According to the U.S. Department of Labor, a bad hire can cost your business up to 30% of the employee’s first-year earnings. Some human resources agencies estimate that the total cost can range from $240,000 to $850,000 per employee!
With such high stakes, ensuring the integrity of your hiring process through federal background checks is no longer optional—it’s a business imperative.
| A federal background check for employment—also referred to as a federal criminal background check—is a specialized screening process that searches federal criminal history records maintained across the 94 United States federal district courts. These records are accessed through the Public Access to Court Electronic Records (PACER) database, which provides detailed information about federal-level offenses. Additionally, PACER includes records of civil cases, such as federal lawsuits and regulatory violations, which may also be relevant depending on the employer’s needs. |
Unlike standard background checks that focus on state or county-level crimes, a federal background check uncovers violations of federal law that are prosecuted and resolved within the federal court system. This makes it a crucial screening tool for identifying serious offenses that may not appear in local or statewide records.
How Does a Federal Background Check Differ from Other Background Checks?
Federal background checks differ significantly from state or county checks in scope, jurisdiction, and the types of records reviewed. While federal checks focus on nationwide offenses prosecuted in U.S. district courts, state and county checks are limited to local jurisdictions.
| Aspect | Federal Criminal Search | State/County Criminal Search |
| Scope | U.S. federal district courts | State or county courts only |
| Types of Offenses | Federal crimes (e.g., tax evasion, bank fraud) | State or local crimes (e.g., theft, DUI) |
| Severity | Typically more serious offenses | Can range from misdemeanors to felonies |
| Geographic Reach | Nationwide | Limited to specific state or county |
| Example Scenario | Federal tax fraud prosecution | DUI conviction in a county court |
Table: Federal Criminal Searches vs. State/County Criminal Searches
| Aspect | Federal Civil Search | County Civil Search |
| Scope | U.S. federal district courts | County courts only |
| Types of Cases | Federal lawsuits (e.g., intellectual property disputes, antitrust cases) | Local disputes (e.g., contract breaches, personal injury) |
| Geographic Reach | Nationwide | Limited to a specific county |
| Example Scenario | Federal employment discrimination case | Landlord-tenant dispute in a local court |
Table: Federal Civil Searches vs. County Civil Searches
Why Should Employers Understand the Difference?
Employers must choose the right type of background check depending on the role, industry, and risks associated with a position:
For roles in finance, government, or healthcare, a federal background check is critical to identify serious offenses like fraud. State or county checks may be sufficient for general employment screenings to flag common local offenses. To learn more about what shows up in a background check and the potential red flags employers should watch for, check out our blog What Shows Up in a Background Check and Potential Red Flags?
By understanding the scope and limitations of federal background checks, organizations can make informed decisions about which screening method to implement for their hiring processes.
How Does a Federal Background Check Work?
Here’s a step-by-step breakdown of how a federal background check works:
1. Candidate Information Collection
To initiate a federal background check, employers for background screening providers gather essential identifying information from the candidate, such as:
- Full legal name
- Date of birth
- Social Security Number (SSN)
- Address history
This information ensures an accurate search and helps avoid mismatches or incomplete results.
2. Search of Federal Court Databases
Federal records are maintained across U.S. District Courts, U.S. Courts of Appeals, and Federal Bankruptcy Courts. The search includes all federal court jurisdictions to identify any offenses linked to the candidate.
Types of searches conducted include criminal records (e.g., tax evasion, bank fraud, drug trafficking) and civil cases (e.g., federal lawsuits, employment discrimination claims).
3. Data Retrieval and Case Verification
Once the search is conducted, the background screening provider retrieves any matching records associated with the candidate. The results are then carefully reviewed to confirm the identity of the individual involved, the nature of the case (criminal or civil), and the case details such as charges, outcomes, sentencing, fines, or dismissals.
4. Reporting the Findings
After verifying the case details, the federal background check results are compiled into a report. Employers can use this report to evaluate candidates’ backgrounds and determine their suitability for high trust and compliance roles. This report usually includes:
- Federal Criminal Records: Felonies and misdemeanors prosecuted at the federal level include tax evasion, drug trafficking, and white-collar crimes.
- Case Outcomes: Guilty verdicts, sentencing details, fines, or dismissals.
- Federal Civil Records: Lawsuits or judgments involving the individual, such as antitrust violations or federal employment disputes.
- Civil Cases: Federal lawsuits involving discrimination, financial disputes, or intellectual property violations.
- Bankruptcy Filings: Records of Chapter 7, 11, or 13 bankruptcy cases.
5. Employer Review and Decision-Making
Once the federal background check report is provided, employers can compare the findings to job requirements and organizational policies.
Employers may assess any risks associated with federal-level offenses or pending cases and make informed hiring decisions while remaining compliant with federal and state employment laws.
Federal Background Check Requirements: Legal Considerations to Follow
To ensure full compliance with the Fair Credit Reporting Act (FCRA), employers must understand the nuances of background screening and adhere to necessary procedures. For a detailed look at FCRA requirements, check out our blog, The Ultimate Guide to FCRA Compliance for Employers.
Below is an overview of the primary laws and requirements governing federal background checks:
1. Fair Credit Reporting Act (FCRA)
The Fair Credit Reporting Act (FCRA) is a federal law that regulates how background checks—including federal background checks—are conducted and used for employment purposes. Violations of the FCRA can result in lawsuits, fines, and reputational damage. The FCRA requirements include:
i) Disclosure and Consent for Federal Background Checks
Before conducting a federal background check, employers must notify the applicant in writing that a background check will be undertaken to make a hiring decision. This is mandatory under the FCRA, ensuring transparency in the hiring process.
- Written Disclosure: The applicant must be informed that a background check will be conducted, specifically for criminal records, civil cases, or any other federal court data.
- Consent: The applicant must provide written consent to allow the employer to conduct the federal background check. Without this consent, the background check cannot proceed.
If the employer does not properly disclose the background check or obtain consent, they could face legal penalties, including lawsuits and fines.
ii) Accuracy and Verification of Federal Records
Employers must take steps to ensure that the federal background check information they receive is accurate, up-to-date, and from reliable sources.
- Accuracy: Employers should cross-reference data from federal sources to confirm the accuracy of the information. Relying on outdated or incomplete information can lead to non-compliance with the FCRA and could result in discrimination claims from applicants.
- Currency of Information: Employers must ensure the background check reflects current data. Federal records should be the latest available to provide an informed hiring decision.
iii) Adverse Action Procedures in Federal Background Checks
If a federal background check reveals information that could negatively impact a hiring decision, the employer must follow a two-step adverse action process mandated by the FCRA.
(I) Pre-Adverse Action Notice: Before making a final hiring decision, the employer must provide the applicant with a copy of the federal background check report and a summary of their rights under the FCRA. This allows the applicant to dispute any inaccuracies or offer clarifications on the findings.
- Notice Content: The pre-adverse action notice must include a copy of the report, a statement that the report will be used to make a hiring decision, and a summary of the applicant’s rights.
- Timeframe: The applicant must be given a reasonable amount of time (usually at least five days) to dispute the information or provide additional context.
(II) Adverse Action Notice: If the employer decides to take adverse action (e.g., deny employment) based on the federal background check, they must send a second notice to the applicant after making the decision.
- Notice Content: This notice must be sent promptly to ensure compliance with the FCRA and to maintain transparency throughout the hiring process. The adverse action notice must include the following:
- The name, address, and contact information of the reporting agency.
- A statement clarifying that the agency did not make the hiring decision and cannot explain its reasons.
- Information on the applicant’s right to dispute the accuracy or completeness of the report.
2. Title VII of the Civil Rights Act of 1964
Enforced by the Equal Employment Opportunity Commission (EEOC), Title VII prohibits discrimination based on race, color, religion, sex, or national origin.
Relevance to Federal Background Checks
Employers cannot use background check results to unfairly discriminate against candidates. If a federal offense appears on a background check, employers must consider:
- The nature of the offense
- Time elapsed since the offense occurred
- The relevance of the offense to the job role
Blanket policies such as disqualifying candidates with federal criminal records can lead to discrimination claims. Employers must demonstrate that exclusions are job-related and consistent with business necessity.
3. Ban the Box Laws
Many states and local jurisdictions have implemented “Ban the Box” laws, prohibiting employers from asking about criminal history, including federal offenses, on job applications.
Requirements
- Employers cannot inquire about criminal records until after the initial interview or conditional job offer.
- These laws promote fair hiring practices and help candidates with criminal histories re-enter the workforce.
While ban-the-box laws are not yet federal, many employers adopt these practices nationwide to comply with state and local regulations.
Common Misconceptions About Federal Background Checks
Federal background checks are essential for employers when screening candidates, especially for positions requiring high trust and responsibility. However, several misconceptions about the process can lead to confusion and improper usage. Below, we clarify some of the most common misunderstandings surrounding federal background checks.
| Misconception | Clarification |
| Includes State and Local Offenses | Federal background checks focus only on federal-level crimes, not state or local offenses. Separate state or county checks are needed for those. |
| Covers All Federal Criminal Records | It may not include sealed or expunged federal records. Only records accessible through PACER are shown. |
| Reveals All Civil Cases | Only federal civil cases (e.g., employment disputes, regulatory violations) are included, not personal lawsuits or state-level civil cases. |
| Same Across All Industries | Relevance varies by industry. Roles in finance, government, and healthcare are more likely to require a federal check due to job sensitivity. |
| Always Takes a Long Time | Federal background checks can be completed in a few days with advanced tools like PACER. |
| Only Includes Criminal Records | It also covers certain federal civil cases like contract violations or regulatory disputes. |
| Reveals All Past Arrests | Federal checks typically show convictions, not arrests, unless linked to a federal case. |
| Comprehensive and Exhaustive | Federal checks focus on federal records; they do not include state/local or all federal information like sealed records. |
| Required for All Employers | Not all employers need to conduct a federal check. It’s typically necessary for roles involving high security or regulatory compliance. |
| Always Accurate | While reliable, federal checks can contain errors like misidentifications or outdated records, requiring careful review and dispute processes. |
Minimize Risks with Verification Screening Solutions’ Background Checks
Verification Screening Solutions, LLC provides reliable, accurate, and thorough background screening services tailored to your needs. With expertise across various industries, we empower organizations to make confident, informed decisions every time.
Our core services include:
With deep expertise and a commitment to delivering precise, up-to-date information, we ensure that your background checks fully comply with all legal standards.
Let us handle the details so you can focus on what matters—making the right decisions for your business.
FAQs
1. Where Are Federal Criminal Records Stored?
Federal criminal records are stored in the Public Access to Court Electronic Records (PACER) system, which provides access to case information from all 94 federal district courts in the United States. These records include information related to federal criminal, civil, and bankruptcy proceedings.
The PACER system allows authorized users, such as employers or background screening companies, to access records related to federal crimes like fraud, drug trafficking, and embezzlement. In addition to PACER, federal agencies like the Federal Bureau of Investigation (FBI) may also store and manage criminal records through their National Crime Information Center (NCIC) database.
2. What Federal Criminal Records Can a Potential Employer Collect?
A potential employer conducting a federal background check can access the following types of federal criminal records:
- Federal Convictions: Any convictions for federal crimes, such as bank fraud, tax evasion, drug trafficking, immigration violations, and white-collar crimes.
- Pending Federal Cases: Active cases involving federal charges, including pending trials or investigations.
- Federal Probation/Parole: Information regarding an individual’s federal probation or parole status.
- Federal Civil Cases: In some cases, employers may also see federal civil case records, such as disputes over intellectual property, contract violations, or employment discrimination that involve federal law.
3. How Long Does a Federal Background Check Take?
The duration of a federal background check can vary depending on several factors, such as the case’s complexity, the specific records being searched, and the service provider used. On average:
- Standard Federal Background Check: Usually takes 2-5 business days when using systems like PACER or other third-party screening tools.
- Complex Cases or Additional Research: If multiple jurisdictions are involved, a more in-depth investigation may take longer, potentially 1-2 weeks or more.
Expedited Services: Some background screening companies offer expedited services, which can reduce the processing time to 1-2 business days, depending on the details.
