The Facts About Workers' Comp History, Medical Exams & Background Checks

At Good Egg, we guide our clients on what to include in their pre-employment background checks. Here's a question we sometimes get: should the employer obtain workers' compensation records?

We're presenting this question to Melissa Snyder, Good Egg's attorney and compliance manager. Melissa is FCRA-Advanced Certified from the Professional Background Screening Association (PBSA).

The big disclaimer, of course, is that any information she provides on this blog is simply educational in nature, not legal advice. You should consult your own attorney regarding your specific situation.

Let's get to it . . .


Can I order searches on an applicant's workers' compensation history as part of the pre-employment background check?


It depends. Workers' compensation history searches and other disability-related inquiries may only be conducted after an offer of employment has been made to the applicant. Moreover, the results of workers’ comp searches cannot be used to make an employment decision in a number of states, including New York where Good Egg is based.

Here are two important points to keep in mind:

1. Workers' compensation records are under the jurisdiction of each state. 

Most workers' compensation records are maintained by a state agency, such as a Workers' Compensation Board or the Department of Labor. There are wide variations between the states in the availability of these records. In some states, the records are not available to the public at all, meaning that the search is not supported and cannot be performed by background screening agencies. In other states, it can take two to five weeks to obtain a record. In some states, there are additional special requirements before obtaining the records, such as a notarized release.

2. The American with Disabilities Act (ADA) imposes certain limitations.

Under the ADA[1], an employer may not inquire about an applicant's medical condition or past workers' compensation claims until a conditional job offer has been extended, subject only to a job-related medical review. Important: this implies that the workers’ comp search/physical exam should be the final step in the background check inquiry, after the applicant has already passed the criminal background check and all other components of the background investigation (including employment and education verifications, reference checks, social media screening, etc.). That’s a big statement, so I’ll break it down with further details and examples below.

Understanding When Employers Can Conduct Medical Examinations

The ADA only permits employers to conduct medical examinations after making “bona fide” or “real” job offers. In Leonel v. American Airlines, Inc., the court determined that a job offer is only “real” if the employer has evaluated all relevant non-medical information which it reasonably could have obtained and analyzed prior to extending the offer. Of course, there are legal and practical considerations as to what is “reasonable” under the circumstances.

From a legal perspective, one could argue that if criminal history inquiries cannot lawfully be made pre-offer in the jurisdiction where the applicant resides and applies for employment (take your pick from the growing number of fair chance hiring laws that prohibit this), it should not run afoul of the ADA to make the job offer contingent upon successful completion of a criminal background check, followed by successful completion of a job-related medical review.

From a practical perspective, having a 2-step background check process is certainly not ideal for any employer. A bifurcated background process may result in added costs and delay in completing the overall investigation. However, the EEOC has issued an informal letter cautioning that employers “cannot justify seeking non-medical information at the post-offer stage merely by claiming that it would save money and time and avoid inefficiency.”  The employer “would need to offer evidence… that details a significant increase in costs and/or significant delays in carrying out the hiring process.”

If the applicant files an EEO complaint, federal investigators will carefully scrutinize the employer’s practices and situations where the employer has withdrawn an offer after a post-offer background examination to determine whether the withdrawal was based on non-medical information in the background check or on information obtained through a post-offer medical review. A similar analysis would happen in federal court, if a claim was filed. Even if it is ultimately determined that the employer’s process is consistent with the ADA, as was decided in Taylor v. Renown Health, it may not be worth the hassle, public scrutiny, and expense of defending against ADA complaints and EEOC enforcement action, especially if you can work with a knowledgeable screening partner to develop a background check process that is undeniably compliant.

Bottom line: Employers need to tread carefully when reviewing medical records and administering medical exams as a condition of employment.

As American Airlines learned the hard way, employers should refrain from any pre-hire medical inquiries or examinations until all other pre-employment contingencies have been removed. As a best practice, employers should consider revamping their background check process to ensure that the medical review is unequivocally the last step in the hiring process.  By ensuring consistent procedures are followed, as evidenced by proper documentation, employers can avoid ADA violations and still efficiently screen to hire top talent.

At a minimum, you should check in with your screening provider and employment counsel to make sure that it’s clearly documented that all non-medical conditions have been satisfied before requiring a medical examination or inquiry. If it is clear that an applicant has suffered no concrete harm as a result of the screening process, the Taylor case tells us that they should have no standing to bring a claim under the ADA.

Workers' compensation records & background checks: what this means for employers.

So, you’ve decided to move forward with workers’ comp searches and medical examinations (please don’t do the former without the latter). You’re at the final stage in the hiring process and you’ve conditioned the job offer on successfully passing a medical examination and review of associated disability-related inquiries. If an applicant with a disability is subsequently denied the job because of information obtained from the medical examination, the reason for this decision is clearly documented. However, this decision can only be made if the physician determines that the applicant is unable to perform the essential functions of the job with or without reasonable accommodation. But what if the physician hasn’t made such a determination? Can you revoke the applicant’s offer based on a review of their workers’ compensation records?

Bottom line: An applicant cannot be denied employment simply because he or she has a history of filing workers' compensation claims.

Further, an employer cannot request workers' compensation records in order to have a policy of not hiring anyone who has made a claim or multiple claims. When a history of filing workers' compensation claims is found post-offer, and medical examinations indicate that there was no valid claim for disability, the offer may only be rescinded under very limited circumstances.

For example, if the applicant has lied on a medical questionnaire, or to a doctor performing a pre-employment physical, then the employer may be justified in rescinding the job offer based upon dishonesty, as long as the employer has fully complied with the ADA and any applicable state or local laws. Additionally, if an applicant has a history of multiple claims that have been denied, then an employer may be justified in rescinding the offer based upon a history of dishonest conduct. Notice that in these scenarios, the reason for denying employment is based upon an inference of fraud, not disability.

What to know about workers' compensation history, background checks, and adverse action.

If, upon medical review, the applicant is denied the position due to either: (i) a disability that is job-related and consistent with business necessity, or (ii) a history of dishonest conduct, the employer will need to comply with the adverse action procedures of the Fair Credit Reporting Act (FCRA) in most cases. If the medical exam and/or workers’ comp search is ordered through the consumer reporting agency (CRA), adverse action procedures must be complied with because the decision not to hire will be based in whole or in part on the results of a background check performed by a CRA.

If a medical exam/workers’ comp search is ordered directly by the prospective employer, FCRA adverse action requirements may still apply unless it is the employer's policy to obtain and review such medical information for every applicant, separate and apart from the pre-employment screening program conducted through the employer’s CRA.

Good Egg's stance when it comes to employers wanting to obtain workers' compensation records.

We strongly advise employers to consult an employment attorney before seeking to obtain workers' compensation records for employment purposes. At Good Egg, we partner with Ali Law Group, which specializes in workplace law compliance and can assist in preparing appropriate company policies, job descriptions, and forms and procedures necessary to comply with the ADA and related state laws, such as a conditional job offer and medical review form.

This is just one of many ways we strive to deliver exceptional customer service with our pre-employment background check solutions.

Got a question for Melissa? Let us know!


Check out previous "Ask the Attorney" features:

[1] Employers may make an offer of employment conditional on the results of a medical examination, if (A) all entering employees are subjected to such an examination regardless of disability; (B) information obtained regarding the medical condition or history of the applicant is collected and maintained on separate forms and in separate medical files and is treated as a confidential medical record; and (C) the results of such examination are used only in accordance with the ADA. 42 U.S.C.S. § 12112(d)(3).

New call-to-action

Melissa Snyder

Posted by Melissa Snyder

Melissa Snyder, FCRA Advanced Certified from the Professional Background Screening Association (PBSA), is Good Egg's Attorney and Compliance Manager. Not only is she an expert in the background screening legal landscape, she is also a lifelong Disney fanatic and is always on the hunt for hidden Mickeys.

Download eBook Now! How to Choose the Right Background Check Vendor