Recently, there was an incident at a small repair shop run by a friend of mine. They had hired a candidate with a strong background, but when they sent the information to a background check company, it turned out there was a bankruptcy record from a few years ago. They canceled the hire based on that and received a complaint letter from the applicant. The owner felt it was unfair, but there were procedural issues.

To get straight to the point, it is legal for employers in the U.S. to conduct background checks on applicants. However, they must follow the procedures set forth by the Fair Credit Reporting Act (FCRA). First, they need to inform the applicant in a separate written notice, not mixed in with other documents, that they will be conducting a credit check or criminal record check, and they must obtain the applicant's written consent. Surprisingly, many companies overlook this and just include it in small print on the application form.

The next step is even more important. If an employer wants to cancel a hire or take adverse action based on the background check results, they must first send a preliminary adverse action notice to the applicant. This notice must include a copy of the report and a summary of the consumer rights. Additionally, the applicant must be given at least five business days to review the information and dispute it. Ignoring this timeframe and immediately notifying the applicant of the cancellation is the trap that my friend's repair shop fell into. Violating this can lead to legal claims for damages ranging from $100 to $1,000 per violation, and if it escalates to a class action lawsuit, the amounts can be much higher.

There are also limits on what can be included in the report. Records of arrests that did not lead to convictions are generally removed from the report after a certain period, and records that are not actual convictions can only be reported for up to seven years. In contrast, records of convictions can be reported indefinitely unless they have been expunged or sealed. This means that an applicant could be held back for life due to a single mistake made in their youth.

What about Alaska? There is currently no state law mandating the removal of questions about criminal history from job applications. Therefore, private companies can ask about criminal history from the application stage. However, the city of Anchorage has enacted an ordinance that prohibits the city and its contractors from asking about criminal history until a conditional job offer is made. While this does not apply to all private small businesses, it does reflect a growing sentiment in the public sector to provide second chances.

I believe this principle of second chances should extend into the private sector as well. In the 1990s, when the three-strikes law was popular, many believed that pushing ex-offenders out of society was the way to ensure safety, but research has shown that this only increased recidivism rates. Without jobs, there is nowhere for them to return. Of course, I understand that employers need to be cautious when it comes to positions involving child care or handling cash. Therefore, I am not suggesting that they should never ask; rather, they should evaluate on a case-by-case basis whether it is relevant to the job.

To be honest, I am not advocating for the elimination of background checks altogether. Companies need to manage risk. However, I have seen too many cases where procedures were not followed correctly, leading to lawsuits. I would advise employers to consult with a lawyer to ensure they have the written consent and the two-step notification process in place. For applicants, if you receive a notice of non-hire, do not just brush it off; make sure to check the contents of the report. If you have any objections, feel free to leave a comment.