Pending Charges on Background Checks: What to Know

Introduction

Pending criminal charges present unique challenges in the background check process. Unlike convictions, pending charges represent accusations that haven’t been adjudicated, creating a complex legal landscape for employers, landlords, and other organizations that rely on background screening.

This guide covers the legal framework surrounding the use of pending charges in background checks, including federal Fair Credit Reporting Act (FCRA) requirements, Equal Employment Opportunity Commission (EEOC) guidance, and state-specific regulations that may limit or prohibit their consideration.

Compliance matters because improper handling of pending charge information can lead to discrimination claims, FCRA violations with statutory damages ranging from $100 to $1,000 per violation, and potential punitive damages for willful non-compliance. Organizations must balance their legitimate screening needs with applicants’ rights and legal protections.

Legal Overview

Key Provisions Explained

The legal framework for pending charges in background checks involves multiple layers of regulation:

FCRA Requirements: Consumer reporting agencies (CRAs) must follow strict accuracy standards when reporting pending charges. The FCRA requires:

Maximum possible accuracy in reporting
Procedures to verify disputed information
Clear disclosure of consumer rights
Seven-year reporting limitation for most criminal records (with exceptions for positions paying $75,000+ annually)

EEOC Guidance: The Equal Employment Opportunity Commission’s 2012 enforcement guidance emphasizes that arrest records alone (including pending charges) may not be used to make employment decisions unless the conduct underlying the arrest makes the individual unfit for the position. Employers must conduct an individualized assessment considering:

The nature and gravity of the offense
The time elapsed since the conduct occurred
The nature of the job sought

Presumption of Innocence: Pending charges haven’t resulted in convictions, meaning the accused remains legally innocent. This principle affects how organizations can use this information in decision-making.

Rights and Obligations

Applicant Rights:

Right to receive pre-adverse action notice with a copy of their background report
Right to dispute inaccurate information
Right to know the specific reason for any adverse decision
Protection from discrimination based on arrest records without conviction

Employer/User Obligations:

Obtain written consent before conducting background checks
Provide required FCRA notices
Conduct individualized assessments when considering criminal history
Follow adverse action procedures if denying opportunities based on background check results

Enforcement and Penalties

Multiple agencies enforce pending charges regulations:

FTC: Enforces FCRA compliance with civil penalties up to $3,500 per violation
CFPB: Oversees larger CRAs and can impose significant monetary penalties
EEOC: Investigates discrimination complaints and can file lawsuits
State Attorneys General: Enforce state-specific background check laws
Private Right of Action: Individuals can sue for FCRA violations, seeking actual damages, statutory damages ($100-$1,000), and attorney fees

Who Must Comply

Covered Entities

Employers: All employers using third-party background checks must comply with FCRA requirements. Those with 15+ employees must also follow EEOC guidance on criminal history use.

Consumer Reporting Agencies: Companies that compile and provide background check reports must follow strict FCRA accuracy and dispute resolution requirements.

Landlords: Property managers and landlords using background checks for tenant screening must comply with FCRA requirements and fair housing laws.

Financial Institutions: Banks, credit unions, and other financial services providers using background checks must follow FCRA and additional sector-specific regulations.

Exemptions

Limited exemptions exist:

Employers conducting purely internal investigations without using third parties
Certain positions involving national security
Some law enforcement positions
Specific statutory exemptions in transportation and other regulated industries

Determining Applicability

To determine if pending charges regulations apply:
1. Are you using a third-party to conduct background checks? (FCRA applies)
2. Do you have 15+ employees? (EEOC guidance applies)
3. What is your industry? (Check for sector-specific regulations)
4. What state(s) do you operate in? (State laws may be more restrictive)
5. What position are you filling? (Safety-sensitive positions may have different rules)

Requirements Breakdown

Specific Obligations

For Employers:
1. Written Disclosure and Authorization: Provide clear, conspicuous disclosure that a background check may be conducted
2. Individualized Assessment: Consider the specific circumstances of any pending charges
3. Pre-Adverse Action Process: Before taking adverse action based on background check results:
– Provide copy of the report
– Provide “Summary of Rights under FCRA”
– Allow reasonable time for response (typically 5 business days)
4. Adverse Action Notice: If proceeding with adverse action, provide notice including:
– CRA contact information
– Statement that CRA didn’t make the decision
– Right to dispute report accuracy
– Right to free copy of report within 60 days

For CRAs:
1. Maintain strict procedures to ensure maximum possible accuracy
2. Respond to disputes within 30 days
3. Delete or correct inaccurate information
4. Provide consumer disclosures upon request

Required Procedures

Verification Procedures:

Confirm pending charges are accurately reported
Verify current status of cases
Update records when charges are dismissed or resolved
Distinguish between arrests, charges filed, and convictions

Documentation Needs

Essential documentation includes:

Written authorization forms
Disclosure documents
Pre-adverse action notices with proof of delivery
Adverse action notices
Records of individualized assessments
Documentation of business necessity for criminal history requirements
Dispute resolution records

Compliance Steps

How to Comply

1. Develop Written Policies
– Create clear policies on how pending charges will be evaluated
– Define job-related criteria for criminal history assessment
– Establish consistent procedures for all applicants

2. Train Decision-Makers
– Educate HR staff and hiring managers on proper procedures
– Emphasize the importance of individualized assessments
– Review documentation requirements

3. Implement Proper Procedures
– Use compliant authorization forms
– Follow pre-adverse and adverse action procedures
– Maintain required documentation

4. Regular Audits
– Review background check procedures quarterly
– Ensure consistency in decision-making
– Update policies as laws change

Implementation Checklist

[ ] Review and update authorization forms for FCRA compliance
[ ] Create templates for pre-adverse and adverse action notices
[ ] Develop criteria for evaluating pending charges by position
[ ] Train all personnel involved in hiring decisions
[ ] Establish documentation retention policies
[ ] Set up systems to track adverse action timelines
[ ] Create dispute resolution procedures
[ ] Review state and local law requirements
[ ] Audit current practices for compliance gaps
[ ] Select FCRA-compliant background check provider

Best Practices

1. Wait for Conviction: When possible, base decisions on convictions rather than pending charges
2. Consider Context: Evaluate the relationship between charges and job requirements
3. Document Reasoning: Keep detailed records of decision-making processes
4. Be Consistent: Apply policies uniformly to avoid discrimination claims
5. Stay Current: Monitor legal developments and update policies accordingly

Common Violations

Mistakes to Avoid

Using Arrests as Automatic Disqualifiers: Blanket policies excluding anyone with pending charges violate EEOC guidance and may constitute discrimination.

Failing to Provide Required Notices: Skipping pre-adverse action notices is one of the most common FCRA violations, even if the final decision wouldn’t change.

Making Decisions Too Quickly: Not allowing adequate response time after pre-adverse action notices can lead to lawsuits.

Inconsistent Application: Applying different standards to different applicants creates discrimination risk.

Case Examples (Anonymized)

Case 1: A retail company automatically rejected all applicants with pending charges. After an EEOC complaint, they paid $600,000 to settle discrimination claims and implemented new individualized assessment procedures.

Case 2: A property management company failed to provide pre-adverse action notices before denying rental applications. A class action lawsuit resulted in $2.8 million in statutory damages and attorney fees.

Case 3: An employer made hiring decisions based on arrest records without considering whether charges were filed or convictions occurred. They faced both EEOC and FCRA violations, ultimately paying over $400,000 in settlements.

How to Fix Issues

If you discover compliance violations:
1. Immediately stop non-compliant practices
2. Consult with legal counsel
3. Review all recent adverse decisions
4. Provide required notices retroactively where possible
5. Implement corrective training
6. Document remedial measures taken
7. Consider voluntary audits to identify other issues

State Variations

Notable State Differences

California: Prohibits employers from asking about arrests that didn’t lead to convictions, with limited exceptions. Pending charges can only be considered if disclosure is required by law.

New York: Under the Fair Chance Act, employers cannot ask about pending charges until after a conditional offer is made. New York City has even stricter requirements.

Illinois: Prohibits using arrest records in employment decisions unless required by law. Pending charges without convictions generally cannot be considered.

Hawaii: Employers cannot consider arrest records without convictions for most positions. Limited exceptions exist for certain sensitive positions.

Stricter Requirements

Several jurisdictions impose additional restrictions:

Ban-the-Box Laws: Over 35 states and 150 cities restrict when criminal history inquiries can be made, often prohibiting questions until after initial screening or conditional offers.

Fair Chance Ordinances: Many localities require:

Detailed written assessments
Specific notice periods
Right to provide evidence of rehabilitation
Consideration of time elapsed since arrest

Multi-State Considerations

For organizations operating across state lines:

Apply the strictest standard company-wide for consistency
Track varying notice requirements by jurisdiction
Consider position-specific policies based on work location
Maintain separate compliance protocols for each state
Regular review of new legislation across all operating locations

FAQ

Q: Can employers consider pending charges when making hiring decisions?
A: It depends on the jurisdiction and position. While federal law doesn’t prohibit considering pending charges, EEOC guidance requires an individualized assessment linking the charge to job requirements. Many states restrict or prohibit using arrest records without convictions.

Q: How long do pending charges appear on background checks?
A: Under FCRA, most criminal records (including pending charges) can be reported for seven years from the date of disposition, entry of judgment, or arrest date. However, this limit doesn’t apply to positions with salaries of $75,000 or more.

Q: What’s the difference between an arrest record and pending charges?
A: An arrest record shows someone was taken into custody, while pending charges indicate formal criminal charges have been filed but not yet resolved. Pending charges suggest prosecutors believed sufficient evidence existed to pursue the case.

Q: Must employers wait for case resolution before making hiring decisions?
A: No federal law requires waiting, but it’s often the best practice. Some state and local laws may require employers to wait or limit consideration of pending charges. Always conduct an individualized assessment if considering pending charges.

Q: Can landlords deny rental applications based on pending charges?
A: Landlords must be cautious, as Fair Housing Act violations can result from discriminatory use of criminal history. While pending charges may be considered in some jurisdictions, landlords should conduct individualized assessments and ensure consistent application of policies.

Conclusion

Navigating pending charges in background checks requires careful attention to federal, state, and local regulations. Organizations must balance their legitimate screening needs with legal requirements and fairness considerations. The key to compliance lies in developing clear policies, conducting individualized assessments, and maintaining consistent documentation practices.

As regulations continue to evolve, staying informed and working with compliant screening partners becomes increasingly important. Regular policy reviews, staff training, and consultation with legal counsel can help prevent costly violations.

Ready to ensure your background checks are compliant and comprehensive? BackgroundChecker.com offers fast, affordable, and FCRA-compliant background screening services designed for modern organizations. Our easy online process delivers clear, accurate reports while our dedicated support team helps you navigate complex compliance requirements. Whether you’re an individual, landlord, small business, or enterprise HR team, we provide the trusted screening solutions you need to make informed decisions. Start your compliant background check process today at BackgroundChecker.com.