Navigating the Maze: State-Specific Background Check Laws for Employers

No matter the size of the company a Human Resources professional supports, staying compliant with background screening laws is not just a checkbox. Keeping up with numerous changes is challenging, and what is perfectly legal in one state could be problematic in another state. In a world where remote work blurs geographical lines and the push for fair chance hiring continues to gain serious momentum, one must have a good working knowledge of state-specific nuances. While HR and those supporting employment background screening are not legal experts, knowing the landscape and having strategies in place can help HR be proactive when changes occur. 

Why the Landscape Keeps Shifting Under Our Feet (And Why It Matters to Your Organization)

Several areas tend to contribute to the continuous evolution of employment screening laws:

• "Ban the Box" Ordinances: 
  These laws dictate when an employer can ask about an applicant's criminal history. This may require updates to applications or initial recruiting processes, and ensuring any human resource software or workflows are configured correctly across all hiring locations. What started in a handful of cities has now spread to numerous states, each with its own specific rules about what or to whom the law applies (e.g., organizational size, job types) and when and what you can ask.
• Fair Chance Initiatives: 
  Beyond the simpler "Ban the Box," more places are rolling out broader "Fair Chance" laws. These require employers to take a more individualized look at a candidate's criminal record, considering factors such as the nature of the offense, its relevance to the job, and how much time has passed since it occurred. This approach moves away from disqualifying someone based solely on the existence of a criminal record and adopting a more nuanced approach, a process that benefits organizations by expanding the talent pool.
• Marijuana Legalization: 
  The rapid spread of legal cannabis, both for medicinal and recreational purposes, at the state level has created a tangle of rules around drug testing and how employers can consider past marijuana-related offenses. Some states even prohibit discrimination based on off-duty cannabis use. Marijuana legalization can have a wide-ranging impact on everything from pre-employment drug screening to overall workplace drug policies, and it can be difficult for multistate or nationwide employers to manage marijuana policy across employee populations.
• Data Privacy Regulations: 
  Laws such as the California Consumer Privacy Act (CCPA) and California Privacy Rights Act (CPRA) and others emerging nationwide are directly impacting how personal data must be handled, stored, and protected. While most of these U.S. state privacy laws include exemptions for data regulated under the Fair Credit Reporting Act (FCRA), HR professionals may still have other obligations related to that data under these laws.
• "Clean Slate" Laws: 
  A growing number of states have enacted "Clean Slate" legislation, a trend that is expected to continue. These laws automatically expunge or seal criminal records that meet certain criteria listed in the law. These criminal records should no longer be accessible in public records and cannot be asked about by employers or considered in hiring decisions.  
• Industry-Specific Regulations: 

  It is also important to note that certain industries (e.g., healthcare, finance, transportation) often have their own unique federal and/or state background check requirements due to the sensitive nature of their work.

Where Background Check Laws Can Really Deviate (and Why It Is Important)

1. Timing of Inquiry ("Ban the Box"):
   The Nuance: Some states prohibit asking about criminal history until after a conditional offer has been made, while others allow an employer to ask for certain information before a conditional offer but may have other limitations. 
   The Impact: Improper questions on applications or during interviews could lead to lawsuits and related legal fees. It can be tricky for multistate employers where one state allows criminal history questions prior to a conditional offer, but another does not. Consider how you would approach that scenario.
2. What Information Can Be Considered:
   The Nuance: Not all criminal history information can be considered when making employment decisions. State laws frequently restrict the use of certain data, such as arrests that do not result in a conviction, but where there is not a pending court case (but further consider: some states or other jurisdictions may not permit pending court cases). Other states do not allow the use of records that have been expunged or sealed, while other states may not allow the consideration of convictions beyond a specific look-back period. Furthermore, the permissibility of credit checks for employment varies significantly by state and the nature of the position.
   The Impact: Using information that is legally prohibited can expose your organization to substantial legal risk and liability for discriminatory practices. A clear understanding of these reporting and use limitations is vital to ensure your background screening policy supports fair and compliant hiring.
3. Adverse Action Procedures:
   The Nuance: While the Fair Credit Reporting Act (FCRA) sets federal-level requirements for adverse action, states and local jurisdictions have and can add their own specific requirements that must be followed in addition to the FCRA requirements. This could mean longer waiting periods for candidates to respond or specific language, notices, or forms that must be included with your letters.
   The Impact: Errors in the adverse action process are a magnet for litigation. Organizations must be precise in following all federal, state, and local requirements.
4. Drug Testing Policies (Especially Cannabis):
   The Nuance: States with legal recreational or medical marijuana may have laws prohibiting adverse action for off-duty use, requiring impairment-based testing, or even limiting pre-employment testing for cannabis.
   The Impact: If your drug testing policies are outdated, you could face legal challenges, especially in states with employee-friendly protections regarding cannabis use. 

Actionable Steps for HR Professionals

Human Resources and others responsible for background screening compliance must take a proactive approach to their programs to remain vigilant as screening laws and regulations continue to shift. AccuSourceHR Workforce Solutions suggests the following: 

1. Partner with a Reputable Background Screening Provider: As a trusted Consumer Reporting Agency (CRA), AccuSourceHR acts as your first line of defense. We can help guide you on resources for your screening program and assist in providing a scalable, centralized solution for complex, multi-state operations.
2. Conduct Regular Compliance Audits:  Create a cadence to periodically review your hiring policies, job applications, offer letters, adverse action templates, and any other relevant templates and processes. Ensure that everything aligns with the latest federal, state, and local regulations.
3. Train Your Hiring Managers and HR Staff: Ensure everyone involved in the hiring process understands the employer-side of background screening compliance, starting from what can be included in the interview process (“ban the box”) to how to handle adverse action letters properly. This is vital for consistency across all levels of your organization.
4. Embrace a "Fair Chance" Mindset: Even if your state currently does not have specific "ban the box" or fair chance laws, consider an early adoption of a “fair chance” mindset. Taking an individualized approach to a candidate's criminal history is good practice and aligns with EEOC guidance on criminal records. This strategy also helps widen your talent acquisition net.
5. Develop Location-Specific Policies (Where Needed): If your organization hires across multiple states, you will likely need multiple policies or at minimum, more comprehensive policies, especially taking into consideration varying laws regarding criminal history and marijuana. A well-planned HR framework, supported by localized data and compliance monitoring from your background screening partner, can help inform decision-making for each new hire's location.
6. Stay Informed and Engaged: Subscribe to legal alerts, HR compliance newsletters, and make time for webinars on background screening laws. Industry associations are often great sources for updates and resources. For comprehensive guidance on how the FCRA applies to employers using background checks, you can directly access resources from the Federal Trade Commission (FTC): Background Checks: What Employers Need to Know.
   

The AccuSourceHR Advantage

Navigating this maze of background check laws doesn't have to be something you tackle alone. At AccuSourceHR, we're dedicated to providing comprehensive, compliant, and cutting-edge employment background screening solutions. Our commitment to staying on top of all these regulatory changes means you can focus on what you do best, find the right talent, and be confident that your screening practices are solid.

The landscape will undoubtedly continue to evolve, but with the right partnership and a proactive approach, your HR team can navigate these complexities with confidence, ensuring fair hiring practices while always protecting your organization.

What's the trickiest state-specific background check rule you've had to navigate recently? We'd love to hear your experiences! Share your thoughts and insights by commenting on this blog post on LinkedIn!

Want to dive even deeper into the latest compliance changes?

Join us for our Mid-Year Compliance Webinar on July 30, 2025, at 10:00 AM PST. We will be covering several of the topics mentioned above and more, providing the essential updates you need to keep your organization informed and your hiring process compliant.