Employee Background Check Laws in North Carolina

The Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., is the primary federal law governing background checks nationwide. The FCRA applies to all employers that use consumer reporting agencies (CRAs) or third-party background check providers to screen job applicants. Under FCRA, employers must: (1) obtain clear, written disclosure and authorization from the applicant before conducting a background check; (2) provide the applicant with a copy of the report and notice of their right to dispute inaccuracies; (3) notify the applicant in writing before taking an adverse employment action based on the report ("adverse action notice"); (4) give the applicant a reasonable opportunity to respond before final denial of employment. The FCRA does not restrict employers from using criminal history in hiring decisions, but the EEOC has issued guidance stating that blanket exclusions of individuals with any criminal record may violate Title VII of the Civil Rights Act of 1964 if they have a disparate impact on protected classes (race, color, national origin). Employers must also conduct individualized assessments of criminal history relevance to the job. The Federal Trade Commission (FTC) and EEOC enforce the FCRA; private right of action also exists for applicants who suffer damages from FCRA violations.

Additional federal considerations include the EEOC's Green Guide (Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions), which clarifies that arrests alone cannot be a sole basis for employment decisions since they do not establish guilt. Conviction records may be considered if job-related and consistent with business necessity, but employers must evaluate factors such as the nature and gravity of the offense, time elapsed since conviction, and the nature of the job. Under the Equal Employment Opportunity Laws, using background check information in a manner that disproportionately affects a protected class without legitimate, documented business necessity may constitute discrimination.

North Carolina does not have a dedicated background check statute or ban-the-box law. Instead, North Carolina employers are solely governed by federal FCRA requirements when using third-party background check providers or consumer reporting agencies. This means North Carolina employers have fewer state-level restrictions on background checks compared to states with explicit ban-the-box legislation. However, North Carolina does provide a remedy for applicants through its record expungement law, N.C. General Statute § 8-70, which allows certain criminal convictions, arrests, and charges to be sealed or expunged from background check visibility under specific circumstances.

Under N.C. General Statute § 8-70, individuals may petition to expunge: (1) charges that were dismissed or resulted in acquittal; (2) certain misdemeanor convictions after a waiting period (typically 5-7 years depending on offense type); (3) felony convictions in limited circumstances; (4) first-time drug possession charges under certain conditions. Once a record is expunged, the applicant can legally state that the arrest or conviction did not occur, and employers conducting background checks should not see expunged records. This provides North Carolina applicants with a state-specific avenue to remove certain criminal history from background checks.

Because North Carolina lacks a state-specific ban-the-box law, employers are not prohibited from asking about criminal history on job applications or conducting background checks early in the hiring process. However, employers must still comply with FCRA requirements and EEOC guidance prohibiting blanket exclusions or discriminatory use of criminal history. Employers covering all North Carolina employees—whether they are small private companies, medium-sized firms, or large corporations—must follow federal FCRA procedures. North Carolina public sector employers (state agencies, municipalities) may have additional restrictions under public employment rules, but private sector employers face no unique state-level background check restrictions beyond federal law.

North Carolina and federal law contain several important exceptions and limitations to background check protections. First, the FCRA's disclosure and adverse action requirements apply only when an employer uses a third-party consumer reporting agency or background check provider; employers who conduct background checks entirely in-house (e.g., calling references directly, reviewing public records themselves) are not subject to FCRA notice requirements, though EEOC disparate impact rules still apply.

Second, certain employment sectors are exempt or have modified FCRA requirements. Financial institutions, employers in positions requiring access to sensitive information, and employers subject to other federal regulatory regimes (such as healthcare or childcare) may have stricter or different background check rules. Background checks for positions in banking, securities, or those requiring security clearances follow specialized federal rules.

Third, expunged records do not legally exist for background check purposes in North Carolina, so applicants whose records have been expunged under N.C. General Statute § 8-70 can legally deny that the arrest or conviction occurred. However, expungement is not automatic; applicants must petition the court, and not all arrests or convictions qualify (e.g., violent felonies, sexual offenses, and crimes of dishonesty typically cannot be expunged).

Fourth, at-will employment is the default rule in North Carolina, meaning employers may hire or decline to hire for almost any reason not explicitly prohibited by law. Using information from a background check to decline employment does not violate at-will employment principles unless the reason is discriminatory (based on race, color, religion, sex, national origin, age 40+, disability, or genetic information).

Fifth, some public records (e.g., felony convictions, certain misdemeanors) can be used by employers even without FCRA compliance if the employer accesses them directly from courthouse records rather than through a CRA. However, EEOC guidance requiring individualized assessment still applies.

Step 1: Document and Preserve Evidence. If you believe an employer violated FCRA requirements in conducting a background check, gather and save all documentation: (1) the job posting and application materials; (2) any written authorization you signed for a background check; (3) the actual background check report or summary you received; (4) any adverse action notice or explanation for employment denial; (5) communications with the employer about the background check; (6) the background check provider's name and contact information; (7) any inaccurate information in the report you can verify (e.g., misidentified criminal records, wrong dates, records that should have been expunged). Keep copies in a safe location and do not alter documents.

Step 2: Attempt Internal Dispute and Correction. Under FCRA, if you received a background check report and identified inaccurate information, you have the right to dispute it directly with the background check provider (the CRA). Request a copy of your full report and dispute form from the provider, typically found on their website. Write a clear, factual dispute letter explaining what information is inaccurate and provide evidence (court documents, expungement orders, police reports showing dismissal). Submit this to the CRA within 30 days of receiving the report. The CRA must investigate your dispute and respond within 30 days. If the inaccuracy is confirmed, the CRA must correct it and notify the employer. Keep copies of all dispute correspondence.

Step 3: File a Complaint with the Appropriate Agency. If the employer did not obtain written consent, did not provide adverse action notice, or the CRA will not correct inaccurate information, you may file complaints with two federal agencies: (1) the Federal Trade Commission (FTC) at reportfraud.ftc.gov or by mail to the FTC, Identity Theft Unit, 600 Pennsylvania Avenue NW, Washington, DC 20580, or by phone at 1-877-438-4338. The FTC enforces FCRA and investigates complaints about background check providers and employers' FCRA violations. (2) The Equal Employment Opportunity Commission (EEOC) at eeoc.gov/charge or by visiting the nearest EEOC field office. File an EEOC charge if you believe the employer used background check information in a discriminatory manner (e.g., blanket exclusion of individuals with criminal histories that disproportionately affects a protected race or national origin). In North Carolina, you must file an EEOC charge within 180 days of the alleged violation (300 days if a state agency is involved, but North Carolina has no separate state civil rights agency handling employment discrimination). Provide the employer name, address, details of the violation, and the date the violation occurred. The EEOC will send a copy to the employer and begin investigation.

Step 4: Understand the Investigation Process. After filing with the FTC or EEOC, expect a 30-90 day investigation period. The FTC typically conducts investigations of CRA violations; the EEOC investigates employer discrimination claims. You may be contacted for additional information. The investigating agency will contact the employer and request documents, including the authorization form, the report provided to the employer, and communications about hiring decisions. Investigation does not guarantee a finding in your favor; the agency will evaluate whether FCRA or employment discrimination laws were actually violated. The EEOC may offer mediation as an alternative to full investigation. If the agency finds evidence of violation, it may pursue settlement negotiations or issue a right-to-sue letter, which allows you to file a private lawsuit in federal court.

Step 5: Consult an Employment Attorney. If you plan to file suit or believe you have suffered significant damages (lost job opportunity, emotional distress, reputational harm), consult an employment law attorney licensed in North Carolina. An attorney can: (1) review your background check report and authorization documents to identify specific FCRA violations; (2) calculate potential damages (actual damages or statutory damages up to $1,000 per violation under FCRA, plus attorney fees and costs); (3) file a private FCRA lawsuit in federal or state court if the CRA or employer will not settle; (4) represent you in settlement negotiations or trial. Many employment attorneys work on contingency (no upfront fee, taking a percentage of recovery). Consult early to preserve evidence and meet filing deadlines.