Complete Guide To “Failed” Background Checks

Pre-employment background checks are often an important part of the hiring process. But what happens if the results of a background check show unexpected information about the candidate? Let’s take a closer look at what a “failed” background check might mean and how to make informed decisions.

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Depending on the role, a “failed” background check may not automatically disqualify a candidate from the position (although there are exceptions), but it may require a closer look at the candidate’s history to understand why they “failed” the check before making a hiring decision. If you choose not to hire a candidate because of information you obtain during a pre-employment screening, you must proceed in a way that is compliant with applicable federal, state, and local laws. 

Note: As an organization, GoodHire does not use pass or fail language with regard to background checks. However, we know that many people do use these terms and have questions about how to proceed when a background check requires extra consideration.

GoodHire is committed to fair chance hiring and empowering employers to fairly assess their candidates’ history. GoodHire tools like Comments for Context and localized adverse action can help employers implement and scale fairer background screening adjudication processes. 

Common Reasons For “Failing” A Background Check

From criminal convictions and driving violations to falsified employment and education credentials, there are several common reasons that can cause a “failed” background check. Because different types of background checks can return information that may or may not be relevant to the job offer, it is important to carefully consider the results of the screening before making a hiring decision. Here is a closer look at the types of screenings and related results that may require employers further information or an individualized assessment. 

Criminal Record

A criminal background check may reveal felony or misdemeanor convictions, violations or infractions, arrests that didn’t lead to prosecution, acquitted charges, or charges that were dismissed. Pending criminal cases may also show up on a criminal record check. If the candidate has a criminal history, there are several factors that may impact an employer’s hiring decision, including industry-specific regulations and the type of role. However, employers must be sure to comply with federal laws and guidance, as well as applicable fair hiring laws if they decide against hiring a candidate based on the results of their background check.

driving record violations

A motor vehicle report (MVR), or driving record check, searches a candidate’s driving history for traffic violations, license status and type, and vehicle-related criminal charges (like DUIs). A “failed” background check may reveal unsafe driving practices or a suspended license. Checking an MVR can help employers avoid any legal or insurance consequences that could arise should the employee get into an accident on-the-clock or while driving a company-owned vehicle. 

unverified employment history

What happens if a background check can’t verify employment? An employment verification can help confirm that what a candidate puts down on their resume or application is true, including previous job titles and dates of employment. If discrepancies appear, this could mean that the candidate was not truthful about their background, or even that they do not have the necessary experience for the role. 

unable to verify education

Education verification helps employers confirm a candidate’s education, degree, training, or certifications. A “failed” education verification may show discrepancies in the information provided by the candidate, which may include invalid or missing academic credentials. In certain industries, like teaching, a specific degree may be required by law. Running an education verification can help e

positive drug test

Pre-employment drug screenings can help employers test for the presence of certain prescription and illicit drugs. A “failed” drug test means one or more results were positive, indicating the presence of such substances. In these cases, an employer may choose not to hire the candidate, especially in regulated industries or where impairment on the job could create liability (such as driving-related positions). In states where individuals may legally use marijuana for medicinal purposes, employers may wish to consult with their legal counsel before taking adverse action on the basis of a failed drug test. Regulations concerning drug testing and hiring decisions vary from one location to another, so employers should follow applicable state laws and the advice of legal counsel.

Navigating A “Failed” Background Check

FOR EMPLOYERS

Employers must stay compliant with applicable federal, state, or local fair hiring or ban-the-box laws when deciding whether or not to make a job offer. If you are unsure of the laws that apply to your company, industry, or state, it is a good idea to seek legal counsel. Here are suggested next steps for a “failed” background check:

Step 1: Consult Your Company’s Background Check Policy

Generally speaking, it is a good practice for an organization to have a formal background check policy in place. These screening guidelines typically outline what types of screenings may be used in your background checks, including criminal history, motor vehicle records, employment and education verification, and where permitted, credit history. To create a consistent hiring process, it is important to adhere to your background check policy when reviewing background screening reports and considering candidates. 

Step 2: Send Pre-Adverse Action Notice

If you’re considering not hiring an applicant based on the results of a background screening, you must inform the candidate with a pre-adverse action notice. They must also be provided with a copy of their background check as well as a copy of the standard “Summary of Rights” document. This gives the candidate a chance to review the results of the background screening for accuracy and respond to any of an employer’s questions regarding information discovered in the report.

Step 3: Allow the Candidate time to Respond

After you have initiated the adverse action process, you must provide the candidate with sufficient time to respond–typically five to ten business days, depending on your jurisdiction. This gives the candidate an opportunity to discuss or dispute the issues within the background check. Depending on the nature of the circumstances related to the results found on the background check, the candidate may be able to provide a sufficient explanation that eases an employer’s mind. 

Step 4: Make A hiring Decision 

Once the candidate has responded (or the waiting period has elapsed), the next step is to determine whether to continue the hiring process or not. You should ensure you’ve applied your company’s background check policy and followed EEOC guidance to conduct an individualized assessment before making a final decision. If you decide against hiring the candidate, you will need to send a final adverse action notice. 

Step 5: Send A final Adverse Action Notice 

When an employer decides not to hire the candidate based on the results of a background check, federal law mandates that you send a final adverse action notice to the individual. This is also sometimes – incorrectly—called a “failed” background check letter. In the letter, you are required to explain that the findings of the background check are the reasons for the rejection, the candidate’s right to dispute any inaccurate information, and the option for them to request a new copy of the background check within 60 days. If the employer worked with a consumer reporting agency (CRA) to conduct the background check, the notice must include the CRA’s contact information and a statement that the employer (not the agency) made the hiring decision. 

FOR CANDIDATES

A “failed” background check doesn’t mean that you are automatically disqualified from the role. 

If you are concerned that the results of a background check may impact receiving an offer of employment, you should consider reviewing the background check results to see what information was included and filing a dispute if the results are inaccurate.

Some CRAs offer features that enable candidates to provide additional context about their past for more informed decisions. Additionally, employers are legally required to follow certain steps when deciding not to hire a candidate based on the results of their background check to ensure decision making based on accurate information. You may also choose to order a personal background check to review the information an employer may see on a pre-employment screening before submitting a job application to be better prepared during the hiring process.

Legal Considerations For Background Checks

When making hiring decisions informed by background checks, employers should comply with all federal, state, and local laws and regulations. Here are some key legal considerations for employers.

• Fair Credit Reporting Act (FCRA): Employers that partner with a CRA to conduct background checks must adhere to this federal law. FCRA requirements include notifying the candidate in writing of your intent to conduct a background check and receiving consent before proceeding. Additionally, if you choose not to hire a candidate based on the results of a background check, you must follow the adverse action process.
• Equal Employment Opportunity Commission (EEOC): The EEOC enforces Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination based on race, sex, color, religion, or national origin. Employers who consider criminal records in relation to employment are advised to consider EEOC guidance, such as the “nature-time-nature” test. This includes reviewing the nature of the criminal offense, when it occurred, and whether it is pertinent to the job in question.
• Ban-the-box laws: Many states and local jurisdictions have ban-the-box, or fair hiring, laws that impact when employers are permitted to ask about a candidate’s criminal history or conduct a criminal background check during the hiring process, among other stipulations.

Frequently Asked Questions

Get A Background Check With GoodHire

While background checks may sometimes reveal unexpected information about a candidate, the results don’t always demand an immediate disqualification of the candidate. Reviewing a “failed” background check in accordance with your company policy and applicable laws can help you make the most informed hiring decision. 

Working with GoodHire can help streamline the process while also supporting compliance. GoodHire offers 100+ background screening options with built-in compliance tools and workflows to help you easily manage employment screening from start to finish. Ready to get started? Get in touch. 

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