Misdemeanors on Background Checks: Impact on Employment

Introduction

Misdemeanors represent the most common category of criminal offenses in the United States, encompassing crimes less serious than felonies but more significant than infractions. When it comes to employment screening, understanding how misdemeanors appear on background checks and their potential impact on hiring decisions is crucial for both employers and job seekers.

This comprehensive guide covers the legal framework surrounding misdemeanors in background screening, applicable regulations, and compliance requirements under the Fair Credit Reporting Act (FCRA) and various state laws. The guidance applies to employers of all sizes, human resources professionals, staffing agencies, and background screening companies conducting employment-related checks.

Compliance matters significantly because mishandling misdemeanor information during the hiring process can result in discrimination lawsuits, EEOC violations, state regulatory penalties, and substantial financial liability. With an estimated 77 million Americans having some form of criminal record, proper handling of misdemeanor information directly impacts millions of job seekers while protecting employers from legal exposure.

Legal Overview

Key Federal Provisions

The Fair Credit Reporting Act (FCRA) governs how misdemeanors are reported and used in employment decisions. Under FCRA Section 605, most misdemeanor convictions can be reported indefinitely, unlike arrests without conviction which generally cannot be reported after seven years. However, completed misdemeanor cases (where charges were dismissed, resulted in acquittal, or involved successful completion of diversion programs) are subject to the seven-year reporting limitation.

Equal Employment Opportunity Commission (EEOC) guidance requires employers to consider the nature of the offense, time elapsed since the conviction, and relevance to the job position. The EEOC’s enforcement guidance specifically addresses how blanket exclusions based on misdemeanor convictions may constitute disparate impact discrimination.

Rights and Obligations

Employer Obligations:

Provide proper FCRA disclosures and obtain written consent before conducting background checks
Follow adverse action procedures if considering denial based on misdemeanor information
Conduct individualized assessments rather than applying blanket exclusion policies
Maintain confidentiality of background check information

Individual Rights:

Right to receive copies of background check reports
Opportunity to dispute inaccurate information
Right to provide additional context or evidence of rehabilitation
Protection from discriminatory practices based solely on criminal history

Enforcement and Penalties

Federal enforcement occurs through multiple agencies. The Federal Trade Commission (FTC) enforces FCRA compliance, with penalties up to $3,500 per violation for willful non-compliance. The EEOC addresses discrimination claims, with remedies including back pay, reinstatement, and compensatory damages.

Private lawsuits under FCRA can result in actual damages, statutory damages of $100-$1,000 per violation, and attorney fees. Class action settlements have reached millions of dollars, making compliance essential for organizational risk management.

Who Must Comply

Covered Entities

FCRA requirements apply to all employers using third-party background screening services, regardless of company size. This includes:

Private employers
Staffing and temporary agencies
Government contractors
Non-profit organizations
Educational institutions conducting employee screenings

Direct employer investigations (conducted without third-party screening companies) fall under EEOC guidance but have fewer FCRA procedural requirements.

Exemptions

Limited exemptions exist for:

Positions with salaries exceeding $75,000 annually (exempts seven-year reporting limits)
Federally regulated positions requiring specific criminal history reviews
Law enforcement and security positions with statutory screening requirements

Determining Applicability

Employers must assess whether their screening practices trigger FCRA requirements. Using any third-party service for criminal background checks, even if supplemented with internal research, generally requires full FCRA compliance. The key factor is whether a “consumer reporting agency” provides information for employment decisions.

Requirements Breakdown

Specific Obligations

Pre-Screening Requirements:

Provide clear, standalone disclosure document informing applicants of background check intent
Obtain signed authorization form with compliant language
Ensure applications don’t request criminal history information in states with “ban the box” laws

During Screening:

Use only FCRA-compliant background screening providers
Ensure reported misdemeanor information meets accuracy and completeness standards
Verify information relates to the actual applicant through proper identification procedures

Post-Screening Procedures:

Conduct individualized assessments considering offense nature, time elapsed, and job relevance
Follow proper adverse action procedures if considering denial
Provide pre-adverse action notice with copy of background report and FCRA rights summary
Allow reasonable time for applicant response before final adverse action

Required Procedures

The adverse action process requires specific timing and documentation:

1. Pre-Adverse Action: Provide background report copy, FCRA rights summary, and reasonable time to respond (typically 5-7 business days)

2. Final Adverse Action: Send formal adverse action notice including background screening company contact information, statement that the company didn’t make the adverse decision, and notice of rights to dispute information

3. Documentation: Maintain records of individualized assessment factors, business justification for decisions, and all FCRA-required notices

Documentation Needs

Employers must document:

Signed authorization forms
Copies of all FCRA notices provided
Individualized assessment determinations
Business justification for adverse decisions
Applicant communications and responses
Retention periods (typically 3-7 years depending on state requirements)

Compliance Steps

Implementation Checklist

Policy Development:

[ ] Create written background check policy addressing misdemeanor evaluation
[ ] Develop individualized assessment criteria and procedures
[ ] Train HR staff on FCRA requirements and EEOC guidance
[ ] Review state-specific requirements for operations locations

Vendor Management:

[ ] Verify background screening provider FCRA compliance
[ ] Ensure reporting practices meet legal requirements
[ ] Establish clear service level agreements and accuracy standards
[ ] Implement quality assurance procedures

Process Implementation:

[ ] Design compliant disclosure and authorization forms
[ ] Create adverse action notice templates and procedures
[ ] Establish applicant communication and response tracking systems
[ ] Develop record retention and confidentiality protocols

Best Practices

Risk Assessment Approach:
Consider factors such as:

Nature and gravity of offense
Time elapsed since conviction
Number of offenses
Job relevance and responsibilities
Evidence of rehabilitation
Employment history since conviction

Consistent Application:
Apply screening criteria uniformly across similar positions while allowing for individualized assessments. Document decision-making rationale to demonstrate non-discriminatory practices.

Ongoing Monitoring:
Regularly review policies for legal updates, analyze decision patterns for potential disparate impact, and maintain current training for staff involved in hiring decisions.

Common Violations

Frequent Mistakes

Inadequate Disclosures:
Many employers fail to provide proper standalone disclosure documents, instead burying background check notices in lengthy application materials. FCRA requires clear, conspicuous disclosures separate from other documents.

Premature Adverse Actions:
Rushing the California Background without providing adequate time for applicant response violates FCRA requirements. Employers must allow reasonable opportunity for explanation or dispute before final decisions.

Blanket Exclusion Policies:
Automatically disqualifying applicants with any misdemeanor conviction, regardless of job relevance or other factors, creates significant EEOC liability exposure.

Case Examples

Example 1: A retail chain automatically rejected all applicants with misdemeanor theft convictions, including a cashier applicant with a 15-year-old shoplifting offense. The EEOC found disparate impact discrimination, resulting in a $500,000 settlement and policy changes requiring individualized assessments.

Example 2: A healthcare staffing company failed to provide proper adverse action notices when rejecting candidates based on misdemeanor drug possession convictions. A class action lawsuit resulted in $2.3 million in damages and mandated compliance training.

How to Fix Issues

Immediate Steps:

Audit current practices against FCRA requirements
Review and update disclosure and authorization forms
Train staff on proper adverse action procedures
Implement individualized assessment protocols

Long-term Solutions:

Regular policy reviews and updates
Ongoing compliance training programs
Vendor management and oversight procedures
Legal consultation for complex situations

State Variations

Notable State Differences

California:
The Fair Employment and Housing Act provides additional protections, requiring employers to consider rehabilitation evidence and limiting consideration of certain misdemeanors. Salary history bans also affect background check timing.

New York:
Article 23-A requires consideration of factors including offense relationship to employment, time elapsed, and rehabilitation evidence. New York City’s Fair Chance Act imposes additional procedural requirements.

Pennsylvania:
Limits consideration of misdemeanor convictions to those directly related to job suitability, with specific industry exceptions for healthcare and education positions.

Stricter Requirements

Several states impose additional obligations:

Ban the box laws in 35+ states restricting criminal history inquiries
Salary history bans affecting background check timing
Industry-specific requirements for healthcare, financial services, and education
Rehabilitation consideration mandates requiring assessment of post-conviction conduct

Multi-state Considerations

Employers operating across state lines must:

Identify applicable laws in each jurisdiction
Develop compliant procedures meeting the strictest requirements
Train staff on state-specific variations
Maintain separate documentation as required

FAQ

Q: How long do misdemeanors stay on background checks?

A: Under federal law, misdemeanor convictions can be reported indefinitely. However, many states impose shorter reporting periods (typically 7-10 years), and some background screening companies voluntarily limit reporting timeframes. Arrests without conviction generally cannot be reported after seven years under FCRA.

Q: Can employers automatically disqualify applicants with misdemeanor convictions?

A: No. EEOC guidance requires individualized assessments considering the offense nature, time elapsed, and job relevance. Blanket exclusion policies may constitute illegal disparate impact discrimination and violate state fair employment laws.

Q: What’s the difference between arrests and convictions on background checks?

A: Convictions carry significantly more legal weight than arrests. Many states prohibit or limit consideration of arrests without conviction, while conviction information is generally permissible (subject to individualized assessment requirements). Always verify the disposition of any criminal charges.

Q: Do employers need to provide background check results to applicants?

A: If using third-party background screening services, employers must provide report copies before taking adverse action under FCRA. Some states require disclosure regardless of the hiring decision. Direct employer investigations may have different requirements.

Q: Can misdemeanor information be removed from background checks?

A: Removal depends on state expungement laws and the specific offense. Successfully expunged or sealed records generally shouldn’t appear on background checks, but reporting practices vary. Individuals should verify record status and dispute any inaccurate information with screening companies.

Conclusion

Understanding misdemeanors on background checks requires navigating complex federal and state requirements while balancing legitimate business needs with fair employment practices. Employers must implement FCRA-compliant procedures, conduct individualized assessments, and stay current with evolving legal requirements across multiple jurisdictions.

The key to successful compliance lies in developing comprehensive policies, training staff thoroughly, working with qualified screening providers, and maintaining detailed documentation of all decisions. Regular policy reviews and legal updates help ensure ongoing compliance while protecting both organizational interests and individual rights.

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This article provides educational information and should not be construed as legal advice. Consult qualified legal counsel for specific situations and compliance questions.