Introduction to Nevada Background Check Laws
Nevada backgrounds check laws are important for both job seekers and employers. For employees or a potential hire, a background check can be a simple way to clarify the accuracy of information on an application or résumé. A hiring decision can be made more easily. The same goes for an employer seeking a background check on a borrower, tenant or business contact. In these instances a background check can be a great tool for evading unanticipated loss. As with any tool, checks in Nevada are limited by law. Employers must follow Nevada background check laws. These rules set standards for application, usage, confidentiality, safeguarding, record keeping, and associated fees. Nevada also creates crimes and penalties for misuse of a background check, such as if the applicant is not hired, not interviewed , or terminated for protected classes as identified in the Nevada Equal Opportunity in Employment Act.
The Federal Fair Credit Reporting Act (FCRA) also provides protections for all Nevada job seekers and other individuals when a background check is done. Because these background checks are managed by third party agencies, they are deemed "consumer reports" under the Fair Credit Reporting Act. The Fair Credit Reporting Act (FCRA) applies to background checks and other consumer reports about Nevada residents processed by third party agencies. The FCRA protects individuals from inaccurate or erroneous information and from the misuse or mishandling of the report once obtained.
This article gives a broad overview of Nevada and federal laws on background reports. It will also highlight the potential penalties for violations of Nevada law when background checks are misused. The FCRA is not discussed in detail in this article. Many of the rights and obligations of employers under federal law are similar to those under Nevada state law.
Who Needs Background Checks in the State of Nevada?
Employment checks must be conducted for teachers and school district employees, private or public, who have direct contact with a child. Teaching professionals in any grade or academic subject are affected by this law and include teachers, administrators, coordinators, principals, vice-principals and librarians. Private sector owners of schools must also follow this law. Health care organizations and facilities that receive payment from federal Medicare and Medicaid programs must perform employee background checks before hiring. This law also covers all persons who contract for commercial services such as laundry, window cleaning or security functions. This requirement affects paid and unpaid staff members such as volunteers, board members, administrators and interns. The state of Nevada requires that all persons employed by the Gaming Control Board or the State Gaming Commission possess a valid license, registration or finding of suitability. These employees are to undergo background checks at the time of employment and on a regular basis after their employment to maintain their license, registration or finding of suitability. Public service drivers, school bus drivers and transit bus operators are required by law to pass background checks before they are permitted to work in their capacity.
Legal Process for Running Background Checks
The legal process of conducting background checks involves a series of procedures that are specifically tailored according to Nevada state laws. Notably, employers must comply with both the federal Fair Credit Reporting Act ("FCRA") and the Nevada Revised Statutes ("NRS").
According to the Fair Credit Reporting Act, employees and applicants for employment must give their consent in order for an employer to conduct a background check. Because of this, employers are required to address this privacy concern. Even where permission is granted, there are still guidelines and regulations that need to be followed in order to guarantee that a person’s privacy is not jeopardized in any way.
Employers should ensure that the consent notice includes the following information: Failure by the employer to adhere to the required provisions of the Fair Credit Reporting Act may subject them to civil liability. For instance, among the penalties for violating the Fair Credit Reporting Act, an employee is entitled to recover damages for "willful" noncompliance. Furthermore, the employee may obtain attorneys’ fees and costs for reasonable expectations.
In addition to the aforementioned FCRA requirements, the law in Nevada, NRS 613.150, specifically requires reaction from prospective employers when conducting background checks.
Prospective employers in Nevada must notify the applicant or employee to be evaluated that a consumer report is being used in their hiring process. Moreover, Nevada law imposes a duty on an employer to disclose the nature and type of background report that will be obtained by the employer and used as part of the hiring process. After an employer has decided not to hire a job applicant based on the results of the background check, it must notify the job applicant so that the applicant will have an opportunity to dispute the report. The disclosure must explain to the applicant that the decision was based in whole or in part upon the information in a consumer report. The job applicant must be provided the name and address of the consumer reporting agency that supplied the report. Further, the applicant should be advised that the consumer reporting agency did not make the decision about the employment action and cannot supply specific reasons why the action was taken. If requested, the consumer reporting agency must furnish a copy of the report to the consumer.
An employer in Nevada should not be "unfairly selective in which applicants to screen for criminal history." For instance, if an employer is performing background checks on all employees, it should not single out some employees for criminal records screening without reason. Exempted from this provision are positions that require unescorted access to areas not accessible to the public or involve advocacy of criminal activity.
Restrictions and Limitations
Nevada law imposes a number of restrictions and limitations on background checks. Notably, it is against the law for employers to restrict employment prospects over credit history unless the employer has a "suspected relationship" with the applicant. Employers may assume a "suspected relationship" exists if the applicant is applying for a position dealing with money, securities, credit or debit cards, personal financial information or personal identifying information. This provision does not apply to publicly held companies or to the extent necessary to comply with federal or state law.
Employers must also refrain from considering criminal records of an employee that have been expunged or sealed. Under Nevada law, an expungement "releases a person from all penalties and disabilities resulting from the offense." Similarly, after a record has been sealed, that record cannot be considered for employment purposes. Anyone who knowingly compels or attempts to compel any employer to make such an inquiry is guilty of a misdemeanor.
Recent Developments and Updates
Employers should also be aware that in Assembly Bill 325, the Nevada legislature has enacted a new law that opens the door for employees to seek a legal remedy for violations of Nevada’s background check laws. More particularly, employers who violate the laws by failing to provide notice when a consumer report is obtained or failing to provide certain information in an adverse action notification may be liable to the employee for an amount not to exceed actual damages. Notably , this is the first time the legislature has created a civil remedy for employees if their employer violates the laws. Employers should therefore be cognizant of this potential new liability and take precautions to ensure that they comply with the warning requirements and notice requirements if they take adverse action based on information in a background report. Finally, it should be noted that while Nevada law requires that employees be given notice that the employer is obtaining an investigative consumer report, the Federal Trade Commission has warned that a state-law only notice will not necessarily comply with the federal Fair Credit Reporting Act (FCRA). The FCRA outlines specific requirements for the written disclosure and authorization that must be given prior to obtaining an investigative consumer report.
Penalties for Mishandling Background Checks
Failure to comply with Nevada’s background check laws can result in significant consequences for employers. These may include:
- Legal Action: Affected individuals have the right to file a complaint with the Nevada Labor Commissioner if they believe that their employer ran an illegal background check or took adverse action based on an inaccurate background check. The Labor Commissioner has the authority to conduct investigations, issue remedial orders, and impose fines on responsible employers.
- Lawsuits: Individuals who have suffered from a wrongful hiring decision based on inaccurate information in their background checks may file lawsuits against the employers responsible for these losses. This can be in addition to the actions taken by the Labor Commissioner.
- Fines: Employers who intentionally violate background check laws can face substantial fines ranging from up to $25,000 for unlawful discrimination, and up to $500 to $10,000 for negligent violations such as failure to obtain permission, failure to provide clear statements, and failure to follow the proper process when seeking a criminal background check.
- Reputational Damage: Lawsuits and fines can lead to negative consequences in terms of public perception. Customers, suppliers, and current employees may become hesitant to work with a company found to be in violation of Nevada’s background check laws.
- Business Disruption: Responding to complaints, lawsuits, and regulatory inquiries can be an expensive and time-consuming process. Employers found in violation may face disruptions from a variety of governmental agencies and investigations.
Implications for Applicants
As important as background checks are to employers, they can be equally significant to the job seeker. All of the accuracy issues that affect employers—misreporting of information, omission of data, noncompliance with both federal and state laws—may affect job seekers as well. Fortunately, job seekers have some rights in these circumstances, and in some cases may have legal recourse for inaccuracies that come up in their background checks.
Background check providers as well as employers that order background checks in conjunction with employment decisions must comply with the FCRA. Job seekers have some recourse against non-compliant background checks via private legal actions, as well as through enforcement by the Federal Trade Commission. Private civil actions are initiated by consumers via formal complaints to the courts. Usually, it is the individual job seeker who initiates a civil action if he or she believes that inaccurate or missing information on his or her report resulted in an employment decision that negatively affected the job seeker. A variety of issues may arise, including: Taking these issues together, there are a number of potential violations of the FCRA including lack of disclosure about obtaining one’s background check, failure to obtain authorization, failure to provide a copy of the report prior to adverse employment action, failure of the employer to conduct further investigation before taking "adverse action," failure of the employer to notify the candidate of their rights under the FCRA, and failure of the employer to work with the reporting agency to resolve any problems. The Fair Employment Practice Agencies (FEPA) offer additional support to job seekers who feel that discrimination may be involved in their case. FEPAs will investigate complaints of discrimination at the state level under specific federal employment laws. In some states, the FEPA would have jurisdiction over background checks from the point when a background check is requested to the point when the background check is used to make an adverse employment action against an individual. Individual applicants may also have recourse against their reporting agencies if they feel that the agency has violated reporting standards under the FCRA. By gaining a better understanding of their rights under the FCRA, job seekers can spot potential inaccuracies and use this knowledge to work with reporting agencies and employers to ensure that their background checks are accurate and comply with state and federal laws.
Best Practices for Employers
To ensure compliance with Nevada background check laws, employers should adopt the following best practices:
Ensure an Appropriate Policy is in Place
An employer must adopt a policy that clearly defines when and how background checks will be used. For example, if background checks will be used at all, they should be performed after the job offer has been made and after the applicant has completed all pre-screening tests. If the employer will not be performing a background check on all final candidates, the policy should clearly define who will be subject to a background check and delineate such factors as type of position (e.g. retail vs. corporate), location (i.e., Nevada vs. non-Nevada), and any inquiries about an arrest record. The policy should also clearly define the employer’s process for determining whether or not the applicant’s conviction record bears a "direct relationship" to the position, as that term is defined under Nevada law. While it is unclear what a direct relationship means, it is generally believed that a narrower approach should be taken when dealing with applicants for blue collar, non-managerial positions.
Consider When a Background Check Will Be Required During the Hiring Process
The policy should specify the stage in the hiring process the background check will be conducted. For most employers, Nevada law seems to require that the background check be done after the applicant has been given an offer of employment. However, employers conducting background checks as part of security clearance process are often required to complete background checks prior to the offer of employment .
Differentiate Between the Types of Background Checks
Employers have several types of background checks available, including criminal background checks, credit report checks, and drug tests. Employers should adopt a policy that clearly defines which types it intends to use and for what purpose(s). Typically, criminal history checks and credit reports should only be used for employment purposes after the conditional offer has been made (types detailed below). Checks complying with NRS 613.130(3) can be conducted before a conditional offer of employment has been made, but are limited to criminal charges or convictions that have been resolved. In contrast to criminal checks, Nevada employers typically do not run credit report checks or drug tests until a conditional offer has been made to the applicant.
Take Steps to Compensate Employees at a Later Time
Nevada employers typically do not conduct background checks until a conditional offer has been made. Thus, employers should ensure that the offer letter includes language outlining the employer’s obligation to conduct a background check before actual hire.
Ensure Compliance with Federal Regulations
If an employer does not conduct background checks until after a conditional offer has been made, they must comply with applicable federal laws upon the decision to rescind an offer of employment based upon the results of that check, including federal regulations useful throughout the hiring process such as the Fair Credit Reporting Act ("FCRA") and Title VII of the Civil Rights Act of 1964.
It is also essential that employers consider and comply with laws regarding the confidentiality and security of background check information.