What To Do When Your Candidate Fails a Background Check

The person who seemed like the perfect candidate for the job failed the background check. You may have offered them the job already. Now you’re left wondering how to handle the situation.

It might seem like you have two options:

1. Hire them despite their recently uncovered history (probably not the right choice).
2. Don’t hire them without telling them why you’ve rescinded the offer and risk a lawsuit for violating the law (definitely not the right choice).

So, where does this leave employers?

First, a “failed” background check doesn’t necessarily mean you shouldn’t hire the candidate. It depends on your company policy, federal and local laws, and your legal counsel’s advice.

Second, you need to know what to do to comply with federal and state laws. We cover this critical information and offer recommendations on developing a thorough background screen and adverse action policy should you pass on the candidate.

What Is a “Failed” Background Check?

Human resource teams or hiring managers run a background check before hiring an employee. The purpose of this check is to confirm the applicant didn’t lie on their application and that they won’t threaten the safety of the employees in the organization.

A failed background check could mean a potential hiring risk for security reasons. Many companies choose to work with a background screening provider to prevent this from happening. Third-party services ensure organizations receive accurate information specific to the candidate. This way, if the candidate fails the background check, they’ll have the information required to assess the situation and proceed.

Know that failed background checks don’t always mean the candidate isn’t suitable for the job. It depends on a few factors, like when the incident occurred or the seriousness of the offense.

Common reasons for a failed background check include:

• Criminal history. If the individual has a long rap sheet, it may not be the best choice to bring them on. Look for anything that includes violent crimes, sexual offenses, repeat offenses, or convictions for embezzlement. While a criminal history can’t be a cause for discrimination, it may be a reason for adverse action if it conflicts with the job.
• Education discrepancies. Did the candidate lie about the university they attended? You’ll want to further vet the situation before hiring the applicant if you suspect evidence of misrepresented credentials like licenses or fake degrees.
• Poor driving record. If you’re hiring for a driving position and the candidate has some serious driving offenses, it’s not in your best interest to hire them. Doing so could put them and others at risk.

Other reasons for a failed background check could include poor credit history, false employment history, or failed drug tests.

Any of these reasons can justify not hiring a candidate. But to do so without violating federal or state law, you need to know how to reject them correctly.

How Do You Reject a Candidate After a Failed Background Check?

There’s a specific process in place that you should follow if you decide NOT to take on the candidate. Otherwise, you could face legal trouble if you’ve already offered the candidate the job.

For starters, you need to review your company’s employment screening policy and the Equal Employment Opportunity Commission’s (EEOC) guidelines. These state that you must apply the same standard to every candidate regardless of race, religion, sex, age, etc. It also states that employers must be willing and prepared to make exceptions if a disability causes a “failed” background check.

You’ll also need to remember the process established by the federal Fair Credit Reporting Act (FCRA) and any applicable local fair chance hiring laws. Your legal counsel or background screening provider will help you navigate these intricate waters.

Here are four steps to follow if and when you decide to reject a candidate due to a failed background check:

1. Follow Your Hiring Policy 

First things first, what does your hiring policy say? You must adhere to your employment screening policy. It will ensure each candidate receives the same fair treatment.

The policy will outline everything that goes into a background check, from past employment verification to Social Security Number verification. You must follow the terms of your hiring policy equally with every candidate.

2. Send a Pre-Adverse Action Notice 

A pre-adverse action notice is a document that states your organization will not hire the candidate after reviewing information uncovered in the background check. This notice is sent out to candidates and gives them the chance to explain their situation.

You must include a copy of the background check with the pre-adverse action notice. Employers must also include a copy of “A Summary of Your Rights Under FCRA.”

The pre-adverse action notice allows any candidate to review the background check results for accuracy.

3. Give the Candidate the Opportunity to Respond 

After sending the pre-adverse action notice, employers must give the candidate a chance to reply. This time allows the candidates to discuss the issues in the background check. If there are any discrepancies, this is the time to clear them.

For example, the candidate may have a valid explanation for the employment history discrepancy. If they have a poor credit score, it may be due to an identity theft case. You’ll never know unless you allow the candidate to respond.

Employers will often find that the reasoning behind the failed screening is sufficient to move forward with the hiring process.

4. Make a Decision 

Now for the hard part (or, in some cases, the not-so-hard part). It’s time to make a decision. The decision shouldn’t be too difficult to make as long as you’ve followed your company’s policies and followed any guidelines set forth by the EEOC.

If the candidate can explain their results and why they failed the background check, you may decide to hire them. In this case, simply move forward with the hiring process.

However, if they cannot explain the results or don’t dispute them, you’ll need to take adverse action. Federal law requires that employers send an adverse action notice to the candidate. It should include the following information:

• The name of the company that ran the background check
• A confirmation that the decision came from you (the employer or hiring manager) and not the background check provider
• A copy of their consumer rights under the FCRA
• A copy of the accurate background check results
• Notification of the candidates’ right to request an additional copy of their background check report within 60 days

How to Develop a Thorough Background Screening and Adverse Action Policy

By developing a thorough background screening and adverse action policy, you’ll have an easier time making fair hiring decisions. Your background screening policy needs to spell out the steps you have in place to protect employees and the workplace. It must also clearly state the conditions under which you may take adverse action.

Ensure a clear, comprehensive, and detailed policy by working with a reputable background screening provider that understands compliance with screening practices. They’ll deliver high-quality background checks and perform the following:

• Ensure accurate results. They’ll run a background check on the right person the first time around. With a trusted background screening provider, you’ll have peace of mind that the results are accurate.
• Streamline the adverse action process. The Fair Credit Reporting Act (FCRA) has strict guidelines in place for employers. For instance, they require issuing an adverse action notice to a candidate who has failed a background check. They’ll advise you on the best practices and solutions to stay compliant with local and national laws.
• Conduct periodic reviews. To keep your hiring policies up-to-date, background screening providers will conduct regular reviews to improve your screening process and practices.

Get in Touch With ScoutLogic Today

Learning your top candidate failed their background check is a harsh realization. However, this doesn’t mean you can’t hire them. It truly all depends on the reasoning behind the failed background screening.

The risk for liability is why it’s essential to follow your hiring policy, send a pre-adverse notice, and allow the candidate to respond. You may find that the reasoning behind the failed background check isn’t serious, and you can move forward with the hiring process. However, if they don’t dispute the notice or have a valid explanation, you’re in your right to deny employment. This will require you to take adverse action.

A great background screening partner understands the best practices and compliance obligations for taking adverse action. Get in touch with ScoutLogic today to partner with our team and move forward with confidence that you’re making well-informed hiring decisions.

David Garcia

David Garcia, co-founder and CEO of Scout Logic, is an industry leader in the bulk background check world. With his strategic acumen and expertise in the HR sphere, specifically in hiring, recruiting, legal compliance, background checks, and resume screening, he’s an invaluable asset and consultant.

David's counsel extends across the boards of ScoutLogic, YipitData, and Supplier.io, drawing from his impactful stints on the boards of Infutor and Avetta. With an extensive 25-year journey, he champions unparalleled B2B commercial leadership within data & analytics, significantly shaping the HR landscape.