation with qualified legal counsel is recommended to determine if there are any applicable laws or risks associated with having applicants pay for their own background checks before implementing this practice.

Guest Author: Asurint

Kelly Uebel, General Counsel for Asurint
Kelly joined the screening industry in 2011. In her current role, Kelly oversees the teams responsible for counseling staff on legal and regulatory risks and requirements. This includes providing subject matter expertise, and monitoring and evaluating proposed and existing laws and regulations from the local, state, federal and international level that impact background screening. In addition to her role at Asurint, Kelly serves on the Board of Directors for the National Association of Professional Background Screeners (NAPBS). In this capacity, Kelly also acts as Board Liaison to the Government Relations Committee where she previously served as co-chair from 2015-2017.

Elise Collman, Legal Analyst
Elise Collman is a Legal Analyst at Asurint and assists General Counsel with research, writing and analysis on a broad range of topics that impact background screening at the local, state and federal level. This includes creating thought leadership collateral such as whitepapers, blogs and other screening related content for Asurint’s clients and staff. Before joining the Legal team, Elise held a position in Asurint’s Compliance department where she was involved with client education on regulatory and compliance matters.