Background Checks Are Not as Simple as They Appear
Background checks feel like a straightforward final step in hiring: verify that the candidate is who they say they are, confirm there are no disqualifying issues, and proceed. In practice, the legal framework governing background checks in the United States is considerably more complex than most employers realize. Getting background checks wrong is not a minor compliance risk. The Fair Credit Reporting Act (FCRA), state laws, and local ordinances together create a framework where procedural errors, even well-intentioned ones, can expose employers to significant legal liability.
Types of Background Checks
Background checks is an umbrella term covering several distinct types: criminal record checks; employment verification; education verification; credit checks (more regulated and generally limited to specific roles); identity verification; motor vehicle record checks; professional license verification; sex offender registry checks; and drug screening.
The FCRA Framework
If you use a third-party service to conduct background checks, the Fair Credit Reporting Act applies. The FCRA requires steps in sequence: Disclosure (provide the candidate a clear disclosure that a consumer report may be obtained, as a standalone document); Authorization (written authorization from the candidate); Pre-adverse action notice (if the report may result in an adverse action, send the candidate a pre-adverse action notice with a copy of the report and their rights summary); Waiting period (minimum five business days for the candidate to dispute); and Adverse action notice if you proceed.
Skipping or combining steps in this sequence is the most common source of FCRA litigation.
Ban-the-Box Laws
Ban-the-box laws prohibit employers from asking about criminal history on job applications. As of 2026, more than 35 states and 150 cities and counties have enacted some version of this legislation. The safest approach for most multi-state employers is to remove criminal history questions from all applications and conduct checks only post-offer, which complies with the most restrictive jurisdictions.
Credit Checks: The Most Restricted Check Type
Credit history checks are appropriate for a narrow category of roles involving fiduciary responsibility or significant control over financial assets. Eleven states plus Washington D.C. restrict or prohibit employer use of credit history in hiring decisions for most roles. Even where credit checks are permitted, the EEOC has noted they can have disparate impact on protected classes and should be used only where job-related necessity can be demonstrated.
Drug Testing and the Marijuana Problem
Drug testing in hiring has become increasingly complicated as marijuana legalization has expanded. As of 2026, marijuana is legal for recreational use in nearly half of US states, and many of those states have enacted protections for employees who test positive for off-duty marijuana use. Employers in states with these protections cannot categorically reject candidates based on positive marijuana tests for most roles. For employers running drug screens, legal review of jurisdiction-specific requirements is essential before making any adverse employment decision based on a positive marijuana result.