Employee Background Check Laws in Indiana

The Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., is the primary federal law governing background checks. The FCRA applies to all employers nationwide, regardless of size, when they use consumer reporting agencies to obtain background information on job applicants or employees. Before obtaining a background check, employers must:

(1) Provide clear and conspicuous written disclosure that a background check will be obtained (2) Obtain the applicant's written authorization on a stand-alone document (3) Ensure the background check is conducted by a consumer reporting agency that complies with FCRA standards

If an employer intends to take adverse action (such as rejecting an applicant) based wholly or in part on information in a background check report, the FCRA requires the employer to provide pre-adverse action notice. This notice must include a copy of the background check report and a summary of the applicant's rights under the FCRA. The applicant then has an opportunity to dispute the information. Only after this process can the employer take final adverse action and provide adverse action notice.

The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) enforce the FCRA. Applicants may also file civil suits for violations. Remedies include actual damages (including emotional distress), statutory damages of $100 to $1,000 per violation, and attorney's fees. Criminal records, bankruptcy, tax liens, and other public records information must be handled in accordance with FCRA guidelines and state law restrictions.

Indiana does not have a comprehensive state-specific background check law that supersedes federal requirements. Instead, Indiana employers are governed entirely by the Fair Credit Reporting Act and must comply with all FCRA protections. However, Indiana law does provide important employment protections that affect how background checks can be used in hiring decisions.

Indiana Code section 22-5-1-1 et seq. addresses employment records and employee rights. While not specifically a background check statute, it establishes that employees and applicants have certain rights regarding their employment records and information held by employers. Additionally, Indiana follows federal Equal Employment Opportunity (EEO) principles, meaning employers cannot use background check information to discriminate based on race, color, religion, sex, national origin, age (40 and over), disability, or genetic information.

Under Indiana law, employers may not use criminal history as a blanket disqualifier. Instead, employers must conduct an individualized assessment considering factors such as the nature and seriousness of the crime, the time elapsed since the conviction, the nature of the job, and whether the criminal record is directly related to job duties. This approach aligns with federal guidance from the Equal Employment Opportunity Commission (EEOC) on the use of criminal records in hiring.

Indiana employers must still comply with the FCRA's disclosure, consent, and adverse action requirements, even though Indiana has no standalone background check statute. This means obtaining written authorization before conducting checks, providing pre-adverse action notice if background information will be used to reject an applicant, and allowing time for dispute. The state does not impose additional burdens beyond federal law, but it also does not weaken federal protections. Remedies available to applicants in Indiana who experience FCRA violations are the same as under federal law: actual damages, statutory damages, and attorney's fees through federal court.

The FCRA and Indiana law contain several important exceptions and limitations on background check use:

Blanket criminal record bans are disfavored under Indiana's adherence to federal EEO principles. Employers cannot automatically reject applicants with any criminal history; they must assess whether the conviction is directly related to job duties and consider factors such as time since conviction, rehabilitation efforts, and job requirements. However, certain positions (such as childcare, elder care, and financial service roles) may have legitimate business reasons for excluding individuals with specific criminal convictions.

Background check reports are subject to the 'reporting limitations' under the FCRA. Certain negative information cannot be reported, including: (1) bankruptcies older than 10 years, (2) civil judgments and paid tax liens older than 7 years, (3) criminal arrests without conviction that did not result in a conviction (unless the charge is still pending), and (4) convictions older than 7 years. However, convictions can be reported indefinitely, and some information (such as criminal records) may have longer or indefinite reporting periods depending on the source.

Third-party hiring companies and staffing agencies that conduct background checks on behalf of employers must also comply with FCRA requirements. If a staffing agency conducts the background check, the employer requesting the check remains responsible for FCRA compliance.

Indiana law does not exempt any employers from FCRA compliance based on size or industry, though certain federal contractors and positions may have additional background check requirements (such as fingerprinting for public safety roles). At-will employment doctrine applies in Indiana, meaning employers can generally refuse to hire applicants; however, they cannot do so based on discriminatory use of background information or in violation of public policy (such as refusing to hire based on a conviction that is unrelated to job duties).

Unions or collective bargaining agreements may impose additional restrictions on how background checks are used in hiring and promotion, and those terms would supersede general at-will employment principles for unionized employees.

Step 1 — Document Everything: Keep a detailed record of all background check-related communications and decisions. Save copies of: (a) the job posting and application materials, (b) any written disclosure about background checks you were given before consenting, (c) the written authorization you signed (or were asked to sign), (d) emails or letters discussing the background check, (e) the actual background check report if you obtained a copy, and (f) any adverse action notice received. Write down dates, times, and names of individuals involved. Take screenshots of online applications that disclose background check policies. This documentation is critical if you later file a complaint.

Step 2 — Request a Copy and Dispute Inaccuracy: Before filing any complaint, obtain a copy of your background check report from the consumer reporting agency that prepared it. You have the right to request this at no cost. Review it carefully for errors such as: incorrect criminal records, misidentified records belonging to another person, inaccurate employment history, or wrong addresses. If you find errors, write a detailed dispute letter to the consumer reporting agency explaining the inaccuracy and providing supporting documentation (court records, employment verification, etc.). The agency must investigate within 30 days and correct or remove inaccurate information. Request written confirmation of the dispute resolution. Keep copies of all correspondence.

Step 3 — File a Charge with the EEOC: If the background check was used discriminatorily (for example, if the employer selectively rejected applicants of a particular race based on criminal history), file a charge with the Equal Employment Opportunity Commission (EEOC). The EEOC has jurisdiction over hiring discrimination claims. File at the Indianapolis Field Office: 101 West Ohio Street, Suite 1900, Indianapolis, IN 46204; phone: (317) 226-7212; website: eeoc.gov. You must file within 180 days of the discriminatory act (or 300 days if filing in a state with a deferral agency, though Indiana does not have a state civil rights agency, so the 180-day federal deadline applies). When filing, explain: (a) the job you applied for, (b) when you applied, (c) what the background check disclosure and consent process was, (d) what information was in the background check, (e) how the employer used it to reject you, and (f) any evidence that similarly situated applicants of a different protected class were treated more favorably despite similar background information.

Step 4 — File an FCRA Violation Complaint with the FTC: If the employer or background check agency violated FCRA requirements (such as obtaining your consent improperly, failing to provide pre-adverse action notice, or refusing to allow you to dispute information), file a complaint with the Federal Trade Commission at reportidentitytheft.ftc.gov or by mail to Federal Trade Commission, Consumer Sentinel Network, 600 Pennsylvania Avenue NW, Washington, DC 20580. The FTC does not conduct investigations on a complaint-by-complaint basis but uses complaints to identify patterns of violations. Also file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov/complaint if a bank or financial institution conducted the background check.

Step 5 — Consider Litigation: If the EEOC investigation does not result in a satisfactory resolution (or if you want to pursue your claim faster), you may file a private lawsuit under the FCRA in federal court. You have up to 2 years from discovery of an FCRA violation (or up to 3 years if the violation was willful). Consult with an employment attorney licensed in Indiana who has experience with discrimination and consumer law. Many employment lawyers work on contingency for FCRA cases, meaning you pay no upfront fees. An attorney can help you: (a) gather additional evidence, (b) send a demand letter to the employer or background check agency, (c) file a lawsuit in federal court, and (d) pursue damages including actual damages, statutory damages of $100 to $1,000 per violation, and attorney's fees.