Michigan Background Check Laws: A Guide for Businesses and HR

Consider this your go-to resource whether you’re a business owner, an HR professional, or a recruiter. This guide is particularly useful for those in industries with stringent screening requirements, such as Staffing Agencies, Healthcare, Transportation, Tenant Screening, Non-profit, Retail, Technology, and Hospitality. Understanding these regulations is crucial for compliance and creating safe and efficient workplaces wherever you fall on the spectrum.

Overview of Michigan Background Check Laws

Michigan Employment Screening

Background checks involve reviewing candidates’ histories to verify their qualifications and ensure they fit the role well. This can include checking criminal records, credit history, past employment, educational background, and driving records. In Michigan, such screenings help employers make informed hiring decisions, reduce risk, and maintain workplace safety standards.

Legal Framework

Understanding the legal landscape is critical when conducting background checks. At the federal level, the Fair Credit Reporting Act (FCRA) sets stringent guidelines for how background information is obtained and used. It requires employers to notify candidates and obtain their consent before conducting a background check. Furthermore, it mandates that candidates be informed if any adverse action is taken based on the findings.

Compliance Importance

Adhering to these federal and state laws isn’t just about avoiding legal trouble; it’s about ensuring fairness and transparency in hiring. Non-compliance can lead to hefty fines, legal penalties, and potential lawsuits. It can damage an organization’s reputation and trust with current and prospective employees. Employers who stay compliant show that they value ethical practices and are committed to creating a fair hiring environment.

By considering these legal frameworks, Michigan businesses can conduct thorough, respectful, and lawful background checks, ultimately helping them make better and safer hiring decisions.

Federal Laws Impacting Michigan Employers

Michigan employers must comply with state regulations and several key federal laws when conducting background checks. Below, we’ll break down two crucial federal requirements that significantly impact background checks: the Fair Credit Reporting Act (FCRA) and the guidelines set by the Equal Employment Opportunity Commission (EEOC).

Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act (FCRA) establishes the framework for employers who utilize third-party agencies to conduct background checks on job applicants. Under the FCRA, certain obligations must be met to ensure the process is transparent and fair for all candidates.

1. Disclosure and Authorization: Before obtaining a background check report, employers must clearly and conspicuously inform applicants that the report may be used for employment decisions. The disclosure must be in a standalone document, separate from the job application. The employer must also obtain the applicant’s written authorization for the background check.
2. Pre-Adverse Action: If an employer considers taking adverse action (e.g., not hiring, firing) based on the information in the background check report, they must first provide the applicant with a copy of the report and a summary of their rights under the FCRA. This allows the applicant to review the report and dispute any inaccuracies.
3. Adverse Action: Should the employer decide to proceed with the adverse action after the pre-adverse action phase, they must provide the applicant with a final notice. This notice must include contact information for the reporting agency, a statement that the reporting agency did not make the adverse decision, and a notice of the applicant’s right to dispute the accuracy or completeness of the report.

Equal Employment Opportunity Commission (EEOC)

The EEOC enforces federal laws that make it illegal to discriminate against job applicants and employees based on race, color, religion, sex, national origin, age, disability, or genetic information. In the context of background checks, the EEOC guides to ensure these practices do not result in unlawful discrimination.

1. Disparate Treatment: Employers must ensure their background check procedures do not intentionally discriminate based on protected characteristics. For instance, requiring background checks for a particular racial group but not others would be discriminatory.
2. Disparate Impact: Even if a policy appears neutral, it may still be unlawful if it disproportionately affects individuals of a certain race, national origin, or other protected characteristic and is not job-related and consistent with business necessity. Employers should be prepared to demonstrate that any background check criteria are directly relevant to the job.
3. Best Practices: To avoid potential EEOC issues, employers should develop a background check policy that includes clear, objective criteria for evaluating background information and ensure that all employees involved in the hiring process are trained to comply with these guidelines.

By understanding and adhering to these federal guidelines, Michigan employers can conduct thorough and fair background checks, minimizing legal risk and promoting equitable hiring practices.

Michigan-Specific Background Check Laws

Regarding Michigan, some unique regulations shape the background check landscape. Here’s what you need to know to stay straight with the law:

Michigan Compiled Laws (MCL) 37.2206 – Elliott-Larsen Civil Rights Act (ELCRA)

The Elliott-Larsen Civil Rights Act prohibits employment discrimination based on race, color, religion, national origin, age, sex, height, weight, or marital status. This act ensures fair treatment in the hiring process and employment practices. Understanding ELCRA is crucial for business owners to ensure non-discriminatory hiring practices. Complying with this act helps avoid legal issues and promotes a diverse and inclusive workplace.

Michigan Compiled Laws (MCL) 37.1206 – Persons with Disabilities Civil Rights Act (PWDCRA)

The PWDCRA prohibits discrimination against individuals with disabilities in employment, public accommodations, and housing. Employers must provide reasonable accommodations to qualified individuals with disabilities. Compliance with PWDCRA ensures that business owners provide equal employment opportunities and reasonable accommodations, which helps foster an inclusive work environment and mitigate legal risks​.

Michigan Executive Directive 2019-10

This directive prohibits state and local government employers from inquiring about a job applicant’s salary history during the hiring process. It aims to promote pay equity and eliminate salary discrimination. Adhering to this directive helps businesses avoid potential legal issues related to salary discrimination and contributes to fair pay practices within the organization​.

Michigan Ban-the-Box Law

Michigan’s “ban-the-box” legislation restricts inquiries about an applicant’s criminal history early in the hiring process. Specifically, employers can’t ask about criminal records on initial job applications. This policy aims to give candidates with past convictions a fair shake by allowing them to advance further in the hiring process before scrutinizing their records.

Additional Research: Studies have found that ‘ban the box’ laws, like Michigan’s Clean Slate Law, can delay the timing of job offers but increase the likelihood of job offers for individuals with criminal records. This study investigates the impact of “ban the box” laws on hiring outcomes, including the timing and likelihood of job offers. See A Study of Factors Influencing Hiring Decisions in the Context of Ban the Box Policies.

Credit Checks

In Michigan, using credit checks as part of your screening process is allowed but comes with stipulations. Employers must have a legitimate business reason, such as positions involving financial responsibilities, access to confidential information, or significant managerial functions. Remember to notify the candidate in writing and get their consent before running a credit check. It’s all about transparency and fairness.

Driving Records

For industries where driving is a key part of the job—like transportation or delivery services—accessing an applicant’s driving records is crucial. Michigan allows employers to review these records, but you must inform the candidate and get their consent. This practice helps assess the applicant’s suitability for the role and mitigates the risk of road accidents and related liabilities.

Healthcare-Specific Regulations

Extra layers of scrutiny are mandatory for those in the healthcare sector, courtesy of the Michigan Department of Licensing and Regulatory Affairs (LARA). Healthcare employers must conduct exhaustive background checks that conform to state and federal standards. This includes criminal history, abuse and neglect registries, and verification of professional licenses. Non-compliance isn’t an option here—too much is at stake with patient safety and institutional integrity on the line.

Understanding and adhering to these Michigan-specific laws ensures that your background check procedures are thorough but also fair and compliant. Keep these points in mind, and you’ll be well on your way to mastering the legal intricacies of background screening in the Wolverine State.

Implementing a Background Check Policy

Creating a robust background check policy isn’t just about compliance; it’s about fostering a fair and secure workplace. Let’s break down the essentials.

Policy Development

Start by defining the scope and purpose of your background check policy. Make it clear which positions require background checks, the type of checks to be conducted, and at what stage in the hiring process they’ll occur. Ensure the policy aligns with Michigan laws and federal standards, like the FCRA. Document everything in an accessible format for easy reference.

Disclosure and Authorization

Before digging into someone’s background, you need to know that they are okay—legally. Provide candidates with a clear disclosure form that explains the background check process and obtain written authorization. The disclosure should be a standalone document, free from extraneous information, to avoid legal missteps. This transparency fosters trust and compliance.

Choosing a Screening Provider

Not all background check services are created equal. Opt for providers accredited by the Professional Background Screening Association (PBSA) to ensure reliable and compliant screenings. Look for a provider with a good reputation, comprehensive services, and robust data protection measures. This step is crucial for maintaining integrity in your hiring process.

Internal Training

Equip your HR team with the knowledge they need. Regular training sessions can cover the nuances of background check regulations, the new policy, and how to talk candidates through the process. A well-informed team ensures smooth, fair, and compliant checks, minimizing the risk of legal issues.

By carefully developing a thorough background check policy, you stay on the right side of the law and build a trustworthy hiring process that benefits both the company and potential employees.

Best Practices for Compliance

Conducting background checks is more than just a procedural step in hiring; it’s about adhering to legal standards and maintaining fairness. Here’s a straightforward rundown for Michigan businesses:

Adverse Action Process

When an adverse employment decision is tied to background check results, following the Fair Credit Reporting Act (FCRA) and Michigan laws are non-negotiable. The process typically involves three steps:

1. Pre-Adverse Action Notice: Before taking any negative action, provide the candidate with a notice that includes a copy of their background report and a summary of their rights under the FCRA.
2. Waiting Period: Allow a reasonable period (typically 5-10 business days) for the candidate to dispute and clarify any inaccuracies in the report.
3. Adverse Action Notice: If you proceed with the adverse action, issue a final notice that informs the candidate of the decision, their rights under the FCRA, and how they can obtain a free copy of the report.

Record Keeping

Keeping impeccable records of all background checks and related actions isn’t just good practice; it’s crucial for compliance. This includes:

• Documentation: Ensure detailed records of the background check process, from disclosures and authorizations to the results and decision logs.
• Retention Policy: As recommended, maintain records for at least five years, but check for industry-specific mandates requiring longer retention periods.
• Security Measures: Safeguard all records with robust security protocols to prevent unauthorized access and protect sensitive information.

Continuous Monitoring

Some roles aren’t a set-it-and-forget-it situation. Continuous monitoring of employee backgrounds is becoming more standard, especially in sensitive positions. Key points include:

• Identification of Roles: Determine which positions require ongoing background checks. High-sensitive roles in finance, healthcare, and IT often fall into this category.
• Frequency: Establish a schedule for re-checks, whether annually, bi-annually, or otherwise suited to your industry’s standards.
• Policy Update: Ensure your background check policy includes provisions for ongoing monitoring and communicate this clearly to employees during onboarding.

By following these best practices, Michigan employers can ensure they remain compliant with federal and Michigan-specific background check laws, fostering a fair and secure hiring environment.

Michigan Background Check Resources

These websites provide valuable resources and information to ensure that Michigan business owners comply with state laws and regulations when conducting background checks.

Industry-Specific Considerations

Staffing Agencies

Michigan staffing agencies face unique challenges when conducting background checks due to the high volume and quick turnaround of placements. Agencies should standardize their background check process to ensure compliance while maintaining efficiency. A key strategy is to clearly understand federal laws, such as the Fair Credit Reporting Act (FCRA), and state-specific regulations, including Michigan’s “ban-the-box” law. Leveraging technology for automation can streamline workflows while partnering with reputable screening providers ensures accuracy and reliability.

Healthcare

Michigan healthcare employers must navigate additional layers of compliance beyond standard employment screenings. This includes adhering to the Michigan Department of Licensing and Regulatory Affairs (LARA) mandates and ensuring checks for required professional licenses. Prompt and thorough background checks, including abuse registry, drug testing, and criminal history, are non-negotiable for maintaining patient safety and regulatory compliance. Collaborative efforts with specialized screening providers familiar with healthcare regulations are invaluable.

Transportation

Comprehensive driving record checks are essential for businesses in the transportation sector and are often mandated by law. With the Michigan Department of Transportation (DOT) regulations as a guiding framework, employers must verify the driving history, commercial driver’s licenses (CDL), and any infractions that could indicate risk. Implementing a policy for ongoing monitoring is critical to promptly addressing any changes in an employee’s driving status. This proactive approach helps maintain a fleet of reliable and safe drivers.

Tenant Screening

In the tenant screening process for rental housing, Michigan landlords must balance thoroughness with legal compliance. Background checks should include criminal history, credit reports, and eviction histories. However, adhering to the state’s guidelines is essential to avoid discriminatory practices. Landlords must standardize application criteria, provide clear disclosures, and obtain applicant consent. A consistent screening process can help make fair renting decisions and ensure tenant reliability.

Non-Profit

Thorough background checks are crucial for non-profits working with vulnerable populations like children, the elderly, or individuals with disabilities. Michigan non-profits should implement stringent screening processes, including criminal background checks, reference checks, and sometimes drug testing. Establishing a policy that complies with state and federal regulations safeguards the organization’s mission and the community it serves.

Retail and Hospitality

Due to high turnover and seasonal employment, industries like retail and hospitality require efficient yet compliant background checks. Employers should focus on criminal background checks, employment verification, and possibly credit checks where relevant. Given the fast-paced nature of these industries, investing in a dependable screening service provider can facilitate quick hiring decisions without compromising compliance and safety.

Technology

Comprehensive background checks are vital in technology, where employees frequently handle sensitive data and intellectual property. Employers should go beyond standard criminal checks to include education and professional credential verification, credit checks, and thorough reference checks. Compliance with state and federal laws protects the company, its proprietary information, and client trust.

Michigan businesses and HR professionals can develop accurate, compliant, and effective background check processes tailored to their unique operational needs by addressing industry-specific considerations.

Frequently Asked Questions (FAQ)

What are the main laws governing background checks in Michigan?

The main laws include the Elliott-Larsen Civil Rights Act (ELCRA), which prohibits discrimination in employment based on race, color, religion, national origin, age, sex, height, weight, or marital status. Another important law is the Persons with Disabilities Civil Rights Act (PWDCRA), which prohibits discrimination against individuals with disabilities and requires reasonable accommodations. Additionally, Michigan Executive Directive 2019-10 prohibits state and local government employers from inquiring about a job applicant’s salary history.

How far back can background checks go in Michigan?

Michigan law does not limit how far back a background check can go. However, the Fair Credit Reporting Act (FCRA) restricts consumer reporting agencies from reporting arrests that did not result in convictions after seven years, unless the position has an annual salary of $75,000 or more.

Are there “Ban the Box” laws in Michigan?

Yes, Executive Directive 2018-4, also known as “Ban the Box,” prohibits state employers from asking about an applicant’s criminal history on initial job applications. This directive aims to reduce barriers to employment for individuals with criminal records.

Can employers use social media for background checks in Michigan?

Employers in Michigan can review public social media profiles but cannot request or require applicants to provide their social media passwords or access to private accounts. This protects the privacy of applicants and ensures fair hiring practices.

What information can be included in a Michigan background check?

Background checks in Michigan can include criminal records, employment verification, education verification, credit history, and driving records. Employers must ensure compliance with the FCRA, which requires informing the applicant and obtaining written consent before conducting a background check.

How should employers handle adverse actions based on background check results?

If an employer decides to take adverse action based on background check results, it must follow FCRA requirements. This includes providing the applicant with a pre-adverse action notice, a copy of the background check report, and a summary of their rights under the FCRA. After a reasonable period, the employer must send a final adverse action notice if it decides to proceed with the adverse action​.

Conclusion

Navigating the complexities of Michigan’s background check laws is no small feat. Still, it’s a critical exercise for any business or HR professional committed to fostering a compliant and efficient hiring process.

By prioritizing compliance and thoroughness in your background check practices, you’re not just mitigating legal risks but building a trustworthy and productive workforce. Michigan businesses can set ethical and effective hiring standards through diligent effort and informed decision-making.