Should Background Checks Be Conducted on Contractors, Vendors and Temps?

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In an effort to reduce potential risks and liabilities related to staffing practices, employers typically conduct background checks on their workers.

Some employers are even required under federal law, state or local law to conduct background checks. But, can you do a background check on a non-full time employee (FTE)?

What is a non-FTE and what is different about screening them?

Non-FTE’s are a varied group, also sometimes called contingent labor. Examples include staffing agencies’ temporary employees, temporary workers, consultants, independent contractors and subcontractors.

When determining if an employer should conduct background checks on independent contractors and other contingent workers, employers often consider and review their internal policies as well as federal and state background screening laws.

For example, employers in certain industries, such as financial services and healthcare, are often governed by federal or state screening requirements, as are employers whose employees work with sensitive populations such as minors, the disabled and the elderly.

Other employers that may be required to perform specific background checks on their workers include those related to national security, employers with government contracts, and employers who have employees in positions requiring security clearance and other security sensitive positions.

This will, at times, include independent contractors and other contingent workers hired to perform work for the employer.  Generally, such non-FTEs will be required to undergo a background screening process that mirrors that of an FTE.

Which laws should we be aware of when screening non-FTEs?

In the United States, the Fair Credit Reporting Act (FCRA), which regulates the use of background checks, includes “employment purposes” as a permissible purpose for obtaining and using a consumer report on an individual. The FCRA also defines a “consumer” as an individual and “employment purposes” as “a report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.”

The Federal Trade Commission (FTC), the agency responsible for the enforcement and interpretation of the FCRA, has issued an opinion letter stating that the term “employment purposes” should be construed broadly and includes independent contractors.

Federal and state equal employment opportunity laws are another consideration when background screening non-FTEs.

While these laws typically apply on their face only to “employers” and “employees”, they could extend to non-FTEs if there is a joint employment relationship.

To the extent that these laws apply, they generally require that when making hiring decisions, employers demonstrate that their employment decisions applied to the use of background checks are job-related for the position in question and consistent with employers’ business necessity.

As a best practice, employers who choose to conduct background checks should apply their policies consistently to their employees, candidates for employment, independent contractors, consultants and other contingent workers to prevent potential claims of discrimination and to ensure compliance with all federal, state and local laws.

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Dan Doss

As a HireRight Sr. Solution Engineer, I support Enterprise-level Sales and Account Executives by providing pre-sales support for complex software application presentations including Form I-9 and E-Verify.

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