Navigating the Changing Landscape of Background Check Laws in 2024
As we near the end of 2024, employers must be well-versed in the significant changes in background check regulations. These changes can profoundly impact hiring practices and compliance, underscoring the importance of HR professionals being proactive and staying ahead of the curve.
In this blog, we’ll explore the federal regulations and changes impacting background checks, giving employers the knowledge they need to prepare thoroughly. We’ll also highlight how APS Payroll’s partnership with Verified First helps ensure smooth and compliant background screening.
Federal Regulations and Changes Affecting Background Checks
Non-Compete Clauses
In April, the Federal Trade Commission (FTC) announced a ban on non-compete agreements, a move aimed at promoting fair competition and employee mobility. Non-compete clauses have historically restricted employees from seeking work in similar industries or companies, often limiting their career prospects and mobility.
This restriction has been particularly challenging for professionals in specialized fields where opportunities may be scarce. By lifting these restrictions, the FTC aims to foster a more dynamic and competitive job market where employees can move freely and seek positions that best match their skills and career aspirations.
The impact of this ruling is significant, as approximately one in five Americans were subject to non-compete agreements. With these agreements now banned, employees have greater flexibility to pursue opportunities that were previously off-limits, enhancing their career growth and job satisfaction. For employers, this change necessitates a review of existing employment contracts for compliance with the new regulations.
Non-compliance could lead to legal issues and the loss of top talent. However, it also presents an opportunity to attract top talent previously constrained by non-compete clauses. Companies may need to adopt new strategies for employee retention and engagement in this more competitive landscape.
Source: Verified First
Salary History Ban
Asking about salary history during the hiring process has been a contentious issue due to its potential for perpetuating wage discrimination. In January 2024, the Biden Administration proposed a rule prohibiting contractors and subcontractors from seeking salary history information from job applicants.
This rule aims to prevent discrimination based on past compensation, which can disproportionately affect women and minority groups who have historically been paid less. By eliminating the salary history question, the new rule encourages employers to set compensation based on the qualifications and skills of the candidate rather than their previous earnings.
The salary history ban promotes fairer hiring practices and helps to close the wage gap. Employers can now focus on assessing a candidate’s experience, skills, and potential value to the organization, leading to more equitable job offers.
Additionally, this change aligns with broader efforts to ensure equal pay for equal work, regardless of an employee’s gender, race, or background. For HR professionals, this means updating application forms and interview guidelines to comply with the new rule and training hiring managers to assess candidates based on merit rather than past compensation.
Source: USA Fact
The Word on Weed
Marijuana legislation is evolving rapidly, with several states loosening restrictions on cannabis use for medical and recreational purposes. However, cannabis remains illegal under federal law, creating a complex legal landscape for employers. The Biden Administration has proposed removing marijuana from the list of most dangerous substances, which would significantly change federal drug policies. This proposed shift reflects growing public support for cannabis legalization and aims to reduce the legal and social consequences associated with its use.
For employers, these changes necessitate reevaluating drug screening policies so they comply with state and federal laws. This reevaluation includes considering the impact of cannabis use on workplace safety and productivity, particularly in industries where impairment could pose significant risks.
Employers should stay informed about legislative developments and adjust their drug policies accordingly, potentially incorporating more nuanced approaches such as impairment testing rather than blanket bans on cannabis use. Additionally, clear communication with employees about the company’s stance on cannabis use and the rationale behind any policy changes is crucial for maintaining trust and compliance.
Source: Forbes
AI in Hiring Regulations
The use of artificial intelligence (AI) in hiring decisions is under increasing scrutiny to prevent bias and promote fair hiring practices. On October 30, 2023, President Biden issued an Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence, which mandates guidelines for federal contractors to avoid discrimination in AI hiring tools.
This executive order addresses concerns that AI algorithms could unintentionally favor or discriminate against applicants based on factors such as race, gender, or age, potentially perpetuating biases present in historical hiring data. For instance, an AI tool might favor candidates from certain universities or with specific job titles, leading to a need for more diversity in the hiring process.
Employers using AI for hiring must closely monitor and regularly audit their AI tools to be transparent, fair, and free from bias. These measures include implementing measures to test and validate AI algorithms, seeking feedback from diverse groups of candidates, and making adjustments as necessary.
The executive order also highlights the importance of human oversight in AI-driven hiring processes so that employment decisions made by AI tools are fair and equitable. By proactively addressing these concerns, employers can leverage AI to enhance their hiring processes while maintaining a commitment to diversity and inclusion.
Source: PGC Group
How Employers Can Prepare for These Changes
Employers must take proactive steps to adapt to these regulatory changes:
- Review Non-Compete Agreements: Evaluate existing non-compete clauses and revise them to comply with the new FTC ruling. This review may involve consulting legal advice from experts to ensure all agreements are updated accordingly.
- Exclude Salary History from Job Applications: To promote transparency and equal pay, remove salary history questions from applications and interviews. Implement training for hiring managers to focus on candidate qualifications rather than past compensation.
- Update Drug Screening Policies: Companies should proactively update their drug screening policies to align with evolving cannabis regulations. Regular reviews and updates are essential to ensure compliance with current federal and state laws and demonstrate a commitment to responsible and proactive management.
- Monitor AI Implementations: Regularly review AI tools used in hiring to confirm they are free from bias and discrimination. Conduct regular audits and seek feedback from candidates and employees.
- Partner with Trusted Background Screening Providers: Collaborate with certified background screening partners, like Verified First, to maintain compliance and efficiency in the hiring process. Check that your screening provider is up-to-date with the latest regulations and best practices.
The Role of APS Payroll and Verified First
APS Payroll has partnered with Verified First to offer integrated background screening solutions to our clients. This partnership provides employers with access to reliable and compliant criminal background checks, helping them navigate the complexities of new regulations.
Benefits of the APS Payroll and Verified First Partnership
- Streamlined Background Checks: Our integration with Verified First simplifies the background check process, allowing quick and efficient screenings. This approach reduces the time and effort required from HR teams, enabling them to focus on other critical tasks.
- Compliance Assurance: Verified First keeps up with the latest legal developments so that your background reports comply with current laws enforced. This reduces non-compliance risk and potential legal issues with entities like the Equal Employment Opportunity Commission (EEOC).
- Enhanced Candidate Experience: A seamless screening process helps maintain a positive candidate experience, reflecting well on your company’s reputation. A positive experience can improve your company’s brand and assist in attracting top talent.
For more information about our partnership, you can visit APS Partners with Verified First and Verified First Partnership.
Employers must take proactive steps to adapt to these regulatory changes:
- Review Non-Compete Agreements: Evaluate existing non-compete clauses and revise them to comply with the new FTC ruling. This review may involve consulting legal advice from experts to ensure all agreements are updated accordingly.
- Exclude Salary History from Job Applications: To promote transparency and equal pay, remove salary history questions from applications and interviews. Implement training for hiring managers to focus on candidate qualifications rather than past compensation.
- Update Drug Screening Policies: Companies should proactively update their drug screening policies to align with evolving cannabis regulations. Regular reviews and updates are essential to ensure compliance with current federal and state laws and demonstrate a commitment to responsible and proactive management.
- Monitor AI Implementations: Regularly review AI tools used in hiring to confirm they are free from bias and discrimination. Conduct regular audits and seek feedback from candidates and employees.
- Partner with Trusted Background Screening Providers: Collaborate with certified background screening partners, like Verified First, to maintain compliance and efficiency in the hiring process. Check that your screening provider is up-to-date with the latest regulations and best practices.
Maintaining Compliance with Background Check Laws
Employers must stay compliant with evolving background check regulations. They can ensure a smooth, compliant employment screening and hiring process by understanding and preparing for these changes and leveraging the partnership between APS and Verified First.
For more detailed insights on employer background check reports, refer to the Verified First blog and additional resources from FTC, Forbes, USA Fact, and PGC Group.
By staying informed and utilizing trusted partners, employers can confidently navigate the changing landscape of background check laws.
