Skip to main content
  • Foundation
  • Executive network
  • CEO Circle
  • SHRM Business
  • Linkage Logo
  • Store
  • Sign In
  • Account
    • My Account
    • Logout
    • Global
    • India
    • MENA
SHRM
About
Book a Speaker
Join Today
Renew
Rejoin Now
Renew
  • Membership
  • Certification
    Certification

    Smiling asian student studying in library with laptop books doing online research for coursework, making notes for essay homework assignment, online education e-learning concept
    Get Certified!

    Be recognized as an HR leader with your SHRM-CP or SHRM-SCP credential.

    • How to Get Certified

      Demonstrate your ability to apply HR principles to real-life situations. No other HR certification compares.

      • How to Get Certified
      • Eligibility Criteria
      • Exam Details and Fees
      • SHRM-CP
      • SHRM-SCP
      • Which Certification is Best for Me
      • Certification FAQs
    • Prepare for the Exam

      Give yourself the best chance to pass your SHRM certification exam.

      • Exam Preparation
      • SHRM BASK
      • SHRM Learning System
      • Instructor-Led Learning
      • Self-Study
      • Study Aids & Add-ons
    • Recertification

      Recertify your SHRM Credentials before your end date!

      • Specialty Credentials
      • Qualifications
  • Topics & Tools
    Topics & Tools

    Stay up to date with workplace news and leverage our vast library of resources to streamline day-to-day HR tasks.

    The white house in washington, dc.
    Executive Order Impact Zone

    Do not abandon, but evaluate and evolve. It is about legal, equal opportunity for all.

    • News & Trends

      Follow breaking news and emerging workplace trends.

      Legal & Compliance

      Stay informed on workplace legal updates and their impacts.

      From the Workplace

      Explore diverse perspectives from your peers on today's workplaces.

      Flagships

      Get curated collections of podcasts, videos, articles, and more produced by SHRM.

    • HR Topics
      • AI in the Workplace
      • Civility at Work
      • Compensation & Benefits
      • Inclusion & Diversity
      • Talent Acquisition
      • Workplace Technology
      • Workplace Violence Prevention
      SEE ALL
      SHRM Research
    • Tools & Samples

      Access member resources and tools to streamline HR tasks.

      • Forms & Checklists
      • How-To Guides
      • Interactive Tools
      • Job Descriptions
      • Policies
      • Toolkits
      SEE ALL
      Ask an Advisor
  • Events & Education
    Events & Education

    SHRM25 in San Diego, June 29 - July 2, 2025
    Join us for SHRM25 in San Diego

    Register for the World’s Largest HR Conference being held on June 29 - July 2, 2025

    • Events
      • SHRM25
      • The AI+HI Project 2025
      • INCLUSION 2025
      • Talent 2026
      • Linkage Institute 2025
      SEE ALL
      Webinars
    • Educational Programs

      Designed and delivered by HR experts to empower you with the knowledge and tools you need to drive lasting change in the workplace.

      Specialty Credentials

      Demonstrate targeted competence and enhance credibility among peers and employers.

      Qualifications

      Gain a deeper understanding and develop critical skills.

    • Team Training & Development

      Customized training programs unique to your organization’s needs.

  • Business Solutions
  • Advocacy
    Advocacy

    Make your voice heard on public policy issues impacting the workplace.

    Advocacy
    SHRM's President & CEO testifies to Congress on "The State of American Education"
    • Policy Areas
      • Workforce Development
      • Workplace Inclusion
      • Workplace Flexibility & Leave
      • Workplace Governance
      • Workplace Health Care
      • Workplace Immigration
      State Affairs

      SHRM advances policy solutions in state legislatures nationwide.

      Global Policy

      SHRM is the go-to for global HR leaders and businesses on workplace matters.

    • Advocacy Team (A-Team)

      SHRM’s A-Team is a key member benefit, giving you the tools, insights, and opportunities to shape workplace policy and drive real impact.

      Take Action

      Urge lawmakers to support policies that create lasting, positive change.

      Advocacy & Legislative Resources

      Access SHRM’s curated policy materials and content.

    • SHRM-Led Coalitions
      • Generation Cares
      • The Section 127 Coalition
      • Learn More & Partner with SHRM Government Affairs
  • Community
    Community

    Woman raising hand in group
    Find a SHRM Chapter

    Easily find a local professional or student chapter in your area.

    • Chapters

      Find local connections from over 607 chapters and state councils and create your personalized HR network.

      SHRM Connect

      Post polls, get crowdsourced answers to your questions and network with other HR professionals online.

      SHRM Northern California

      Join SHRM members in the greater San Francisco Bay area for local events and networking.

    • Membership Councils

      Learn about SHRM's five regional councils and the Membership Advisory Council (MAC).

      • Membership Advisory Council
      • Regional Councils
    • Volunteers

      Learn about volunteer opportunities with SHRM.

      • Volunteer Leader Resource Center
Close
  • Membership
  • Certification
    back
    Certification
    Smiling asian student studying in library with laptop books doing online research for coursework, making notes for essay homework assignment, online education e-learning concept
    Get Certified!

    Be recognized as an HR leader with your SHRM-CP or SHRM-SCP credential.

    • How to Get Certified

      Demonstrate your ability to apply HR principles to real-life situations. No other HR certification compares.

      • How to Get Certified
      • Eligibility Criteria
      • Exam Details and Fees
      • SHRM-CP
      • SHRM-SCP
      • Which Certification is Best for Me
      • Certification FAQs
    • Prepare for the Exam

      Give yourself the best chance to pass your SHRM certification exam.

      • Exam Preparation
      • SHRM BASK
      • SHRM Learning System
      • Instructor-Led Learning
      • Self-Study
      • Study Aids & Add-ons
    • Recertification

      Recertify your SHRM Credentials before your end date!

      • Specialty Credentials
      • Qualifications
  • Topics & Tools
    back
    Topics & Tools

    Stay up to date with workplace news and leverage our vast library of resources to streamline day-to-day HR tasks.

    The white house in washington, dc.
    Executive Order Impact Zone

    Do not abandon, but evaluate and evolve. It is about legal, equal opportunity for all.

    • News & Trends

      Follow breaking news and emerging workplace trends.

      Legal & Compliance

      Stay informed on workplace legal updates and their impacts.

      From the Workplace

      Explore diverse perspectives from your peers on today's workplaces.

      Flagships

      Get curated collections of podcasts, videos, articles, and more produced by SHRM.

    • HR Topics
      • AI in the Workplace
      • Civility at Work
      • Compensation & Benefits
      • Inclusion & Diversity
      • Talent Acquisition
      • Workplace Technology
      • Workplace Violence Prevention
      SEE ALL
      SHRM Research
    • Tools & Samples

      Access member resources and tools to streamline HR tasks.

      • Forms & Checklists
      • How-To Guides
      • Interactive Tools
      • Job Descriptions
      • Policies
      • Toolkits
      SEE ALL
      Ask an Advisor
  • Events & Education
    back
    Events & Education
    SHRM25 in San Diego, June 29 - July 2, 2025
    Join us for SHRM25 in San Diego

    Register for the World’s Largest HR Conference being held on June 29 - July 2, 2025

    • Events
      • SHRM25
      • The AI+HI Project 2025
      • INCLUSION 2025
      • Talent 2026
      • Linkage Institute 2025
      SEE ALL
      Webinars
    • Educational Programs

      Designed and delivered by HR experts to empower you with the knowledge and tools you need to drive lasting change in the workplace.

      Specialty Credentials

      Demonstrate targeted competence and enhance credibility among peers and employers.

      Qualifications

      Gain a deeper understanding and develop critical skills.

    • Team Training & Development

      Customized training programs unique to your organization’s needs.

  • Business Solutions
  • Advocacy
    back
    Advocacy

    Make your voice heard on public policy issues impacting the workplace.

    Advocacy
    SHRM's President & CEO testifies to Congress on "The State of American Education"
    • Policy Areas
      • Workforce Development
      • Workplace Inclusion
      • Workplace Flexibility & Leave
      • Workplace Governance
      • Workplace Health Care
      • Workplace Immigration
      State Affairs

      SHRM advances policy solutions in state legislatures nationwide.

      Global Policy

      SHRM is the go-to for global HR leaders and businesses on workplace matters.

    • Advocacy Team (A-Team)

      SHRM’s A-Team is a key member benefit, giving you the tools, insights, and opportunities to shape workplace policy and drive real impact.

      Take Action

      Urge lawmakers to support policies that create lasting, positive change.

      Advocacy & Legislative Resources

      Access SHRM’s curated policy materials and content.

    • SHRM-Led Coalitions
      • Generation Cares
      • The Section 127 Coalition
      • Learn More & Partner with SHRM Government Affairs
  • Community
    back
    Community
    Woman raising hand in group
    Find a SHRM Chapter

    Easily find a local professional or student chapter in your area.

    • Chapters

      Find local connections from over 607 chapters and state councils and create your personalized HR network.

      SHRM Connect

      Post polls, get crowdsourced answers to your questions and network with other HR professionals online.

      SHRM Northern California

      Join SHRM members in the greater San Francisco Bay area for local events and networking.

    • Membership Councils

      Learn about SHRM's five regional councils and the Membership Advisory Council (MAC).

      • Membership Advisory Council
      • Regional Councils
    • Volunteers

      Learn about volunteer opportunities with SHRM.

      • Volunteer Leader Resource Center
Join Today
Renew
Rejoin Now
Renew
  • Store
    • Global
    • India
    • MENA
  • About
  • Book a Speaker
  • Foundation
  • Executive network
  • CEO Circle
  • SHRM Business
  • Linkage Logo
SHRM
Sign In
  • Account
    • My Account
    • Logout
Close

  1. Topics & Tools
  2. Workplace News & Trends
  3. HR Magazine
  4. Multi-State Employment - Additional Resources
Share
  • Linked In
  • Facebook
  • Twitter
  • Email

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Vivamus convallis sem tellus, vitae egestas felis vestibule ut.


Error message details.

Copy button
Reuse Permissions

Request permission to republish or redistribute SHRM content and materials.


Learn More
Feature

Multi-State Employment - Additional Resources

May 1, 2012 | Stephen Woods



May  CoverThis article provides an expanded view of one of the subjects—background checks—covered in “The Perils of Multistate Employment” in the May 2012 issue of HR Magazine. It also contains a checklist to help multistate employers ensure compliance on a range of topics.

Despite the complexities of lawfully conducting background checks, employers continue to rely on them as an effective screening tool. In a 2010 Society for Human Resource Management survey, 92 percent of responding HR professionals indicated that their companies conduct criminal background checks, and 87 percent indicated that their companies conduct credit background checks on applicants for some or all positions.

The federal Fair Credit Reporting Act (FCRA) and state mini-FCRAs govern most background checks conducted by employers today. They apply to all types of background checks, such as criminal, credit, motor vehicle, employment or professional references—if they are conducted through a fee-paid third party known as a consumer reporting agency.

Penalties and damages. The federal and state laws create a complex set of requirements, with possible costly penalties of $100 to $1,000 for each instance of noncompliance. Multiply those numbers by each applicant, and then add attorneys’ fees and punitive damages, and the dollars add up quickly. For instance, assuming a federal Fair Credit Reporting Act statute of limitations of either two years from the plaintiff’s date of discovery or five years from the date the violation occurred, whichever is earlier, a large, national employer that conducts 5,000 background checks a year could potentially face $10 million in damages alone for the statutory period. A small employer that conducts 500 background checks a year could face $1 million in damages during the same statutory period.

Applicable state law. Don’t think you need to comply with these laws only in the states where you have facilities. The state laws where applicants reside when they apply to the company or when the background checks are run are also in play. For example, if a New Jersey applicant applied to an employer for its New York facility, the employer should have to comply with both states’ background check laws. Compliance with state background check laws is becoming increasingly difficult. Nine states currently prohibit or substantially limit employers’ reliance on credit background checks. At least 36 bills are pending in 19 states to limit employers’ use of credit background checks.

Rise of class actions. Not surprisingly, given the prevalence of background checks and the potential damages available, background check and FCRA class actions have recently been filed against companies like Kmart and Dillard’s department stores, alleging technical violations such as not separating the background check consent form from other consent forms, including an extra sentence in the consent form, and not waiting enough time between the required pre-adverse action letter and the required post-adverse action letter. In March 2011, a national employer settled for $5.9 million after the employer allegedly failed to wait a reasonable amount of time after receiving background check results before taking adverse action. In April 2011, another national employer settled for $2.6 million after it allegedly obtained background checks without first securing applicants’ consent.

EEOC’s position and activities. The U.S. Equal Employment Opportunity Commission (EEOC) issued updated enforcement guidance on the consideration of arrest and conviction records in employment decisions under Title VII on April 25, 2012, which went into effect immediately.The guidance is a summary of the EEOC’s long-held position that employers’ reliance on arrest and conviction records may have a disparate impact on individuals because of their race or national origin, with some significant changes in certain areas near and dear to the hearts of most employers.

The EEOC’s guidance focused on “disparate impact” claims under Title VII, when an employer’s neutral background check policy or practice disproportionately impacts protected individuals, unless the policy is job-related and consistent with business necessity.The EEOC identified two circumstances that will allow employers to establish this business necessity defense.However, only one will likely be useful to most private-sector employees—a targeted screening process, which takes into account: (1) the nature and gravity of the offense; (2) the time that has passed since the offense; and (3) the nature of the job held or sought.

For individuals “screened out” by this targeted screening process, the employer’s process should provide for an opportunity for an individualized assessment, where the employer provides notice to the applicant that it may take adverse action based on the applicant’s criminal record.While the guidelines stopped just short of requiring these individualized assessments, the between-the-lines message is that individualized assessments are now expected.This means that employer or background check service “red-light/green-light” policies of rejecting applicants based solely on a matrix (e.g., any violent felony bars the applicant from employment) must be reexamined.In what is sure to be a controversial one-sentence “best practice,” the commission recommends that employers not ask about convictions on employment applications. Equally controversial is the EEOC’s position that employers’ compliance with state law background check requirements (e.g., that healthcare providers must pass a background check) does not provide a defense to a Title VII discrimination claim.Given the EEOC’s stance on this issue, it will likely be the EEOC’s position that customer/client requirements (e.g., a client requirement that prohibits access to a worksite for anyone with a felony conviction) do not provide a defense to a Title VII discrimination claim.While courts are not required to defer to the EEOC’s guidance, they likely will look to the EEOC’s interpretation for guidance.

In January, Pepsi settled a race discrimination claim with the EEOC for $3.13 million. According to the EEOC, Pepsi’s criminal background check policy—which allegedly denied employment to applicants with arrest records, even if such arrests did not result in convictions, and certain conviction records—was racially discriminatory. In the updated guidance, the EEOC maintains its long-held position that arrest records should not be the sole basis for employment decisions.The guidance does not distinguish between currently pending arrest records and arrest records that did not result in convictions.

Additionally, the EEOC held a public meeting in October 2010 on the discriminatory impact of credit checks, citing studies that show that racial minorities, Hispanics, and women tend to have lower credit scores than non-Hispanic white males.

Instituting a System

There are several components to an effective, lawful background check system for applicants and employees:

  • Assess and determine whether background checks may lawfully be performed. Do this for each job title and position, and consider federal and state law components. For example, employers may not conduct credit checks in Illinois unless the applicant’s or employee’s credit history is a bona fide occupational requirement. Under federal law, employers should not conduct any background check that is not job-related and consistent with business necessity--this analysis has become even more important in light of the EEOC's updated guidance. For instance, a credit background check is fine for a chief financial officer but not for a custodian.
  • Request background checks and communicate results lawfully. The process must be legally compliant. This means using forms and letters that comply with the federal FCRA and state background check laws. The most common legally deficient form is the background check disclosure and authorization form. It must be on its own form, separate from all other subjects; must contain required state notices from 10 states, depending on the type of background check conducted; and must not include a “release from liability” statement. Be sure to separate the disclosure section from the authorization section, and comply with other technical requirements. New York, for instance, requires that employers provide a copy of New York Correction Law Article 23-A when requesting investigative consumer reports. Fourteen states require credit security freeze notices in the pre-adverse action packet.
  • Use the information obtained from a background check lawfully. Based on the EEOC's updated guidance, a targeted screening process--which includes consideration of the criminal record based on the three factors set forth in the guidance and and opportunity for an individualized assessment--should be used before employers take adverse action based on criminal record information. State law may place additional requirements on employers' use of background check information. For example, employers in California may not rely on information about convictions for certain marijuana-related possession offenses if the convictions are more than two years old. In New York, a criminal conviction must have a direct relationship to an applicant’s or employee’s ability to perform the job duties, with six or seven specific factors or questions to be used in assessing the “direct relationship” requirement.

Checklist of Multistate Issues

In addition to the topics discussed in “The Perils of Multistate Employment,” employers operating in multiple states should review and examine the following employment-related elements under the laws of the states where they have facilities and, in some cases, the states from which they accept applicants or employ employees:

Employment applications. Many states require specific language to disclaim employment applications and prevent them from becoming implied contracts of employment. Some states require notices to accompany application questions about criminal convictions, while Philadelphia prohibits all questions about criminal history on the application. Additionally, the EEOC's updated guidance "recommends," but significantly does not require, that employers remove questions regarding criminal convictions from their employment applications. At least one state requires language about lie detector tests.

Electronic signatures. Electronic signatures on documents that employers must provide “in writing,” such as the background check authorization form under the federal FCRA, are governed by the federal Electronic Signatures in Global and National Commerce Act. At least one plaintiffs’ attorney has argued that this act does not apply in the employment context, leaving employers to use state electronic signature laws. State electronic signature laws may place additional requirements on employers’ use of electronic signatures. Given the recent focus in this area by the plaintiffs’ bar, employers should review their online process for compliance with both federal and state laws.

Drug testing requirements and policies. Drug testing statutes generally fall into three groups:

  • Mandatory requirements to conduct drug tests, such as those for issuing pre-test notices, testing procedures, verification procedures and post-test notices.
  • Optional steps to qualify for a workers’ compensation premium discount.
  • Optional steps to deny unemployment compensation to an applicant or employee testing positive for drugs.

Although employers may choose not to take advantage of the financially beneficial optional drug testing provisions, the mandatory provisions in states as diverse as North Carolina and Minnesota are very technical and unforgiving for employer noncompliance.

Protective or restrictive covenants such as noncompetes or nondisclosure agreements. How long an employee may be bound not to disclose confidential information, what it takes for information to be considered confidential and what geographic territory is reasonable for a traditional noncompete all vary from state to state.

Protected characteristics.Some states prohibit discrimination on bases beyond those protected by federal law, including marital status, sexual orientation, gender identity and age younger than 40.

Paid-time-off and vacation restrictions. Some, but not all, states allow “use it or lose it” policies. For states that allow employers not to pay out to employees accrued but unused paid time off or vacation at termination, many require specific, advance and often written notices to employees.

Gun and weapon prohibitions. Some states expressly or implicitly allow employees to bring weapons into employers’ parking lots in their personal vehicles, some states prohibit such weapons, and other states are silent on the topic

The author is a shareholder with Ogletree Deakins in Greenville, S.C., and head of the firm’s Background Check Advice team. He may be reached at stephen.woods@ogletreedeakins.com.


Artificial Intelligence in the Workplace

​An organization run by AI is not a futuristic concept. Such technology is already a part of many workplaces and will continue to shape the labor market and HR. Here's how employers and employees can successfully manage generative AI and other AI-powered systems.



Related Content

Kelly Dobbs Bunting speaks onstage at SHRM24
(opens in a new tab)
News
Why AI+HI Is Essential to Compliance

HR must always include human intelligence and oversight of AI in decision-making in hiring and firing, a legal expert said at SHRM24. She added that HR can ensure compliance by meeting the strictest AI standards, which will be in Colorado’s upcoming AI law.

(opens in a new tab)
News
A 4-Day Workweek? AI-Fueled Efficiencies Could Make It Happen

The proliferation of artificial intelligence in the workplace, and the ensuing expected increase in productivity and efficiency, could help usher in the four-day workweek, some experts predict.

(opens in a new tab)
News
How One Company Uses Digital Tools to Boost Employee Well-Being

Learn how Marsh McLennan successfully boosts staff well-being with digital tools, improving productivity and work satisfaction for more than 20,000 employees.

HR Daily Newsletter

Stay up to date with the latest HR news, trends, and expert advice each business day.

Success title

Success caption

Manage Subscriptions
  • About SHRM
  • Careers at SHRM
  • Press Room
  • Contact SHRM
  • Book a SHRM Executive Speaker
  • Advertise with Us
  • Partner with Us
  • Copyright & Permissions
  • Post a Job
  • Find an HR Job
Follow Us
  • LinkedIn
  • Facebook
  • Twitter
  • Instagram
  • YouTube
  • SHRM Newsletters
  • Ask An Advisor

© 2025 SHRM. All Rights Reserved

SHRM provides content as a service to its readers and members. It does not offer legal advice, and cannot guarantee the accuracy or suitability of its content for a particular purpose. Disclaimer


  1. Privacy Policy

  2. Terms of Use

  3. Accessibility

Join SHRM for Exclusive Access to Member Content

SHRM Members enjoy unlimited access to articles and exclusive member resources.

Already a member?
Free Article
Limit Reached

Get unlimited access to articles and member-exclusive resources.

You've reached the limit of 1 free article this month. Join to access unlimited articles and member-only resources.

Already a member?
Free Article
Exclusive Executive-Level Content

This content is for the SHRM Executive Network and Executive Content Subscription members only.

You've reached the limit of 1 free article this month. Join the Executive Network and enjoy unlimited content.

Already a member?
Free Article
Exclusive Executive-Level Content

This content is for the SHRM Executive Network and Executive Content Subscription members only.

You've reached the limit of 1 free article this month. Join and enjoy unlimited access to SHRM Executive Network Content.

Already a member?
Unlock Your Career with SHRM Membership

Please enjoy this free resource! Join SHRM for unlimited access to exclusive articles and tools.

Already a member?

Your membership is almost expired! Renew today for unlimited access to member content.

Renew now

Your membership has expired. Renew today for unlimited access to member content.

Renew Now

Your Executive Network membership is nearing its expiration. Renew now to maintain access.

Renew Now

Your membership has expired. Renew your Executive Network benefits today.

Renew Now