The hidden risks, legal traps, and privacy rules every employer must master with background checks
A survey by the Professional Background Screening Association (PBSA) found that 90% of employers conduct background checks on full-time employees, marking a 4% increase from the previous year.
Further research from AccuSource revealed that 46% of reference and credential verifications indicated discrepancies between the information provided by applicants and what the screening revealed.
In a world where a digital footprint is nearly impossible to erase, employers are having to walk a fine line between being thorough while not being intrusive. And, throw into this the differing rules and regulation across Canada, which can be a minefield for organizations.
Speaking to HRD, Lorenzo Lisi, partner at Aird & Berlis, says that understanding provincial privacy rules is key to staying on the right side of the law.
“Employers in Canada typically perform background checks to verify the identity and qualifications of a candidate,” Lisi explains. “The most common checks include criminal records, educational background, employment history, and financial checks, particularly if the role involves handling money. However, these checks must align with privacy and human rights legislation. Privacy obligations in particular can vary both provincially and federally.”
In Canada, background checks are primarily governed by provincial laws, with the scope and legality of checks varying depending on jurisdiction. For example, Ontario, unlike provinces such as Quebec, does not have private sector privacy legislation, giving employers slightly more leeway when it comes to requesting background information.
“Best practices dictate that employers secure consent from candidates before conducting any background checks,” adds Lisi. “Typically, this consent is included as a condition in the offer of employment. The offer may state that the role is contingent upon the successful completion of a criminal record check or another relevant screening.”
Lisi emphasizes that a background check should be tailored to the specific requirements of the job. For instance, if the position involves handling money, a financial background check might be reasonable. For roles involving driving, employers may seek information on any Highway Traffic Act convictions. However, it’s essential to ensure that the checks are job-related and respect human rights considerations. Because while certain checks are permissible, there are clear boundaries that employers must not cross.
“Employers should collect only the information that is reasonably necessary to assess the candidate's suitability for the role,” Lisi advises. In other words, is the requirement a true occupational requirement of the job. “For example, if someone is applying for a receptionist position, it wouldn’t be appropriate to request confirmation that they can lift 30 pounds, unless there’s a bona fide occupational requirement tied to the role.”
Medical history is another sensitive area where employers need to tread carefully. Post-offer, employers can inquire about an employee's ability to perform the essential elements of the job with accommodation. For example, in a physically demanding job, the employer can ask if the candidate has any restrictions, provided this is tied to the essential duties of the role.
Employers also need to consider additional requirements when hiring for roles involving vulnerable populations, such as positions working with children, the elderly, or other at-risk groups. Lisi explains that vulnerable sector checks, which include more detailed information about charges and convictions, are standard in these scenarios. These are governed by federal legislation (the Criminal records Act of Canada) and are implemented to ensure the safety of vulnerable populations.
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Lisi recommends that employers create and implement a background screening policy in accordance with applicable provincial or federal laws. The policy itself can guide HR professionals in the organization on how to access background hiring information but at the same time, reducing any potential legal liability related to the collection, use and disclosure of the information which they obtain.
One area related to background checks which has become more common in the hiring process is the social media background check. While it is not illegal for employers to review public social media profiles, Lisi cautions against relying on such information without careful consideration and diligence with respect to how such information may be used with respect to the hiring of a potential candidate.
“Once an employer has information about an employee through the use of a social media review, it cannot “unknow” that information, as Lisi puts it. For example, if an employer discovers information about a candidate’s religious affiliations or disability via a search of their online presence, that information may be used by the candidate challenging the decision not to hire on the basis of a prohibited ground of discrimination.
Here, Lisi again stresses the need for a background check policy, which clearly sets out the parameters of the information they are looking for, and how it can relate to the job they are looking to fill.
“It’s vital to have a structured and documented process which ensures that any irrelevant or sensitive information discovered is not used in decision-making, and is, in fact, eliminated from consideration. Transparency and fairness are key to avoiding legal challenges.”
When it comes to withdrawing a job offer based on background check results, employers must tread carefully. Lisi points out that the reasons for rescinding an offer must be defensible under human rights and privacy laws, but also at common law. If, for example, an employee has quit another job on the basis of an offer, then has the new offer rescinded, it can lead to legal liability for the employer.
“Again,” says Lisi, “if a background check reveals information which might lead to rescinding an offer, it has to have a rationale as to why the job offer was retracted, which can involve a consideration of human rights. Bottom line is that employers have to make sure that they’re not basing decisions on information they are not entitled to request or consider.”
And the regional variation in privacy legislation across Canada means that employers must remain vigilant about compliance in each province.
“In certain jurisdictions, privacy laws explicitly address the need for consent before collecting personal information,” Lisi explains. “In all cases, employers should limit their inquiries to what is reasonably necessary for the job. Collecting irrelevant or excessive information can not only lead to a violation of privacy laws but could also damage the employer's reputation.”
Essentially, best practices for background checks include making them a condition of employment, obtaining explicit candidate consent, and ensuring the checks are narrowly tailored to the role’s requirements. Lisi advises that employers communicate the confidentiality of the information collected and establish clear policies to handle the information collected appropriately.
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“It’s about balancing due diligence with respect for the candidate’s privacy and rights.”
With the introduction of more legislation which impacts hiring, the landscape is constantly evolving. The intersection of privacy, human rights, and hiring practices means employers need to establish policies and consistently implement them when it comes to hiring.
“Employers must stay informed and proactive to ensure their hiring practices remain both effective and legally compliant. This requires a careful balancing act between protecting the organization’s interests and respecting the rights of prospective employees.”
