Why Background Checks Can Create Legal Risk
Many Utah business owners assume a quick online check is harmless. However, state and federal laws strictly control how employers gather and use personal information. In particular, the Fair Credit Reporting Act (FCRA) and Utah’s employment laws require transparency, consent, and fairness.
See also: Employee Handbooks in Utah: Why Every Small Business Needs One.
Step 1: Get Written Consent Before Any Screening
Before ordering a background or credit report, you must get clear written authorization from the applicant.
- The notice must be separate from the job application—no fine print buried in other paperwork.
- The applicant must understand you may use a third-party agency to gather information.
- Consent must be voluntary, not a condition hidden in general onboarding forms.
Therefore, using a stand-alone consent form is the safest way to comply.
Step 2: Provide Proper Disclosures and Pre-Adverse Notices
If you decide not to hire someone based on what the background check reveals:
- Send a “pre-adverse action” notice with a copy of the report and a written summary of FCRA rights.
- Give the applicant time to respond—usually five business days.
- After that period, if you still decline to hire, send a final “adverse action” notice confirming the decision.
In addition, keep records showing when notices were sent in case of future disputes.
Step 3: Avoid Using Restricted Information
Utah law prohibits employers from seeking or using certain data:
- Arrests without convictions cannot be the basis for rejection.
- Bankruptcies and credit scores are generally off-limits unless clearly relevant to the job.
- Expunged or sealed records must not be considered.
As a result, employers should tailor background checks narrowly to the job’s responsibilities rather than collecting unnecessary data.
Step 4: Train Hiring Staff and Vendors
Mistakes often come from untrained managers or third-party screening services.
- Train HR staff on disclosure and notice timing.
- Review vendor contracts to confirm compliance with the FCRA and Utah law.
- Audit processes annually to make sure nothing has slipped through the cracks.
For another compliance safeguard, see: Utah Non-Compete Agreements After Employment Ends: What Employers Can and Can’t Do in 2025.
Step 5: Handle Data Responsibly
Once a background or credit report is complete, employers must store or destroy it securely. For example, shred printed reports and encrypt digital files. In addition, limit access to those who truly need it. Mishandling this information can violate both federal privacy laws and Utah’s data-breach statutes.
The Bottom Line
Background checks can protect your Utah business—but only if you follow the law. By obtaining consent, giving proper notice, and limiting data collection, employers can make informed decisions without risking legal penalties.
Contact Us Today
If your business uses background checks or credit reports in hiring, Duckworth Legal Group can help you review your policies for FCRA and Utah compliance. Contact us to protect your company before problems arise.